Retaining good employees takes time, money and energy, but losing them is even more costly – costing a company as much as 20% of an employee’s annual salary to replace them, according to Paul Petrone in his LinkedIn article “How to Determine if Your Employee Turnover is Recruiting’s or HR’s Fault (And How to Fix It).”
Petrone explains that losing employees happens for one of two reasons:
- You’re hiring the wrong people.
- You’re lousy at keeping them.
The first step toward fixing the problem is determining why you’re losing good employees. Petrone points out if people are leaving because of the company’s culture or you are firing them because they don’t have the skills to do their jobs, then you’re hiring team isn’t selecting the right candidates. If either of these things is happening, your company will see the following patterns, says Petrone:
- Low short-term retention. If employees are leaving the company within six months of being hired, they don’t fit the company culture, or they aren’t qualified to do their jobs.
- People leave your company to make a lateral move elsewhere.
- High termination rate. If your company is firing more than its share of employees, it is not hiring the right candidates.
If hiring the wrong people is the problem, here are three suggestions to improve:
- Be candid about your company’s culture when you interview candidates.
- Improve your screening process by changing your interview style, and trying one with more structure to yield more useful information.
- Consider raising the bar in terms of a position’s qualifications, so you aren’t attracting lesser qualified candidates.
If you are experiencing high turnover because employees are leaving for better opportunities or reasons not related to the job itself, then retention might be a human resources issue. Warning signs include:
- People fitting into certain demographic categories (e.g., new parents) routinely leave the company.
- People leave for companies where they are doing similar work, but where they will have seniority over others.
- Employees are less engaged the longer they work for you.
If you determine that the problem is a human resources problem, here are some ways to improve retention:
- Provide a career path to give employees opportunities to grow within the company.
- Review your compensation and benefits packages. Are they similar to those of your competitors, or are your compensation packages falling short? Look at Netflix, for example, which now offers unlimited parental leave for new parents. That sets the bar pretty high, and creates an expectation that other companies will offer similar benefits. Look at what you can realistically offer, keeping in mind that replacing employees is costly.
- Take time to recognize and appreciate your employees for their hard work and achievements. Make time to engage them and to provide opportunities for them to work as a team.
So how you determine where the problem starts and what you can do about it? Follow the suggestions above, and schedule exit interviews with candidates when they leave the company to find out why they are leaving. This will give you important feedback to help you with future hiring and retention practices. It also gives the company the opportunity to leave a positive impression on the employee before you part ways.
Thanks to Paul Petrone for the great advice, and thanks to YOU for reading!
Have a great week,
Diana Albertson, CEO