Business Problem: High Employee Turnover

A common problem in many organizations. Employee turnover is very costly to any organization. Keep in mind that employee turnover is generally the result of more than one factor. Follow these steps in assessing and dealing with this problem:

1. Ask the employees how they feel about working for the organization. This can be accomplished in several ways, but anonymity is often important because employees often fear retaliation from superiors or peers. Keeping this in mind, it is best to conduct an anonymous survey of the employees. You will want to assess how they view the organization's working environment, their superiors, communication, perceptions about how they feel they are valued by the company, benefits, compensation, attitudes toward company policies, their comfort level with their peers and with their current position as well as other factors specific to your organization. Carefully plan your approach to carrying out the survey process. Employees must feel that they can speak their minds, so to speak. If they don't, the results will be less meaningful. Compile the results and take them seriously. Don't dismiss the results as inaccurate and don't let your ego get in the way of taking the results to heart. If there are issues that really stand out, deal with those first. Prioritize them based on the apparent severity of the problem based on responses to the survey. Methodically develop a plan for dealing with the problems and communicate that plan to employees. The worst thing you can do is conduct a survey to seek input on employee satisfaction and then do nothing with it.

2. Assess your compensation structure relative to your market. If you are paying employees below market wages, the likelihood of employees leaving increases dramatically. While money is probably not the key motivator for employees, they do expect to be paid fairly. That is a given in their minds. Market data is available from a variety of source, but be careful which sources you use. You would be well advised to hire a firm that specializes in compensation work to provide you with the information needed by type of position. If you find you are not meeting market pay scales, develop a plan to get there or beyond. What you spend to get there should be offset by reduced turnover and less "moaning" about wages, therefore productivity should increase if only slightly. Don't underestimate the amount of time employees spend complaining about various things. Don't give them a reason to sit around and complain about their wages relative to the market you operate in.

3. Determine how well employees are suited to the jobs they hold. Almost without exception, the key factor in employee turnover can be traced to ineffective hiring and promotion practices. All too often employees simply do not match the jobs they hold in terms of their intellect, what interests or motivates them and their personalities. In other words, too many employees just are not cut out for the jobs they currently hold. This sets the employee up for failure and certainly impacts the performance of the business. Look at your hiring process. Is sufficient effort really being put into it to determine how well someone will match the job being hired for? What criteria are you using to hire people for various jobs? If your number one criterion for hiring boils down to knowing something about the type of business you are in, this is a prescription for trouble. You can teach a bright person your business. You can't teach them intellect, to be interested in what they do or change their personality. These factors are really the keys to how well someone matches a particular job. Structure employment searches to find people who have the appropriate level of mental ability, a strong interest in doing the type of job being filled and a personality well suited to that job. While it is nice to find someone who has experience in your industry, this should not be the primary factor in hiring. In fact, someone who matches your job well in terms of the factors mentioned above with virtually no experience in your type of business will almost always outperform someone with experience in that industry, but who is a poor match for the job. This requires a shift in thinking in many organizations. Too many owners and managers get hung up on finding people who know their business. Again, bright people can learn your business relatively quickly. Don't get caught in the "my business is unique or complex" trap! When promoting people, you should look for people who match the job being promoted into. Every day we see people who were high performers in one job being promoted into jobs they have little chance of being successful in because they don't match the job. There are several good to excellent assessment tools that help match employees to jobs that can be used in the hiring and promotion process. These tools are critical in augmenting your decision process in hiring and promoting employees. For more information on these tools, see Assessments on this web site.

4. Look at your turnover statistics. Is turnover higher in certain work units, departments or divisions? If so look more closely at the makeup of those areas. Often there is a problem with a manager or supervisor in terms of how they deal with their employees. Or it could be a peer who is a problem employee but is not being dealt with by management. Is your work environment in those areas conducive to a pleasant, productive work day?

5. Overall culture of the organization has a lot to do with employee satisfaction and turnover. What kind of atmosphere exists within your company? Is it pleasant, productive and light or is it heavy handed, gloomy and generally unpleasant? Employees need an environment where they can thrive and feel good about coming into work. By the way, it's ok to introduce some fun into the work day. Take an objective look at your environment.