Employee retention is the second part of the equation and if the first part isn’t done well, you won’t have to worry about it, there is no retention – it’s an automatic loss.
Employee Turnover Is Costly!
Let’s look at the contributing costs of not retaining an employee. A departing employee, assuming there is no severance pay, is not an out of pocket expense for the business there are multiple costs and huge amounts of time associated with a departing employee:
- Lost productivity during employment
- Recruiting costs incurred again in hiring a replacement
- Training a replacement
In addition to these tangible costs, there are intangible factors that can equally affect a company in a negative way:
- Morale of other employees
- Disruption of business
- Lost intellectual talent acquired during departing employee’s tenure
When you add up the numbers it can easily amount to tens of thousands of dollars in lost revenue and months or years of delayed progress in your business plan.
Find the right candidate
Finding the right candidate is easier said than done. It is more than posting a position on a job site or getting a referral from a current employee. The recruiting process and subsequent interviews are important factors leading to employee retention and should be taken with due diligence. The interview should be more than simply reviewing someone’s credentials and experience to learn if he or she has the requisite skills to adequately handle the assigned job responsibilities.
The “right” candidate is the person who not only has the required skills but also is the “right fit.” Can the candidate quickly adapt to the company culture? Will the candidate’s personality gel with current employees? Are the candidate’s moral values the same as others in the company? Multiple interviewers should talk with the candidate, ask probing questions, speak with references, and compare notes after the process is completed and before the candidate is hired. When the right candidate is found, it can be a home run for the new employee and the company…but to retain the employee for the long-term, more must be done.
Onboarding is more than just completing paperwork
Certainly, required paperwork is a necessity but a relatively minor function when compared with the critical importance of bringing a new employee onboard in the right way from the very first day of employment…even before the first day. Preferable onboarding steps that help ensure long-term longevity are:
- Complete paperwork before day one
- Make introductions and become acquainted with facilities
- Spend necessary time orienting new employee to company protocols and specific job responsibilities
- Don’t gloss over the “little stuff” that is important to the busines
- Stay engaged with new employee until comfort level is reached
The Departing Employee – Why?
Every new hire is thought to be a “home run,” but anyone who has ever had the task of hiring someone knows that is not always be the case. Although everything possible might have been done correctly during an employee’s tenure, there will be multiple reasons why someone resigns. This is an opportune time to learn for the next employee coming onboard.
Exit interviews can be as important as initial interviews. Why is the employee leaving, and what could have been done to retain the employee? Was the employee a good fit from the start? Were mistakes made in the hiring process? Important information can be obtained during the exit interview but is only valuable when shared with other hiring managers. The reason behind every employee leaving should be thoroughly discussed to determine what might be changed in the future to hire the right employee and retain that employee for the long-term.
Employee Tenure Is Valuable
While employee turnover is costly, the reverse is true for employee tenure. It not only reduces costs but also increases company efficiency. These two factors can add significantly to a company’s bottom line profit. Rather than hiring and firing or hiring and quitting, a business objective should be hiring and retaining.
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Source article comes from the Association of Accredited Small Business Consultants with contribution from John Hackley of Oculus Business Coaching consulting and coaching. Lighting a Pathway to Success!