Kathbern Management, in our role as a Toronto-based senior management recruiting firm, helps companies find great people to enable them to grow and prosper. We simplify the process and, through our deep research, are able to bring more and better candidates forward than would ever be possible through a do-it-yourself passive advertising campaign.
BUT …….. what is the point, if a high turnover rate is draining away good employees as fast as they can be found and hired?
Our informal opinion is that the breakeven point for companies to recover the cost of hiring, training and general disruption is about 2.5 years for a new employee. For more senior employees, the breakeven point is longer and the disruption caused when they leave is greater.
Employee turnover can be costly to any organization, and it’s important to make sure that employees want to stay with your company for a long time. As millennials continue to enter the workforce, gone are the days when people stay at one organization for life, however, nudging the average employment period up will reduce expenses considerably.
So, how do you entice your star employees to stay?
At the core, you want to make sure your employees feel happy, fulfilled and embrace the company’s goals as their own. By providing them with the right opportunities, challenges, compensation and ways for them to provide feedback, you can have a productive environment where people want to stay long-term. Some companies do better than others at reducing turnover, so start with these tips to put your organization at the head of the pack.
- Measure, Measure, Measure
Measure and report turnover stats monthly. If you don’t know where you are, you can’t very well make it better or chart your progress. Measure turnover rates on an annualized basis. Compare to several prior years and measure turnover for all employees AND also by major job category in your company (i.e. sales, administration, technical). Sales typically has the highest turnover naturally, and technical roles the lowest, but watch for unusual changes that could be a red flag.
Read More: A Cookbook for Building a Sale’s Powerhouse
- Have a Clear Vision (and Communicate It!)
Employees aspire to more than just the numbers (the company’s numbers or even their own compensation). You have to have a vision of what your company is all about and then you want your employees to understand what they’re working towards. A company vision is a mantra, perhaps best expressed as a one-line value proposition that is meant to inspire all employees and communicate the message externally as well.
Creating a strong vision, together with a mission, values and core beliefs, will strengthen the pride your employees feel in coming to work every day.
- Build a Sustainable Culture
Flowing from the vision, mission, values and core beliefs is the creation of a sustainable and predictable culture that might be expressed as “This is how we do things around here.” Creating a positive company culture can take a very long time but positive results should start to be evident as soon as you start. The type of culture that you might try to create is often determined by the type of employees and type of customers that you are trying to attract.
- Aim to Create Job Satisfaction (Measure with Surveys and Exit Interviews)
When a clear vision is in place and a sustainable culture exists, then meaningful jobs can be created for individuals which will give them job satisfaction. How will you know if job satisfaction generally exists? The best way is, again, to measure it. Job satisfaction surveys can be simple or elaborate. From our own experience, the real benefit from surveys is the group discussion afterwards (maybe 2-3 weeks following the survey) where the 5 or 6 major themes or issues can be put on the table for discussion by an employee group and management can take away their concerns and then feedback later on an action plan. Employees feel they have been heard through this process and that is often the most important thing.
Another part of measuring job satisfaction is to conduct exit interviews. When any employee leaves the organization for any reason, an interview with them should be conducted following a standard script. Consideration should be given as to who should conduct that interview, however a good idea is for that person to be the “manager once removed” or their boss’ boss (two levels up).
- Create Opportunities for Growth & Challenge
In a previous article in this series (refer to: What Do You Mean Money Isn’t Everything?), we talked about the fact that employees are always happy to get more money, but feel even more fulfilled with their job when they feel like they are growing, learning, and being challenged. In fact, without satisfaction in these other areas, good compensation alone will not be sufficient to reduce turnover. To do this, make sure your employees at all levels have a path to personal growth.
Here are a few examples:
Training: Host workshops, lunch and learns, and offsite training for your employees so they can get inspired and become even better at their job.
Tuition assistance: Regardless of the industry, offer to cover all or part of continuing education courses or skills courses that might be required, or might just help an employee reach their future goals.
Mentorship program: Pair up more senior managers with people on the front-line or in supervisory roles. They can help guide employees and see that they are supported with whatever route they wish to pursue.
Shadowing/Job swaps: If an employee wants to dip their toe into another side of the company, let them! Keeping talent but shifting them to another department is a lot more valuable than losing talent to a competitor. Show your employees that you support job growth, even if it means in a completely new position.
- Insist on Management Styles that are in Sync With Your Culture
Dysfunctional managers are the number one cause of turnover. You can’t afford to have managers that employees don’t want to work for and won’t support. Managers who struggle to manage their teams in a manner that is keeping with your culture and your values should be coached towards improvement or dismissed.
- Ensure that Your Compensation Policies & Working Conditions are Competitive
First, take the pulse on what employees at other companies in your industry are being paid and compare that to how you’re paying your team. Then decide what your strategy is with respect to compensation. Are you aiming to be in the 90th percentile, 50th or 25th? There is no wrong answer but that decision is logically tied to your strategy in the marketplace. Are you the premium service provider, in the middle of the pack or the low cost, high volume provider?
When considering compensation-related items, be sure to include:
The most basic form of compensation. Be sure to have a job grading system in place and a formal rationale for how individuals are paid within that system.
• Share Option / Share Purchase Plans
Suitable only for public companies and most often used at senior management level, but they can be more widely implemented as well.
• Incentive Programs (Bonuses and Commissions)
Most frequently used for sales positions, incentive compensation can also be a valuable part of every employee’s compensation, as long as the program is carefully and thoughtfully developed. Do your research, see what other companies are doing, and get the ball rolling on setting up your own incentive program (refer to: “5 Ways to Make Your Incentive System Work Better”). Also, avoid the pitfalls regarding incentive systems.
Read More: The Unintended Results of Poor Incentive Design
Employees want to feel valued, and perk programs are one way to ensure your employees feel like they’re important to the company. These programs can be things such as company-branded products, earned vacation, points to buy items, fitness memberships, etc.
• Benefits Packages
A wide range of possibilities exist here. Consult a professional benefits broker to explore the options to fit your budget.
• Vacation Time
Include this as part of your compensation survey to be sure that you are not too far off the trend for your industry.
• Work/Life Balance
In order to reduce turnover, you want to make sure your employees aren’t burning out. With many families having two adults working outside the home, managing family life and managing their work lives can be stressful. Flexible schedules (and occasionally working from home) can go a long way to winning the support of employees with families.
Reducing Turnover Can Be Done
Start with the big picture (vision, mission, strategy) and then build a formalized structure to support the big picture. Survey employees to see how they’re feeling about the company, and then take that feedback seriously. When employees leave the company, conduct exit interviews. Focus on the feedback from these sources and investigate the things that are shared. Listen – and then act!
Kathbern Management is a Toronto-based executive recruiter focused on working with organizations who are seeking to find and hire the key people who are critical for their success.
Contact us today for a free consultation about your key person search.