HOW TO REDUCE EMPLOYEE TURNOVER

The phrase is said so often it's a management cliché: "Our company's most important assets walk out the door every night."

Does anyone believe it? If so, then why are turnover rates in the stratosphere?

If you don't believe that employee retention is your company's biggest challenge, then consider the results of a workforce poll taken last year by the Society of Human Resource Management and the Wall Street Journal. The survey found that 64% of employees polled said they were "extremely likely" to begin or accelerate a job search.

In other words, two out of every three people questioned were actively job-hunting!

Another 19% of respondents described themselves as "somewhat likely" to increase their search efforts.

You can do the math: 5 out of every 6 employees polled were going to have new jobs sometime soon.

All this job-hopping creates huge expenses for employers, and chronic dissatisfaction for employees.

Replacing workers is expensive. You have to find a replacement, train the replacement, and suffer missed opportunities while the replacement gets up to speed. It all adds up. The cost of replacing the average worker is between 2-1/2 and 3 times the departing employee's salary.

And often the exiting employee is heading down the block, to join the competition!

Factor in the intangibles - the impact on customers, the disruption of teamwork, the tearing of the corporate culture - and you realize that job turnover is a key business issue.

I say: It is the key business issue.

Yet so many employers ignore the problem. Few monitor job defection. And the workforce is shrinking, not growing, as the Baby Boom generation ages and approaches retirement.

This much is clear: No organization can ignore retention and not pay a huge price.

Once I was consulting to a company that experienced chronic turnover. I found people in meetings were often introducing themselves. At some meetings nearly everyone in the room was newly hired. Everything seemed improvisational and temporary.

When I flagged this problem to my client, he fumed. He wanted to focus on other issues. He was wrong. The company went out of business.

Companies successfully address retention in two basic ways: by quantifying and by communicating.

Let's start by looking at what can be quantified. You can learn quite a bit about employee turnover by tracking employee departures over the course of a year, or less.

Step 1. Set up a tracking mechanism. Be able to follow movement according to departments, compensation, hiring source, age, shift, or other criteria relevant to your industry. All supervisory reports should include turnover data, analysis, and recommendations. Interview all exiting employees. (More on that later.)

Step 2. Set departmental goals. Find out your industry's retention rate, then set out to beat it. Every department should have an appropriate retention goal, and managers who exceed their quotas should be compensated, same as with sales goals or other numerical targets.

Step 3. Identify the managers who inspire loyalty, and have them share pertinent knowledge and skills throughout the organization, with such things as training seminars, newsletter articles, and policy implementations.

Next, communicate better and more frequently

Studies consistently show that while people work for money, without a sense of purpose they will merely punch the clock. The difference between clock punching and commitment is communication. Put another way: You don't have to overpay people to motivate them.

The National Association of Convenience Stores took a survey of its membership a few years ago, and uncovered a startling result: store owners who held regular meetings with employees reduced turnover of full-time employees by 50%. Those who provided employees with employee handbooks reduced full-time turnover by 25%.

I find these results extraordinary. In an industry where employee turnover often exceeds 100%, and is an acknowledged hurdle to profitability, managers made significant improvements simply by the act of communicating.

A few fundamentals are well worth repeating.

Be respectful. Find opportunities to praise someone for doing a job well. Praise publicly, criticize privately. Praise more than you criticize.

Lead by example. People are watching you, so do what you ask others to do.

Be specific, avoid generalities.

Right way: "You need to get your reports in on time, all the time."

Wrong way: "Sometimes you don't get all the job's responsibilities handled in a timely manner."

Clarify through repetition. If it's important, say it twice.

Good communication practices, both written and oral, reduce turnover. I find that often turnover is the result of a mismatch between candidate and position. A manager who clearly defines a job on paper is halfway to successfully filling that job.

A well-written job description lists necessary technical skills, indicates which personality traits and "soft" skills will come in handy, and in general allows the candidate to assess whether there's really a match.

On the other side of the desk, the candidate is evaluating the prospective employer, too. An employer who lacks a written job description, or offers one that is too vague, out-of-date or too muddled to serve its purpose, is sending signals too.

Inevitably, there will be job turnover. Almost no one today retires with one line on their resume. When an employee moves on, I advise both sides to sit down for an exit interview. The exit interview is, potentially, a valuable exercise. The departing employee is able to make a favorable, and often lasting, outgoing impression. The employer is able to learn how the company can do a better job at what, increasingly, is a primary task: Keeping its workforce satisfied, productive - and on the payroll because you can't keep satisfied customers otherwise.

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