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While you should expect some turnover as the price of doing business, if you’re not careful, that price can become awfully steep.  Turnover has a number of causes: Employee motivation and personal reasons, quality of management, work environment, company practices and strategy, and, the primary focus of this piece, hiring practices. Fortunately, you can take steps to cut down on employee turnover, thus making for a more stable working environment for everyone.

To put that price of doing business into actual numbers, consider that for a small business of less than 100 employees, turnover costs can reach $8,000. Seventy-five percent of demand for new employees is replacing those who left, with the average cost of a new employee at $57,968, excluding the cost of training (inc.com). Hiring a mid-level manager for 2.5 years, terminating, and replacing that person, adding in onboarding costs, compensation, severance packages, etc., can cost around $840,000, according to recruiter Jorgen Sundberg.

While hiring alone is not the only aspect of the management process that can help to decrease turnover, it is an important one. To help avoid the high costs of turnover, take a few important steps:

  • Keep your job descriptions clear and complete. Sit down with HR and the supervisor for the position to come up with exactly what you’re looking for in terms of experience, qualifications, and job duties, and create the description based on that list…but separate (for yourself as well as the candidate) the absolute requirements from the preferred skills. Then use this as a checklist as you go through potential candidates while considering the occasional highly motivated candidate who may not have the exact skill set but has skills that can transfer well.
  • Take some time with interviews. While a process that takes too long can actually push away the top candidates who don’t want to wait around, a rushed process may mean you hire someone who isn’t the best fit because something got overlooked. Have two rounds of interviews (the first round could be a phone interview to narrow down the field) so you can compare notes with your job description before the final interview. Keep the interview rounds within the same week to avoid losing the best candidates. But before you make your choice, read the next point.
  • Remember, you’re hiring people, not skill sets. With regard to that required set of skills, you also want to seriously consider the candidate’s personality – sometimes the person with the best background for the job simply won’t fit into the company culture or seems to have little interest in the position, and if you can’t work together well, that will lead to turnover. Ask questions that gauge the candidate’s motivation level for the work (e.g., “Tell me about a time when you had to deal with a difficult situation and how you handled it.”), and talk to references to get a well-rounded picture of how it will be to work with the candidate on a day-to-day basis.
  • Have a backup plan for unexpected turnover. As pointed out above, sometimes employees find positions in other states, have to leave due to family or other reasons. Thus it helps to have a good relationship with a staffing agency like PrideStaff so when an employee has to leave unexpectedly, you can put quality temporary staff in place while you figure out how to fill the slot. Perhaps they have problems with a style of management or the work environment. In these cases, you can best respond by looking honestly and carefully at how you run your company to see if changes will make for more satisfied employees who want to stay.

A company with low turnover implies that it knows how to hire and keep employees happy, and that’s helpful for your bottom line. For help with hiring (and cutting down on general turnover), reach out to the experienced staffing professionals at PrideStaff Thousand Oaks.

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