Proven Strategies For Having Employees Work For You For Long
As an HR consultant, your job normally involves reviewing HR strategic plans and systems of small to medium size companies, then making recommendations on how to improve. Most of the companies you work with do not have large HR departments, and they find it less expensive to hire you than to hire a full-time person. Your current client, Pacific Books, is a small online retailer with forty-seven employees. Pacific Books has had some challenges, and as the economy has improved, several employees have quit. They want you to look into this issue and provide a plan to improve retention. Pacific Books currently has just one person managing payroll and benefits. The individual managers in the organization are the ones who handle other HR aspects, such as recruiting and developing compensation plans. As you speak with the managers and the payroll and benefits manager, it is clear employees are not happy working for this organization. You are concerned that if the company does not improve its employee retention, they will spend an excessive amount of time trying to recruit and train new people, so retention of the current employees is important. As with most HR issues, rather than just guessing what employees want, you develop a survey to send to all employees, including management. You developed the survey on SurveyMonkey and asked employee satisfaction questions surrounding pay and benefits. However, you know that there are many other things that can cause someone to be unhappy at work, so to take this survey a step further, you decide to ask questions about the type of work employees are doing, management style, and work-life balance. Then you send out a link to all employees, giving them one week to take the survey.
When the results come in, they are astounding. Out of the forty-seven employees, forty-three selected ―dissatisfied‖ on at least four or more areas of the five-question survey. While some employees are not happy with pay and benefits, the results say that other areas of the organization are actually what are causing the dissatisfaction. Employees are feeling micromanaged and do not have freedom over their time. There are also questions of favoritism by some managers for some employees, who always seem to get the ―best‖ projects. When you sit down with the CEO to discuss the survey results, at first she defends the organization by saying the company offers the highest salaries and best benefits in the industry, and she doesn‘t understand how someone can be dissatisfied. You explain to her that employee retention and motivation is partly about pay and benefits, but it includes other aspects of the employee‘s job, too. She listens intently and then asks you to develop a retention and motivation plan that can improve the organization.
7.1 The Costs of Turnover
According to the book Keeping the People Who Keep You in Business by Leigh Branham, the cost of losing an employee can range from 25 percent to 200 percent of that employee‘s salary. Some of the costs cited revolve around customer service disruption and loss of morale among other employees, burnout of other employees, and the costs of hiring someone new. Losing an employee is called turnover. There are two types of turnover, voluntary turnover and involuntary turnover. Voluntary turnover is the type of turnover that is initiated by the employee for many different reasons. Voluntary turnover can be somewhat predicted. Involuntary turnover is where the employee has no choice in their termination. For example, employer initiates the termination due to non-performance. Turnover rate can be calculated by: separations during the time period (month)/total number of employees midmonth × 100 = the percentage of turnover.For example, let‘s assume there were three separations during the month of August and 115 employees midmonth. We can calculate turnover in this scenario by: 3/115 × 100 = 2.6% turnover rate.
This gives us the overall turnover rate for our organization. We may want to calculate turnover rates based on region or department to gather more specific data. For example, let‘s say of the three separations, two were in the accounting department. We have ten people in the accounting department. We can calculate that by: Accounting Dept.: 2/10 × 100 = 20% turnover rate. The turnover rate in accounting is alarmingly high compared to our company turnover rate. There may be something happening in this department to cause unusual turnover. In HR, we can separate the costs associated with turnover into indirect costs and direct costs. Direct turnover costs include the cost of leaving, replacement costs, and transition costs. Indirect turnover costs include the loss of production and reduced performance.