Turnover can have a significant impact on a company’s bottom line. While the cost of turnover varies from company to company, experts estimate that the loss of an employee can range from 30 to up to 150 percent of that person’s salary.
Unfortunately, most organizations do not have a formal retention strategy to address this key business issue. Instead, they approach retention on an as-needs basis, rather than develop a comprehensive, coordinated and preventative strategy.
Before the problem of retention can be addressed, you need know where the problem exists. The first step toward developing a retention strategy is to quantify and measure turnover rates for the entire organization, including specifics for each department and supervisor.
The second step is to analyze the competition. What companies are competing with you for employees? Do your organization’s compensation package, working conditions and reputation match or exceed those of your competitors?
Since the relationship between supervisor and employee is a vital factor in retention, the strategy should also include a plan for selecting and developing leadership talent. Most people who become supervisors never receive training on managing employees until they are in the job for a significant amount of time or in some cases, not at all. One of the key measures of supervisor performance should be employee satisfaction and turnover.
Additionally, companies should examine management policies and practices and determine their impact on turnover. Sometimes policies and practices developed in prior years are no longer applicable in today’s work environment. Workers today are more concerned about work-life balance, and corporate policies should help employees achieve this goal.
The more positive the work environment, the higher the retention rate. Most organizations spend more time criticizing and reprimanding than they do praising and recognizing.
Workers who are emotionally engaged in their work are less likely to want to change jobs. A good retention strategy addresses each employees need to understand his or her importance to the company and its mission.
Finally, the strategy should establish open communications based on trust and integrity throughout the company.