Feature Stories - February 2006

Employee Retention

Turning the Tables on Turnover

by Doresa Banning

It is a frustrating problem that all companies face, but it impacts some more than others. It affects their bottom line and often causes them to lose business. It is magnified in Nevada and is predicted to worsen.

It is employee turnover.

In today’s business world and Nevada’s economy, companies must make concerted efforts to retain their employees. "It’s a matter of survival," said Greg DeSart, president of Las Vegas-based Geotechnical & Environmental Services, Inc. (GES). "A company that successfully retains employees is a company that’s going to be successful and survive."

Employers who successfully retain employees proactively work to keep their staff happy and minimize turnover. "People are a company’s most important asset," said Casey Shields, business development representative for the legal placement division of Volt Services Group, a staffing company. "Employees drive a firm’s initiatives and produce its revenue."

Employee turnover in Nevada is greater than in many other states because Nevada is growing so rapidly, while the unemployment rate remains low because numerous new job opportunities continue to arise. "People come here for that forty-niners feeling; they want to achieve and grow and they’re constantly looking for what’s ahead on the horizon," said Doug Geinzer, president of Recruiting Nevada, which operates a network of employment Web sites.

Workers today have different attitudes than those held 30 years ago. Today, staying at a job for two to three years is the norm, whereas in the past, people spent their entire careers at one company. Today’s world moves at a faster pace, too.

"People get bored easily and frustrated, and their first impulse is to leave that situation," Shields said. "People tend to give themselves raises by going from one company to another."

An upcoming demographic shift will amplify the problem. In the future, companies will have a shrinking work force from which to draw employees: 44 million gen-Xers versus 78 million baby boomers. All the available positions won’t be filled.

"Employee retention will be even more important," said Doug Beckley, chief executive officer of The Beckley Group, a firm providing customized training and management consulting. "You’ll have to work harder to hire better and treat your employees well."

Why Bother?

Employee retention first and foremost saves companies money. "The cost of replacement is much higher than that of retention," Geinzer said. Experts estimate the cumulative cost of replacing an employee to be anywhere from 30 to 100 percent of his or her annual salary. If a company loses an employee with a $50,000 salary, it will spend between $15,000 and $50,000 to replace that person.

Those costs include time and money spent on administrative functions related to termination, advertising, screening applicants, verifying credentials, checking references, interviewing, hiring, training and dissemination of information to new hires. Companies often spend money on separation/severance pay, increases in unemployment compensation and – for replacement employees – travel/moving expenses and medical exams.

Less obvious costs result from decreased productivity, lost knowledge, decreased morale among co-workers and frustrated customers, which can result in lost business. Retaining employees ensures consistency and continuity within a company. Morale and customer service remain constant and productivity does not suffer. "Oftentimes, the full impact of a person leaving isn’t felt until months later," Shields noted.

"Turnover breeds turnover," said Katie Weigel, branch manager for Robert Half International Inc., a staffing firm. "If people feel that their peers are not committed, they are less likely to be committed themselves."

For GES, employee retention is so important that retaining the best people is part of the company’s three-pronged business approach, along with meeting customers’ needs and making a reasonable profit.

Strategies

"Companies typically are aware that turnover is a problem, but they’re usually unaware of how to fix it," Beckley said. "It begins with hiring. Oftentimes when you have a problem with turnover, it really can be traced back to a bad hire to begin with."

For whatever reason, managers and owners often shorten the hiring process, accepting the first qualified person who applies, rather than taking the time to find a strong job match. "The paradox is that when they shortcut the process, they’re back doing the same process months later," Beckley said.

Experts agree employers need to spend more time on the front end of screening and assessing. They need to take a hard look at the job requirements and scrutinize each applicant’s personality, experience and skills to find the person who best fits the position. For example, an applicant who prefers working at a slower pace will not do well in a fast-paced environment. Additionally, it’s essential that the person enjoy the type of work he or she will be doing. Employers can utilize assessment tests to aid in the process. Tests can measure applicants’ character, personality and competency. "If a manager is doing a good job of interviewing when applicants come in, they’re going to know what makes each candidate tick," said Weigel.

In addition, employers need to empower their employees, making them feel and act like partners in the business. There are various ways of achieving this:

? Control less and coach more. Provide resources, direction and training to get employees to a point where they can participate in setting goals, solving problems and making decisions. "When they’re at that state of empowerment, they’re creating their own work environment," Beckley said.

? Share information with employees. "People need to be clear about what’s happening," Weigel said.

? Make employees feel like they’re part of a team. "When people feel like they’re a part or they belong to something, they tend to work harder, try harder and stay longer," Shields said.

? Provide a comfortable, friendly environment. Promote group activities, such as lunches, competitions, barbecues, etc. to build rapport among the staff. "Make it a place that people want to get up and go to every day," Weigel said.

? Challenge employees. Find out what workers are capable of and give them as much responsibility and challenge as is reasonable. Encourage them to acquire new skills and training and to advance. "Under-utilizing people is a huge mistake companies make," Beckley said.

? Know what motivates your employees and give it to them. For most, it may be recognition that they’re making a difference. Recognition can be accomplished with rewards or something as simple as a pat on the back. "A simple thank you and a showing of gratitude goes a long, long distance," Geinzer said.

? Other employees may prefer benefits and perks, which should complement competitive wages. They may range from health benefits to babysitting services. Some employees want flexible schedules, cash bonuses or more time off. Even non-traditional perks are a good idea, such as allowing employees to bring their dogs to work or having an on-site concierge who handles personal tasks for employees.

"Extra perks and benefits are essential," Beckley said. "The important thing to remember with those kinds of non-monetary rewards is to make sure they are what your employees want."

? Get employee feedback. This can be done through suggestion boxes, surveys, exit interviews, employee reviews or less formal methods. "Employees have to feel comfortable communicating upward about issues," Shields said.

Surveys should ask what employees like and dislike about the company, what they would change if they could, what kinds of benefits they want, and more. Exit interviews should determine why a person is leaving and whether he or she would recommend the company to someone else. "If you take the time to look at your employees as peers rather than in a dictatorial manner, you will understand their driving factors and what makes them happy," Geinzer said.

? Listen to employees and act on their input. When employees see leadership listening to them, they feel important.

? Create new ways to retain employees. For example, GES has created a program in which it selects entry-level people, trains them for three months in-house and selects for hire only the ones who demonstrate leadership ability, integrity and skill. Hired employees tend to be enthusiastic and more loyal. "Instead of getting one or two applicants, we get 50 or 100 applicants," DeSart said. "We then have the luxury of having a choice. We hire the people who have a great attitude and fit in."

? Have a succession plan in place for key positions. Don’t wait until a key employee leaves to figure out how to handle it. Plan ahead.

What Successful Retention Says

"If a company’s turnover is above average for its industry, it usually means deeper and more significant problems exist within, such as bad leadership or a hostile or unpleasant work environment," Beckley said.

When businesses successfully retain their employees, it typically suggests the company-employee relationship is strong, company performance is better than average, leadership is asking questions, listening and implementing solutions and the company is a preferred place to work.

"The better place it is to work, the easier it becomes over time to bring in more people when needed," said Tina Grefrath, manager for Nevada JobConnect, which provides workforce development services.

Doresa Banning
Doresa Banning is a freelance writer based in Northern Nevada.