One of the easiest ways to relieve yourself of the pressure of hiring is to decrease the occurrences of employee turnover. Turnover is costly and disruptive, and the resulting strain on a company can limit its ability to compete effectively in today’s business climate. The United States Department of Labor estimates the cost of employee turnover at one-third of the annual salary of the newly hired person. Costs include lost productivity while the position is vacant, recruiting and screening costs, interview costs, training costs, and the cost of reduced efficiency as the new employee learns the job.
The first step in increasing employee retention is to understand its importance. Obviously, you cannot eliminate employee turnover completely; it is a fact of business that people change jobs. You can, however, reduce needless employee turnover by doing all that you can to make certain you hire the right person to begin with.
Just imagine how much damage a bad hire with one month’s job time can do versus the amount of business that a two-year veteran employee with a stellar performance history can garner for your practice. It is almost impossible to be too stringent with your employment requirements. My first hiring experience involved three applicants culled from a stack of a dozen or so resumes. I was told by management to pick the best of three. Today, when interviewing job candidates, the ratios are as follows: We receive 100 resumes, of which 60 are called on the telephone for brief interviews. Of those, perhaps 30 are invited to come to the office for an interview. Upon arriving at the office, these applicants are given two tests. Approximately one-third of these applicants pass the tests, leaving 10 applicants to be interviewed. For every 10 applicants that we interview, we are satisfied if one meets our criteria. The key here is not to hire the best of those interviewed, rather to keep interviewing until you have found the ideal candidate.
Eight steps to increasing employee retention:
- Be Sincere-Management must adopt the attitude that they will do what it takes to make their employees happy, and therefore, their employees will give them an honest day’s work and remain loyal to the company. Employee retention means employee happiness. You cannot have employee retention without having happy employees.
- Management Must be Supportive-Perhaps the most common reason for high employee turnover is what is viewed by the employee as unfair management. Managers must seem to support the needs of employees, while at the same time, they must be viewed as treating employees fairly. This does not mean that employees expect to be pandered to, but they do expect to be treated in a respectful manner. Many new managers take this need to be fair too far and direct all of their energies to accommodating employees and forget to discipline them when necessary.
Throughout years of interviewing multitudes of job applicants, I have found a few common traits that ring true for these applicants’ favorite managers. “Firm but fair” is the best description of a good manager. If an employee has erred, let the employee know he or she made a mistake but do not belittle him or her. A simple rule is “praise in public, chastise in private.” Many studies indicate that lack of respect and recognition is often the reason for leaving. Most employees, if they feel comfortable and valued, prefer to stay at their job, rather than look elsewhere.
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