Turn-over of employees can be one of the largest costs to a business. Losing an employee costs an average of 50% of their annual earnings. The figures get worse when you consider an employee is an appreciating asset, that produces more the longer they work for your company.
There are 3 major solutions suggested to companies. First, radically change your benefits and culture to fit the wants of your staff. Second, accept mediocre performance because the replacement is expensive and might not be any better. Last, raise pay above your industry average. All of these might slow down turn-over, but each is costly.
You might be better off accepting that people leave your company than pour the amount of time and money in that these solutions require. Every business needs to be competitive with pay, work conditions, treatment, and benefits. Improving your company to be more attractive to workers is important, but it isn't how you solve an employee retention problem.
Turn-over cost in excess of $160 billion last year
There is a much better way to solve the turn-over problem, with great ROI. Find potential issues in the interview. Most interviews completely revolve around skill, and attitude. Neither of these are predictable root causes for an employee to separate from your company. You are probably going to say that attitude feels like a large factor, and a lot of people that separate from employment do have poor attitude at the end. Attitude isn't the reason a person leaves it is a symptom of the issue that is making them uncomfortable, the real reason behind the turn-over.
Here are the 4 root causes to look for:
There are a few other reasons people leave jobs, but most are a healthy part of the natural business cycle and you shouldn't try to avoid them. Career growth beyond a position, retirement, and being laid off due to business concerns are a few examples. The rest can be found during the interview process and save your company a lot of heart ache.
All you need to do is insert 4 questions into your interview, and listen carefully for signs that the candidate isn't going to fit. The questions should be open-ended investigations into the applicants past. Look for situations that will mirror ones that will come up in your company and prod the interviewee to give detailed descriptions of how it impacted their prior jobs.
- Schedule - Tell me about what you had to do to make schedule adjustments in your last job. Walk me through the process, and give some examples of when you needed to either get time off or change your daily schedule.
- Commute - How was the traffic coming in today? Was it a better drive than your last jobs?
- Stress - Describe the month-end at your last job. What type of deadlines/quotas did you have, and did you ever have to miss them?
- Ego - What is the area where you exceeded one of your prior Managers? How did they handle that? Where you given the room to shine?
The best predictor of future success is past performance
Instead of trying to take square candidates and shove them into a round hole, let's identify the people that will really fit your company. If your business involves a high-pressure month end, don't hire a person that cracked under the pressure of their last job. Remember that an applicant that really wants a job now will always promise you the hour drive to work isn't a problem, until they find a job offer closer to home six months after you hire them.
During the interview process be open about both the rewards and trials of working for your company. Many times employees are lost due to over-selling the position. It can be tempting to tell a very talented candidate that you have a family friendly atmosphere (you are flexible with schedule and time off), but in reality their Manager hasn't taken a flex day off in 30 years.
Be honest with yourself about the real demands of working for your company, and screen your candidates to live up to them. Curbing turn-over and boosting your bottom line will be within your reach.