Employee Turnover: The Bottom-Line Buster
01/12/18 | 10:54AM | Posted by Pasha Ostby
Three ways to prevent churn and increase commitment.
Employee retention and turnover are not just fancy buzz words. They’re a real challenge and they’re hitting businesses hard. Turnover is one of the highest business expenses that kills the bottom line It’s the kind of thing that keeps human resources (HR) people like me and business owners up at night.
Many HR professionals and business owners downplay turnover because they don’t understand how it impacts a company’s overall financial success.
In today’s competitive race for talent, finding hard-working and committed employees is difficult. And, trying to keep them past their first payday can seem virtually impossible. A lot of effort goes into the hiring process: HR posts jobs, interviews a select group of candidates, makes a hiring decision, onboards and trains them, only to have to do it all over again because that person decides to leave the company. While we often think it’s just easier to find someone else to do the job, hiring a new person can cost businesses more — up to five times more according to many sources — than simply retaining an employee by some measurements. That means, businesses can lose a lot of money by not making an effort to understand why people are leaving and fixing the issues.
According to the IBISWorld Janitorial Services in the US: Market Research Report published in June 2017, turnover in the janitorial industry is particularly high, and from what we’ve heard in the industry average annual turnover can be as high as 200 percent. In other words, some building service contractors are hiring for the same position multiple times in a year. That’s a huge financial, not to mention time and resources, drain.
To add to the turnover burden, unemployment is low – very low. According to the Bureau of Labor Statistics, the national unemployment rate was 4.1 percent in November 2017, which is close to what economists consider full employment. Some states are well below the national average, like North Dakota at 2.6 percent. As the unemployment numbers dip, this means that the number of jobs available will outpace the available talent pool needed to do the work. Companies trying to fill those lower-paying, low-skill jobs must find a way to retain their workforce and lower employee churn to better serve customers and protect bottom lines.
There’s no silver bullet to keep your talent from walking out the door, but there are three key best practices you can implement to increase engagement, connect with employees and demonstrate your commitment to them as an employer. You can’t afford to lose hardworking and committed employees, so take the time to find individuals who want to work for you for the right reasons and then implement simple ways to help engage them:
- First, just talk to them! Have a meaningful conversation — and not just once, do it regularly. Take time to understand their challenges and motivations, what they need to do their job better and what they value about their job. Then find ways to support them. As an employer, you satisfy their basic need to make money, but so does every other business out there. Take a different approach, and what you discover by simply connecting with them will lead to other actions you need to take. This could mean they need a more competitive pay rate, better equipment or opportunities to develop new skills. It could be that they want more decision-making authority or to do a different type of work. Maybe it’s a flexible schedule that provides work-life balance.
- Gain commitment. Once you find out what they value, commit and show them — not just tell them — that you support them. In turn, you’ll earn commitment from them. A happy employee means happy customers – and, ultimately, a happy business.
- Lastly, don’t forget that you can’t take the human out of work. If you use technology to communicate or operate any aspect of your business, make sure you find the best technology to help your employees perform efficiently and train them to use it. Show them how technology tools improve their quality of life and work. Working more efficiently means they can spend more time on high-value activities, both at work and at home. But keep in mind that you can’t just throw technology into the mix and expect it to fix your employee engagement and communication problems. It’s a tool, not a solution.
By improving employee retention and reducing time and money spent on turnover, you can focus on investing in other things to maintain a competitive edge, like technology. Take the time to analyze your people and what you need to do to keep them. It will cost you less time and money to find the right people and keep them happy than to have a constant revolving door of hiring and onboarding.
As a TEAM customer, you don’t have to brave employee engagement alone. As an HR pro, I’m here to help. TEAM’s newest offering, Pro Services, can help you align your people, processes and technology, using TEAM’s unique blend of tech experience, industry knowledge and expertise. Learn more here.
Compensationforce.com, 2016 Turnover Rates by Industry