Four ways to tackle high turnover

Every organization wants a productive team. But when flawed hiring processes lead to the wrong people being hired, high turnover follows—and it comes at a high cost.

A study by the Center for American Progress reports that the median costs of replacing an employee are estimated at more than 21 percent of the employee’s annual salary. Some estimates go even further, suggesting the cost can be as high as 400 percent of the employee’s salary, depending upon the employee’s position and level.

With so much at stake, hiring the wrong people is a mistake you can’t afford to make.

Lay a foundation of trust 

The goal of every organization should be to retain every high-performing employee. High performers who leave too soon will force you to start over, and this constant churn can feel like being on a hamster wheel.

While it’s challenging for busy managers to make time to engage with teams and build good rapport, it’s essential for resolving turnover issues.

Here are four strategies your business can implement to minimize turnover and focus on investing in dedicated, talented people.

1. Tap your best people for the hiring process. Most leaders don’t know how to improve their recruiting efforts. When interviewing candidates, include the people who know the job—unlike managers who want to fill a hole, these people will assess whether they want to work alongside the candidates. Team members who will work with the new employee can be trained to use behavior-based interview questions that probe not only for experience, but also for character and attributes. Those who know the job inside out are the most capable of identifying the best candidates.

2. Provide new hires with the information they need to succeed. How an employer handles the initial weeks and months of a new employee’s experience is critical: Studies show that the first 90 days of employment are key as new employees establish relationships with management and colleagues. New hires should be brought on using a strategic and engaging onboarding process that introduces the company’s policies and procedures for getting things done, as well as its culture. Unfortunately, companies often confuse onboarding with training. An effective two-way onboarding process significantly affects employee retention by ensuring people are brought up to speed on the job skills and internal knowledge they need to be productive.

3. Maximize the manager’s role. If you’re experiencing high turnover, the root cause is most likely bad leadership, according to Gallup research. At HPWP Consulting, we frequently see leaders functioning below their pay grade, overwhelmed by the demands of daily operations and unavailable to develop and coach their teams. Additionally, weak leaders don’t address employees doing the bare minimum; this not only impacts productivity, but it also affects the morale of good performers, who end up doing more. A good employee won’t put up with a bad leader for too long.

4. Focus on retention strategies. Stay interviews are 20 or 30-minute discussions—between managers and direct reports, ideally—that offer a tangible way for leaders to show they care about employees and value their contributions. In addition to alerting leaders of people with significant concerns (an early warning of quitting), stay interviews offer intervention opportunities before high performers become turnover statistics. After discovering what employees appreciate about a company’s processes, culture, and leadership, these areas should be strengthened, celebrated, and reinforced by leaders.

Value performance over statistics

Jack Welch, former General Electric CEO, is widely quoted saying that the bottom 10 percent of his organization needed to be replaced every year.

Some have concluded that 10 percent is the “golden turnover number” that every organization should aim for, and a recent article about Amazon’s culture called this type of annual culling “purposeful Darwinism.”

HPWP doesn’t believe in a “survival of the fittest” model of management. When a company strives for 100 percent performance, magic numbers become irrelevant.

Rather than worry about the “golden turnover number,” companies should encourage, support, and develop employees. High performers will stick around only if they feel valued and can trust their managers. There may not be a hard number attached, but this formula is proven to reduce turnover and increase innovation.

Photo credit: Lauren Kallen

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