To reduce turnover and increase retention, take a look at your employees’ happiness. Nancy Saperstone from Insight discusses how to create a great work environment from hiring the right people to ensuring they stay. Listen or read more to find out how to keep your employees happy.
John Maher: Hi, I’m John Maher. I’m here today with Nancy Saperstone, Senior HR Business Partner at Insight, a human resources and employee benefits consulting firm based in Massachusetts, with offices in Dedham and Beverly. Today we’re talking about reducing turnover and increasing retention. Welcome, Nancy.
Nancy Saperstone: Thank you for having me.
John: Sure. Nancy, we all know that reducing turnover is important, but can you talk about some of the reasons why.
Nancy: Probably one of the main reasons is for costs. There are couple different costs that go into turnover, when you have employees leaving all the time. The first is really the direct cost to recruit, hire, and train an employee. It’s hard to really quantify exactly what that number is, but there’s been a lot of research around what that number could be. It can range anywhere from $1,000 to $4,000 per employee, just to recruit, hire, and train a new employee. That’s a lot of money when you start thinking about just that one aspect of replacing an employee.
There are also a lot of indirect costs, which can include decrease in productivity because now the department is down an employee or two. Quality starts to suffer because they’re down employees. Deadlines might start being pushed back. Deliverables don’t get done. Employees really struggle to keep up. When you add those indirect costs along with those direct costs, you can end up really adding up to anywhere from 50 to 60% of an employee’s annual salaries, what the research is telling us. Putting it all together, there is a huge cost to turnover.
Also, the other big piece is that you lose a lot of historical knowledge. Again, that historical knowledge can start to break down productivity and quality, but it also starts to affect morale of your employees as well.
John: Right. You’re talking about the systems, how the business runs, all of the different details of how things have to happen — how you lose an employee that’s been there for 10 or 20 years or something like that. You lose a lot of that knowledge of how the systems work.
Nancy: How things work or client interactions in customer databases and information — what interactions happened? A lot of that may not be documented. Now, you have an employee who left and they walked away with that client contact.
John: Right. Then, if you have a period of time where you’re down an employee, like you said, the other employees start to feel overworked, maybe they have to put in extra hours to make up for it. Then they start to not be happy with their jobs, and then you could have a snowball effect where you lose even more employees and that wouldn’t be good.
Nancy: Exactly. It just ends up snowballing out of place, everybody’s unhappy.
John: What are some of the primary reasons that employees leave?
Nancy: There are two basic reasons. They’re either involuntary or they’re voluntary. Involuntary reasons why employees leave might be because you have to lay them off. There’s just not enough work for them, or it might be due to poor performance. That’s the company’s decision.
What we’re talking about here is really more the voluntary reason why employees leave. It’s more out of your control, although it really is in your control because you can do things to retain those employees. But, maybe they’re leaving because they’re going to move out of town. That type of reason might be more out of your control. But, maybe they’re leaving because they’re not challenged. Maybe they’re leaving because they have a bad manager or they have a bad work environment. Those are the things that we’re trying to really make an impact in trying to retain our employees. Ultimately, most voluntary terminations, they’re leaving because they’re unhappy about something.
John: Okay. A lot of people change jobs and that sort of thing, but how does a company know if they have a problem with turnover?
Nancy: Right. Intuitively, we kind of have an idea like, “Maybe we should take a look at this”. We should also look at the metrics and really start to measure that, so that you can make a determination over time where you have issues. You can track turnover, and there’s some easy ways to do this. Probably, the easiest way is to take the total number of employees you have that have left the company over a period of time, and divide that by the total number of people at the company.
For example, you have a full staff of 100 employees and over a year 10 people leave that would make your turnover 10%. You want to look at that and start measuring it year over year or month over month, quarter over quarter — whatever makes sense for you. Then, look at that and see if there’s any trends in your turnover and see if it’s an issue.
The other thing to do is — I would look at that if you know you have another department which you think has more turnover than another department. You might want to look at that by department. Not necessarily as a company as a whole, but maybe you’re going to look at your sales department, and your accounting department, your finance department. Whatever it may be, but look at where you might have issues and start to measure that and look at the trends over time.
John: Are there any baselines or standards, first by industry or by type of job or anything like that, that I might be able to figure out? Like, what a standard turnover rate might be? Maybe I just have no idea whether or not I even match up with other companies in my industry.
Nancy: There are some standards out there, but I think a lot of it’s going to also depend on the market, your employees, the job. There are standards, but I would rather look at it from your particular company and see if we can make determinations.
John: If I had a 5% turnover rate last year and all of a sudden it’s 15% this year, that’s more important?
John: How do I determine then, why employees are leaving? Because the reason why they’re leaving is probably one of the most important factors.
Nancy: The first thing to do is talk to your employees that are leaving. If they’re voluntarily terminating and they’re resigning, conducting exit interviews is one of the best ways to understand the reasons for termination. You can also talk to their manager and find out from their manager if there was anything that they might have come to the manager to talk about or a department head or whatever it may be. Again, if this is an involuntary termination, you’re likely not going to be able to get that exit interview information. If it is a voluntary resignation, typically the employee will talk openly with you.
The other big way to get it is through an employee engagement survey. That’s where you’ll survey your current employees. You can talk to them about benefits, compensation, work/life balance, their managers, the training they’re getting, their work environment, their opportunities. Talking to them and finding out what they think about those different topics will really help you see where there are pain points within the company that you might not have realized existed.
John: When we’re talking about retention, what are some of the reasons that employees leave, where we might be able to have an impact on that?
Nancy: I think there are a lot of reasons we can make an impact. Ultimately, really, I always think it boils down to: happy employees stay. We need to understand what makes employees happy and what makes them happy within our own company. There are a couple really ’employee wants’ that all employees feel like they want. That includes a good safe work environment. That’s been in the press a lot lately. Creating that safe environment.
Employees want a good boss. They want good coworkers. They want a place where they can come in and talk to somebody, and have some camaraderie. They want opportunities for growth and development. Challenging work. This is especially important for millennials who are really — they get a bad rap that everybody thinks they’re just jumping ship from job to job to job — but really, what they’re looking for is opportunity and challenging work. If we can create that for them within the company, then they’re going to stay. Really understanding what they want.
Employees also want work/life balance. They want recognition for their hard work, and that could be either through compensation, it could be through a reward program, through a bonus program, through incentives. There’s different ways to reward and recognize employees.
We mentioned camaraderie, but being a part of a team is really important especially I think workforces have changed over the last 10 plus years. We work a lot more in teams now. So, fostering that good team environment is really important. The other things that employees want are to be treated fairly. They want to feel like they’re being compensated fairly, that they have fair opportunities for growth and for promotions. That they understand the goals that they’re supposed to be achieving, and that they also have the resources to do their job. There’s nothing more frustrating than feeling like, “I just don’t have what I need to get my job done”.
The last thing is communication. Employees want to know what’s going on. That is that trickle down open door, old school communication — is so important. We can’t underscore how important communication is at all different levels across the company to make sure that employees know what’s going on. Know the direction of the company. Know what the company goals are. Know what their department goals are. Where they fit in. What the trajectory is. How the company is doing. The more you can communicate, you’ll find you’ll have happier employees.
John: What can we do as a company to help give some of those things to the employees that they’re looking for?
Nancy: Probably the first thing you can do is hire the right people. I think we sometimes get caught behind always making sure we’re doing right by our employees, but really the first step to that is making sure we get the right people in the job to start with. A lot of times we end up being in a situation where we’re down an employee and we have to hire somebody really quickly, so we just pull the trigger and hire somebody.
John: Right, the first person that you interview.
Nancy: That first person might be the right person, but understand what you’re looking for and what you need in that employee before you actually hire them, because bad hires lead to turnover. So, it’s really important to make sure you’re hiring the right person.
Then, once you’ve hired them to understand how you’re going to on-board them and assimilate them to your company. If you look at some of the data, it tells us that a good on-boarding program is going to lead to a more successful employee. Think about how you are training them on the day-to-day job. How you’re training them in terms of the basics, the administrative basics we sometimes forget about. Those frustrations can make a new hire very unhappy if they don’t know where to put their expense report, and how to get reimbursed for their travel or whatever it may be.
Think about how you’re training them, how you’re on-boarding them, how you’re introducing them to other employees, how you’re making them a part of that team. If you’re putting together a mentor program, what’s the right fit for them? Really making sure you have a smooth transition for your employees.
John: There’s been a lot in the news lately about the work environment, especially with harassment and things like that. How does that play into retention?
Nancy: I have ‘safe work environment’ down as one of my employee wants. That’s really been highlighted a lot lately. Employees deserve, and they want to be in a safe environment. It’s not just the right thing to do — it’s a legal thing to do. We need to provide employees with that level of safety. Provide them a good environment in terms of any threats, violence, harassment, or discrimination. Because if they’re not safe, if they don’t feel that safety, they’re going to leave. Likely if they’re leaving because of that reason, it’s going to be more than retention issues that you’re having — you’re going to have legal issues. It’s really important to make sure that we are providing our employees with a safe environment.
John: Is a big part of that making sure that they understand what the process is that they should go through if they feel threatened or something like that? To know that the higher-up people are not just going to push them away, but are actually going to listen to what their concerns are, that sort of thing?
Nancy: It’s important to do harassment training at all levels and especially for all new hires. Letting them know where to go if they do feel uncomfortable, if they feel like it’s a bad situation, who they can talk to, what the company’s philosophy is on it, and then the company then has to take action when they do have somebody who does raise a concern and not just brush it under the rug. But really take action, do an investigation, and take the appropriate remedial action if necessary.
John: You mentioned challenging employees, how do companies go about doing that?
Nancy: It’s important to really challenge employees. This is again, this is back to the millennials, but it’s not just the millennials it’s everybody that wants to be challenged. People really want to make sure that they have meaningful work. Busy work is a thing of the past. Everybody wants meaningful work. We can all do that, but we also maybe need to balance it if we need to with the administrative. If you have a job that is more highly administrative, how can you balance that and make it so that the employee does feel like they still are challenged despite having to get other responsibilities done.
You also want to encourage employees to be involved in decision making and empower them. In all different levels, that’s a way to really challenge employees and let them think for themselves. Let them take ownership, don’t micromanage them. Don’t be somebody who’s constantly on top of them and saying, “I need this now, I need this done”. Trust your employees to get things done. We live now in more of what we call a ‘results-oriented workforce’ where an employee is given a project and a deadline. It doesn’t matter when they get that done or how they get it done, as long as that gets done and it gets done on time, and it gets done well. Trust that your employees are going to do that and that you’re not going to micromanage them.
John: If an employee comes to you and says, “Hey, I think I have a better way to do this,” or “a different way to do this”, maybe encourage them and say, “Hey, give that a try, let’s see how it works for a couple of months,” or something like that. “If we like it, we’ll implement your system.”
Nancy: Right. Give them a chance to really make a difference. It is a great way to challenge them. Also, we talked about communicating with employees. Getting to know them. Understand what their career goals are. Understand where they’re looking to go. That will help you challenge them because now you know more about them, you know what they’re looking for.
John: As we challenge employees and we push them harder, what are some of the things that companies should watch out for?
Nancy: Probably the biggest one is making sure that you continue to be fair to them. Understanding the feedback program, and understanding how you’re going to let them know what their feedback is because employees think it’s not fair when all of a sudden they’re just taken off a project. Maybe it was — you tried that new way and it didn’t work, so we need to move on to a different situation. Making sure that you’re giving ongoing feed back to your employees, and not just the annual performance review, but also giving them ongoing feedback, compensating them fairly, giving them bonuses, giving them incentives.
Then also, celebrating group successes. We talked about teamwork and how it’s so important to have a team now. Celebrate those teams and get them to work together to help foster that work.
John: You mentioned communication in terms of feedback, but how important is it otherwise?
Nancy: Communication is important, not just when it comes to feedback, but it’s really going to be the pillar of a good work environment. So, again, making sure that you’ve talked about what the company is doing, listening to your employee concerns. Don’t keep employees in the dark. Tell them, “We like to report financials every quarter. It’s a great way to understand what’s going on”. Really the more you can give your employees in terms of communication, not just on their own performance, but the company performance, the projects, the direction, it’s going to help with the employees happiness and keeping them.
John: That’s a lot of information. If you had to leave employers with one key take away what would it be?
Nancy: My mantra is this, “Happy employees stay”. That’s the big takeaway for me, is to make sure that your employees are happy. Whatever you can do to make those employees happy is going to help them stay. It’s going to reduce your turnover. It’s going to increase your retention. Looking at it holistically from the employee experience: from the hire, to the on-boarding, to how you’re challenging them, giving them meaningful work, how you’re giving them feedback, how you’re communicating with them, how you’re rewarding them, how you’re recognizing them — all of that together is going to help make happy employees. Then, hopefully they’ll stay.
John: All right, that’s great advice. Thanks again for speaking with me today, Nancy.
Nancy: Thank you.
John: For more information visit InsightPerformance.com or call 781-326-8201.