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Why Your Employee Retention Is Worth Millions
According to a recent survey by Paycor, 61 percent of CFOs do not think HR impacts the bottom line in their organizations. Another 43 percent of businesses surveyed don’t track how much it costs to hire a new employee.
As a manager or HR rep, you might want to rip your hair out after hearing those statistics because you know how important recruiting and HR are to the overall health of a business.
You might not change the C-suite or a business owner’s mind overnight, but there are a few strategies you can employ to help executives understand why they should care about employee retention.
Engagement, Retention, and Profit
A CEO, CFO, or small business owner might not care about employee engagement, but they will care about how profits are impacted when employees leave. It’s HR’s job to help them see that employee engagement and employee retention and directly related.
You can do that by making that line between retention, engagement, and profit as clear as possible. Luckily, Gallup’s State of the American Workplace report does a fantastic job of outlining that very point succinctly and in a way that will resonate with your leadership.
The report says:
“Employees who are engaged are more likely to stay with their organization, reducing overall turnover and the costs associated with it. They feel a stronger bond to their organization’s mission and purpose, making them more effective brand ambassadors. They build stronger relationships with customers, helping their company increase sales and profitability.”
Back up broad statements like that with examples from within your organization. Highlight an employee who is engaged and successful, and contrast that with someone who was disengaged and left the company.
The combination of broad metrics and individual stories represents a new mode of storytelling for HR professionals — and one that might break through to executives who previously had not spent much time thinking about employee engagement or retention.
The Cost of Turnover
Even if you can’t get executives on board with buying into employee retention, perhaps you can persuade them that employee retention matters for financial reasons when you consider how much it costs to hire and fire employees.
We’ve found that the cost of hiring an employee who does not work out can cost up to 10 percent of that employee’s annual salary. This cost becomes even higher if you are working with a recruiter to fill an open position.
A good place to start here is to work out what the recruiting costs are in your organization. Once you have an idea of that, compare it to the number of employees who leave and the productivity loss that happens as a result.
Again, there are opportunities here to mix broad data sets with specific workplace examples. How was one department impacted when someone left unexpectedly? Was there a project that fell behind? Or did everyone else on the team have to work crazy hours to make up for it?
The Paycor report also revealed a disconnect between employees and executives about why people leave an organization. Executives say the most common reason is because of compensation, but employees overwhelmingly say it’s because of bad managers.
About 75 percent of voluntary turnover occurs because of bad management. This number should be high enough to shock any executive into action. With their support, you can begin using your resources to address management issues to increase employee retention and engagement.
The First Step
Assembling the large-scale data on turnover and combining it with specific employee examples takes time, but is well worth it in the end if you can convince the C-suite or business owner that they should devote resources to employee retention.
We’ll be talking a lot more about turnover in the following paragraphs and how personality counts when making a hire. Sign up to receive updates and more information about how you can make reducing turnover a priority in your organization!
Reasons to Consider Personality When Hiring
Personality is one of those fun topics to discuss, but it does have some real implications for the workplace and it’s wise to consider how personality factors in when hiring a new employee. For example, how will this person fit into your company’s culture and get along with others?
Personality and interests are one very big piece of the puzzle that, without them, would be incomplete. Psychologists support that one’s interpersonal skills are also an important component to on-the-job performance, in addition to personality and cognitive abilities. It’s these skills, after all, that allow your candidates to excel and thrive within their work environment.
Understanding how our potential employees deal with others- their colleagues, customers, and prospects before committing to hiring someone lends us significant insight into how this person might perform on the job in a real-life circumstance. We can also use these insights to identify areas of strength as well as room for growth and improvement or coaching.
Interpersonal skills encompass understanding others’ motivations and actions and then knowing how to interact with others in various settings. These skills also cross over into the customer-service realm and include traits such as assertiveness, agreeableness, humbleness, initiative, and communication.
Does your potential employee understand these concepts and how to apply them?
It is important to understand one’s interests and preferences in terms of their personality because it’s these very interests that will ultimately keep them engaged in whatever task they’re expected to perform over an extended period of time.
An employee’s level of engagement in a task and in their role as a whole is important for you, as the employer, because when your employees are interested in the work they are doing from a fundamentally personal position, they are more likely to report a higher degree of job satisfaction than those whose interests don’t align with their everyday work activities. Because they’re more interested in what they’re doing, they will probably also be better at doing these things, which serves to improve on-the-job performance, as well.
A pre-employment personality assessment can accurately assess a prospective employee’s social skills. It is important for any business that employees are able to cooperate, exchange ideas, and work efficiently together.
The ability to interact positively with clients and customers can be a difficult trait to discern prior to watching an employee work. Personality assessments can help eliminate this type of uncertainty before you make your decision.
Researchers have found that pre-hire personality assessments can predict a candidate’s future performance at work. Employees who have desirable personality traits, including strong levels of motivation, empathy, and self-confidence, are shown to perform better in the workplace.
These qualities are essential in employees who will be able to stay on task, present a positive attitude towards their jobs, and perform effectively. Pre-employment testing can accurately assess a candidate’s personality for these and other key factors of employee success.
There are a lot of different names given to and used to describe the four main personality quadrants that we’re going to discuss in the upcoming weeks, so for ease of understanding, we break them down as follows:
- The Controller / Assertive Quadrant
- The Expressive / Social Quadrant
- The Analyzer / Logical Quadrant
- The Supporter / Empathy Quadrant
Your Pre-Employment Assessment Testing Process Should Have Both
When attempting to identify a pre-employment assessment test to use in your hiring process, it’s important that you take into consideration these things, looking for assessments that cover cognitive abilities, personality, and interpersonal aspects to get the most well-rounded picture of your candidate.
Pairing these assessments with in-depth interviews and reference checks is always the best practice that we recommend. Taking into consideration each of these aspects allows you to truly make the most informed decision about whether this person is a fit for your organization or not.
How to Retain Your Employees
Retaining key employees is an overlooked part of the hiring process. Nobody wants to lose their employees or hire people that will quit in two months.
We all know that the days of the 30-year career at one organization are long gone, but frequent job-hopping is quickly becoming the norm — especially in a time of record unemployment.
According to the Bureau of Labor Statistics, more than 3 million workers voluntarily quit their jobs in July 2018. This is the highest number since 2001 and a sign of employee confidence in a strong job market.
In a small or medium-sized business, one or two employees leaving can wreak havoc on day-to-day business. Some amount of turnover is natural in any organization, but it can also be a sign of unhealthy company culture.
Yet many businesses do not actively try to retain employees. Some employers feel there is little they can do to stop an employee from leaving, especially if they are unable to offer raises or meet other demands.
Fortunately, there really are steps that can be taken to encourage loyalty and retain employees. These techniques can ensure that your employees feel valued while also gaining you more skilled, devoted workers.
1. Increase Opportunities to Retain Employees
Many employees report they feel unsatisfied at work. One way to combat this restlessness in your own employees is to ensure there are some opportunities for learning and advancement.
This doesn’t mean you need to provide extensive training or promise promotions beyond your capabilities. Encourage employees to develop new skills and suggest managers and supervisors do the same in their jobs. Small projects can go a long way towards making employees feel that they have opportunities to develop professionally.
Of course, any chances for genuine, sustained training and a clear willingness to consider internal hires will do even more to make employees feel valued.
2. Spend Some Extra Time on New Hires
Get a clear idea of where the candidates you interview want to go in their careers. Not every employee will have a clear goal or plan, and of course, you must consider past behavior and capacity for growth first.
However, taking note of candidates who truly want to learn and become involved in the company will allow you to select employees who are likely to make a genuine commitment.
Dedicate some extra time to introducing new hires to the workplace. Encourage suitable employees to make themselves available to new hires for questions or advice. This benefits you, as well, as it may save mistakes and will assist in setting clear expectations.
Go out of your way to debrief with the new employee about their progress, even take them out to lunch to make sure they are socializing well with the rest of the team. These little touches will go a long way to demonstrate your interest in their well-being.
3. Collect Real Feedback – Perhaps Anonymously
Collecting feedback from employees can be a vital step in preventing employees who may consider leaving.
By offering avenues for feedback – whether written, through supervisors, or at meetings – you will be able to understand what employees are thinking. Consider creating a pathway for employees to provide this feedback anonymously, outside of direct conversations or performance reviews.
4. Pay Appropriate Salaries and Wages
Unsurprisingly, many employees feel underpaid. As the economy continues to recover from the recession, companies must understand that a lower unemployment rate will increase worker confidence. As a result, employees may search for opportunities elsewhere.
Businesses willing to pay higher salaries will have a great advantage, particularly when it comes to highly skilled workers. Depressed wages may seem like an advantage, but in reality, paying employees below what they are worth can result in dissatisfaction.
There are many reasons employees may choose to leave your company, it would be a mistake to behave as though nothing can be done to stop it. Providing opportunities for growth and making employees feel valued are major steps for reducing turnover.
Thankfully, these steps should also leave you with more skilled, dedicated workers.
5. When in Doubt, Over Communicate
As a manager or small business owner, you may feel like you over-communicate at times. But, are those messages making it to lower-level employees?
Remember that no one likes to feel left out. This is just as true in the office as it was on the playground in elementary school.
Take the time to make sure everyone is in the loop about what’s happening in your organization. Send email updates after important meetings or make the notes available on shared spaces like Slack or Trello if you use them. Your employees might not read every word, but knowing that they are there says a lot about a commitment to transparency.
Without a clear flow of information coming from the top of an organization, gossip and rumors step in to fill the void. Tools like Slack make it even easier to spread misinformation and plant seeds of doubt about company culture.
Taking the extra time to make sure everyone is on the same page will nip rumors in the bud before they spread and will lead to a more transparent company culture.
6. Be Flexible When You Can
If you manage young employees, then you know the days of “punching the clock” at certain times each day are quickly coming to a close. A system that was designed to control production schedules at factories decades ago does not translate well into an office environment.
There’s no reason everyone needs to come in at the same time and leave at the same time every day, especially when technology gives us the ability to connect with each other whenever and wherever we want to. Take full advantage of this by allowing your employees to work from home or have flexible schedules.
If you can’t give someone the schedule they want, they will find someone else who can. More and more companies are allowing employees to work hours that best suit them to create a better work/life balance. If you can, consider making it part of your recruiting strategy and the benefits package that you offer to new and existing employees.
7. Make a Good Match From the Start
In a time when unemployment is at a record low, it’s easier than ever for a competitor to lure away your employees. But, if that employee is happy and engaged, he or she will be much less likely to be looking for the door.
Creating this sense of engagement begins at the interview stage. Hiring assessments provide an opportunity to ensure that a prospective hire is going to be a good fit for your company culture. Adding a pre-employment assessment to your hiring process will stretch out the timeline, but will be well worth it when you are not doing another search again in six months or a year.
Once someone starts, make sure that they are doing the job you hired them to do. Otherwise, you’ll see motivation and productivity decrease pretty quickly and watch someone you thought was going to be your star hire head right out the door. There are always going to be “other duties as assigned,” but those tasks should be few and far between.
You might not be able to buck the job-jumping trend completely, but with a little planning and day-to-day coordination, you can keep a happy, successful, and engaged team for as long as possible.
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