How Much is Your Employee Turnover Costing You?

Have you stopped to add up what you have spent in the last 12 months to find, hire, and train new people? 

Consider the following: The hard cost of advertising for new people. Employment agency fees. Cost in human resources to handle the above, screen telephone calls and arrange interviews. Cost in human resources to conduct the interviews. Cost to train new hires. Cost of lost revenue from customers due to an inexperienced employee unable to meet your customer's expectations.

And just when you think you have found the "perfect person" for the job, they have left your organization and you are now back to Step Number One!

A recent study by the American Management Association (AMA) determined the average cost of employee turnover to be about 30% of an employee's salary. If you calculate your hard cost to hire a new employee, plus what it costs you in terms of lost revenue or worse yet, the cost of losing a customer because of poor service, how close do you come to AMA's figure on the real cost of your employee turnover?

So how much of an investment have you made in the last 12 months to keep your current employees?

Lots of employers think employees are all about "show me the money." Yes, its true that people need to feel as if they are fairly compensated; but actually, people need to feel like they are part of the company, that their ideas and suggestions are important, and that they add value and help the company grow.

A recent Gallup poll of 55,000 employees matched the following attitudes directly to higher profits: Employees felt they had an opportunity every day to do what they do best. They believed their opinion counted. They sensed that there co-workers were committed to quality. There was a direct connection of their work to the  company's mission statement.

So what can you do to increase employee retention?

1. Little things mean a lot - when your people go above and beyond what is typically expected, let them know publicly how much you appreciate them. Thank your people verbally as well as in other ways. A written thank you note to recognize both small and large tasks in building a strong relationship. Or better yet, send a letter to their spouse, significant other or family to let them know what a great job their husband, father, son, etc., is doing and how proud you are to have that person on the team!
   
2. Help them grow - encourage your people to pursue professional growth  opportunities. If you provide the opportunities for them to take classes or workshops to improve their skills, these  benefits will be returned to you many times over. Perhaps you can offer to subsidize a class if it relates to their job. Wouldn't those skills be an asset to your company in the future.
   
3. Ask for their ideas - front-line people typically see many things as they do their jobs that could be done differently to improve performance, save time and money, and improve your bottom line. Unfortunately, most of these great ideas are never shared. Why? Because no one ever asks their opinion. Ask all if your people for their ideas. It is important to respond to their ideas immediately, to let them know if their idea fits or doesn't and why. Remember that there are no bad ideas. But people need to know that you are listening!
   
4. Reward ideas - get your people involved in defining what rewards motivate them. A national company with 900 locations set up a study to compare cash vs. non-cash rewards. The non-cash group outperformed the cash group by a 46% margin while generating a 37% increase in sales. Small rewards for ideas is  small investment in your future profits. Demonstrate to your people that their ideas and suggestions are valuable to the growth of your company.
   
5. Improve their skills - provide your people with continual training so they have the skills and knowledge to surpass the customer's expectations of service. Your investment to hire a trainer to come into the company or pay for people to attend an outside seminar will reap benefits beyond the initial investment. With good communication and customer service skills, your people can put you head and shoulders above your competition. What better way to demonstrate to your people that you care about them as demonstrated by your willingness to invest in their future with your company?
   
6. Invest -  in a personality profile tool for new hires - a recent study by Harvard University showed that nearly 80% of turnover is due to hiring mistakes. The primary reason for turnover was that the characteristics of the individual hired did not match the requirements of the position filled. This study further proved that a personality profile tool could increase the likelihood of hiring successful candidates from 14% using interviews alone to 75% using a personality tool. There are a number of profile systems available which can help you better match possible candidates with both the job and the company's culture.
   
7. Get them involved in the company - Open the books and show your people how to read a profit and loss statement. Most people have no idea what it costs to run a company. Involve them in understanding the numbers, ask them for suggestions on ways to decrease costs, improve profits, and increase sales.
   
8. What is your perception of employees? - The definition of employee in the dictionary is "a person hired by a business to work for wages." Do you want someone that sees their position as just a job they show up to everyday because they get paid? Or do you want an associate, team member, or partner, that knows they are part of your company and have an interest in the growth and future of your company? Simply changing the term from employee to something else, like associate, team member or partner, won't make the difference. But asking for their ideas and suggestions, recognizing their performance and getting them involved in your business will communicate the message that you value them more than just someone paid to do a job-the bottom line is that your staff can make or break your business.

It's not all about the money. It's the small things that a company does to communicate the message that your people are important and their ideas and feedback is valued. Invest in your people and they will invest in you.