A resource for safe and effective tips to help prevent staff turnover from the leaders in simulation training.
Greetings, Troubleshooters! Thanks for tuning in once again to Troubleshooting Thursdays. Today on TST we’re talking about your staff churn rate, also known as staff turnover.
Here’s an interesting factoid to get things rolling: in May 2018, the US quit rate (the proportion of people quitting their jobs) reached the highest level since 2001. On one hand, that’s good news, because a high quit rate is a sign of optimism about the economy, since workers are confident they can find a better job.
On the other hand, it’s not great news for employers, because that’s their talent walking out the door.
What is turnover?
At its most basic, staff turnover is simply employees leaving their jobs. But it helps to distinguish between two kinds of turnover: voluntary and involuntary. Involuntary staff turnover includes an employee being dismissed for poor performance or laid off, for example. In other words, they aren’t leaving of their own volition.
Voluntary staff turnover is when employees decide themselves to leave their jobs. Voluntary staff turnover can be functional (as in the case of poor performers or people whom it is easy to replace) or dysfunctional (harmful to the company because these are high performers or difficult to replace).
It’s the dysfunctional voluntary staff turnover that we’re talking about today, and that hurts employers.
Staff turnover is costing you
The reason this matters is that staff turnover is costing your organization money and productivity.
Josh Bersin, a global industry analyst specializing in HR, says that an employee’s economic value to a company grows over time. The early part of their employment is the time when the organization is investing in them, onboarding, etc. As time passes, though, the employee begins returning value to the organization, as training kicks in and they are able to take on new tasks and greater responsibility. In this way, their value to the company increases over time. Bersin also notes that highly engaged employees who receive recognition and are able to develop in their role return even greater value to the organization.
So, if an employee leaves a few months after onboarding, that’s bad, because the company has only been investing in them, and hasn’t gotten any real return from them. It has been a one-way street. And if they leave after a few years when they have become exponentially more valuable, that’s also bad, because it represents a significant cost to replace the value lost when they quit.
The Society for Human Resource Management (SHRM) says that replacing an employee can cost as much as 200% of their salary plus benefits. That’s an astonishing number. But it includes HR staff time, manager’s time, accrued paid time off, temporary coverage, delays in production, lost clients, disruptions to team-based work, disruptions to customer service, retraining—and all of this costs money.
Staff turnover also affects the overall success of your organization. It affects morale, sales growth, profitability and market value. When employees with social capital (i.e., popularity and influence) leave, it can dramatically affect a business’s performance by affecting the morale (and job performance) of the staff who remain.
At a time when the skills gap is a huge concern and skilled workers are being poached by the competition, companies need to take steps to stop the hemorrhaging.
How to reduce staff turnover
Obviously, you can’t completely stop dysfunctional turnover, but you can definitely take steps to reduce it and all of the downside associated with it.
To understand how to reduce turnover, you need to know what causes it. It turns out it’s more than just compensation, so just throwing money at the problem in terms of higher wages or salaries won’t necessarily solve the problem.
A lot of study has gone into this question, and there are several theories, such as the theory of organizational equilibrium, which basically says that an employee will remain with a company as long as the benefits to that person (pay level, developmental opportunities, working conditions) are greater than or equal to the contributions the employee makes (such as time and effort).
Career development is key
So developmental opportunities are as significant as pay in retaining your talent. Josh Bersin also notes that younger employees (such as Gen Z or Millennials ) are increasingly focusing on greater opportunities for career growth, which is important because by 2025, 75% of the workforce will be Millennials.
SHRM analysis indicates that low job satisfaction and lack of commitment can lead to an employee leaving (and even before that, they can lead to pre-withdrawal behavior such as absenteeism, apathy, and poor job performance). Job satisfaction is increased by a sense of achievement and career trajectory.
Come up with a plan
According to SHRM research, 53% of organizations have some sort of “talent management” strategy in place, and 76% of them say it is a top organizational priority. A talent management or staff retention plan requires analyzing who is leaving, how many are leaving, and the costs involved, and deciding whether staff turnover is hurting your organization. If it is, you must find out why they are leaving, through exit interviews, surveys, focus groups, etc. Then you must come up with retention strategies tailored to your circumstances. After implementation, it’s important to regularly evaluate the success of the strategies.
Training is cheaper than turnover
Although there are several other drivers for turnover, such as pay, working conditions, and management, job satisfaction is repeatedly listed among the motivating factors for staff churn.
Ongoing career development programs, including upskilling training, can help staff feel greater self-esteem, feel like they are moving ahead in their life plan, more appreciated and more valuable, which contributes to overall job satisfaction. Upskilling and other training programs certainly cost less than replacing employees, and can boost job satisfaction to retain your valuable talent.
These days, employers need to pull out all the stops to prevent talent from walking out the door, so be sure to make training and upskilling part of your staff retention plan.
Okay, Troubleshooters, that’s all for today! Tune in next week when we take a deep dive into your OEE (overall equipment effectiveness), an important metric in plant reliability.
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