Do you know the cost of turnover for your organization? Experts say that the cost ranges from 50% to 400% of base salary. So, for an employee making $10.00 per hour, it could mean $10,000 -$80,000! Regardless of the exact number, it’s a hardship on any organization to budget for and plan accordingly when turnover is high.
Having the right “systems” in place for hiring and retention strategies can make or break the bank. Implementing a thoughtful approach when addressing the who, what, when, where and how of those systems can cut unnecessary costs, increase productivity and develop engaged employees who want to contribute to the success of the organization.
Start with a strong baseline with respect to compliant practices. From there, hiring the best people with the right cultural fit should be a priority. While you can train certain skills, the person must have the capacity for learning, the drive to perform the work, and an interest in serving your customer at an optimal level.
Next, have a strong team in place responsible for bringing new colleagues on board. Then, ensure retention strategies are in place and the efforts are owned by the appropriate parties.
Easier said than done?
While many organizations haven’t considered all points below, the following serve as a quick check of the organization’s hiring and retention philosophy:
- Are all interviewers trained to ensure potential candidates are evaluated correctly?
- Does the organization utilize appropriate assessment strategies to determine fit, capability, etc.?
- Is a measurement of integrity, reliability, work ethic, attitudes towards drugs and alcohol taken?
- Are references being thoroughly reviewed and vetted?
- Does the job description thoroughly outline the responsibilities of the role to ensure expectations of the candidate are managed?
- Are new employees welcomed into the organization and left with an ideal first impression?
- Who is responsible for new employee development?
- Are employees rewarded appropriately with regards to compensation and benefits?
- How is career development managed for all employees?
- Does the culture fit the organization?
- Are interviews of current employees utilized to “check the pulse” of those who are retained?
- Are metrics used to evaluate engagement of employees? Followed with action items and/or communication?
Just having an answer to the above questions isn’t necessarily the optimal solution. While not having the appropriate investment in the people conducting your business can mean a hit to your business and customer base, not to mention the potential expenses, the proper investment of resources into these systems can drive your business results toward excellence.
Now, let’s go back to the math. For an organization with 250 employees and a 40% turnover rate, the overall cost of turnover could be in the millions. Improving hiring practices and retention strategies could be the million dollar solution.
Kelley Helgeson, SPHR, EMBA is a Principal Consultant with MCM LLP’s HR Advisory Services. She is an HR leader with extensive experience creating and leading HR programs, developing strategic alliances, and establishing herself as a business partner serving a variety of industries. Kelley will speak at the Academy’s Spring conference about HR related topics.
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