The biggest most powerful incentive to reduce staff turnover, is the cost to the business.
There are many calculations regarding the cost of staff turnover. They range from the most conservative that puts the total cost of replacing a staff member as being equivalent to a minimum of 30 weeks income for that staff member. At the other end of the estimates the figure of 100 weeks is suggested.
Whatever the figure it is a preventable loss to the business.
Staff retention strategies are not costly. However they do require thought, effort and time. It is relatively easy to justify staff retention programs when you know the losses incurred through staff turnover. To get approval for a staff retention program, current losses are a powerful argument.
From a business point of view, the losses incurred through staff turnover will make a dent in their net profit. Staff retention is a low-cost initiative and represents a considerable return on investment. Every thinking business should invest in strategies to retain its staff because it is an economically sensible decision.
There are not many alternatives to an effective staff retention program. Paying higher wages has proved to be a limiting strategy. After a while you will find that you have recruited wage and salary sensitive staff.
Just remember, if you employ somebody because you've offered a higher rate, they will be the first to leave when faced with an even higher rate.
The factors affecting staff retention are relatively simple but must be managed carefully. Income is only one of the many aspects of staff retention.
Surveys over the years in different countries show that there are different factors that have been identified as what people want from their work. High income typically is fourth or fifth on the wish list of desirable benefits that can be achieved from work.
Things that come before income are, recognition, being involved, respect and personal development. Surveys and studies show that most employees want to do a good job and also work to their potential.
Sense of involvement
A lot of people need a strong sense of involvement with the business in which they work. They feel that a lack of information is a disincentive to put their hearts and mind into the work. They like to be a part of the organization with the opportunity to voice their opinion and add their ideas.
Because the workplace is a social environment, people do not want to be just treated as a number. Most of them enjoy belonging to a team and participating in teamwork.
This teamwork does create a sense of obligation to the other members of the team. It obviously pays to recognize and create teamwork because of the contribution to staff retention.
Because of the diversity of human beings not everybody wants to be part of the team. These individuals have to be treated differently and not shoehorned into a team against their wishes. This is where the leadership skills of the immediate supervisor are put to the test.
Recognition contributes to the sense of involvement. It takes many forms. Acknowledgement of a job well done and specific information of why the performance deserves your special attention is a good form of recognition.
Recognition of a person who is working under difficulties such as pressure and stress, goes a long way to reducing the effects of the stress on the individual. It is surprising the number of managers and supervisors who do not use recognition and praise as part of their leadership style. It is one of the most effective leadership tools and costs very little.
Motivated contributors are proud employees. They feel they belong to something worthwhile. They feel they matter. Their performance reflects their self-image. Recognition has to be meaningful and specific.
Letting employees know how much you appreciate their input makes them more receptive to what you are trying to do. On the other hand, meaningless praise serves only to confuse people about what behavior is desirable and what isn't. Saying, "well done" to somebody is not specific enough and is unlikely to reinforce desirable behavior.
A Comprehensive and Effective Induction Process
There is a clear link between the quality of the induction process and staff turnover. Companies that retain their staff have an effective induction process. Therefore, it seems sensible as part of staff retention strategies to include an effective induction process.
Induction sets the standard for the time the person is employed in the business. Poor induction sets poor standards and vice versa. Induction can be a quite complex process but is another cost-effective strategy.
One of the biggest problems created by the induction process is its delivery. Typically, an induction process may last from an hour to several weeks.
Go back to first principles. Ask yourself the purpose of the induction process and then look at the method. Better still ask the people emerging from the induction process what they thought about it and you may be surprised.
When somebody moves to a new employer, there is a wealth of new information. Human beings learn differently and at different rates with different levels of retention.
The first day of the induction program is often far too much for the person to absorb. They go into "brain overload" at some time during the day and much of the following information is just not retained.
When staff turnover is a problem, look objectively at your induction process. If you are going to restructure your induction program consider the process as being "little and often."
Clear Epectations of Performance
Many organizations do not clearly lay out what expectations of performance they have from their staff from day one. Expectations and performance become the topics of the conversation only when something has gone wrong.
Rather than state expectations during the induction process, the employer only mentions his or her expectations after there has been some problem.
The difficulty of this approach is that, when the crisis arises, emotions are running high and blame is normally a factor.
This is a counter-productive approach and can be handled quite easily by setting expectations and repeating expectations on a regular basis throughout the person's employment.
There is compelling evidence that people who work with clear expectations, perform better and are much more fulfilled in their work.
Feedback on Performance
It is strange to think that in every hobby, sport or pastime, people keep score. They count how many shots when they play golf, they count how many goals were scored at a football game, they count the fish they caught, they count how much beer they drink, and so on.
At work, often there is very little feedback on performance. This means that members of staff don't know how their performance is measured.
When feedback is provided, it is much easier to share goals and targets. There appears to be a strong need for people to know how they are getting along. One of the ways to meet this need is to provide regular and relevant feedback.
Feedback can be the number of rejects produced, the amount of "up time" the machine operates during a working day, the distance traveled, the fuel used, the deliveries on time, the cartons filled and so on.
The psychologists call it Knowledge of Results and have concluded that this is a strong motivator of behavior. It also helps people to see that their work is worthwhile and is a valuable activity.
This sort of information not only contributes to higher performance but also strengthens the bond between the employee and the employer.
Feedback from Customers
One of the most neglected practices in the workplace is the lack of information about what customers think of the service or products the company has been delivering.
This information is also a strong motivator for behavior and because it gives purpose to the work being carried out. Furthermore, it places a measure of importance on the activities of the individuals and the group.
Feedback from customers has an extremely positive effect in creating an environment where the staff member is valued. Every piece of information either negative or positive should be fed back to the staff concerned. This will also improve performance and give valuable direction to changes that should take place in the workplace.
In the absence of feedback information from customers, managers, supervisors, employees will tend to assume that they are doing the right things or that no-one cares.
Well maintained tools and equipment. It is very hard for people have pride in their work if the tools they have to work with are substandard or poorly maintained. It borders on being a Health and Safety issue.
Quality work does not normally come from poor quality tools or poorly trained people. It is a false economy to supply employees with equipment which is substandard because it sends a clear message that the work is not important, quality is not an issue and that the employees are expendable.
A situation like this can adversely affect staff turnover, quality, safety, pride, and discretionary effort.
Effective leadership is absolutely necessary to create a stable workforce. It is the single most important factor in determining staff turnover. However, effective leadership is rare. People get placed in leadership positions without any training and are expected to be effective. But the sad fact is that most of them fail.
Failed leadership is the single biggest cause of staff leaving. Competent leadership on the other hand is found to retain staff and fulfill the needs of the staff so that they can perform to their potential.
The key to raising business performance is clear. Raise the leadership skills within the organization and business performance will follow.
When businesses provide effective leadership they are sending a positive message to all members of staff.
The message is this, "We value your contribution. We respect you as an individual. We have provided you with the best leadership that we can to demonstrate our commitment to you."