There are vast profits waiting for your company when you plug the dollar drip, drip, drip that employee turnover steals directly from your bottom line. This article will provide you with information on how to stop turnover. Whether you're an executive, a manager or a team leader, the following information will be beneficial to you.
Too often, executives look the other way and accept employee turnover as a nuisance, but necessary fact of business life. The cost of employee turnover does not show up on a P&L statement, making it easy to overlook the high cost of turnover when analyzing expenses. However, if your business has a revolving door in the HR department, be assured that you could increase profits by thirty percent just by better hiring practices and by reassigning employees to jobs for which they are better suited.
Stop hiring the wrong people
One place to plug the leak is to stop hiring the wrong people. Some HR professionals expect to hire two to four people in order to find one who stays six months or more. Companies have adopted 90-day probationary periods for new employees, anticipating their failure. In short, they have surrendered rather than taking a proactive stance toward turnover.
Stop Turnover - A four-step process
As an example of how turnover affects a business, let's consider a company of 1,000 employees with fifteen percent turnover. In a year's time, 150 employees will leave and be replaced by a like number of new employees. While new employees are usually highly motivated, it takes a while for them to become fully productive because they lack the training and experience that comes with time. In time, hopefully, they will join the fifty-five percent of a company's employees who are motivated, competent, and productive. That means that in our company of 1,000 employees, only 550 of them are truly productive.
About thirty percent of the company's employees are in yet another category, one that is an anchor on productivity. These are people who are probably competent, but lack the motivation to become fully productive. Some employees tend to drift back and forth between this group and the group that really is productive. People may be in this category for a number of reasons; they may be distracted by personal or family problems, they might be potentially good employees who have been assigned to the wrong tasks, they might have grievances or disgruntled about a work issue, etc.
Whatever the cause, one of three things will eventually happen. Some will continue to perform marginally and manage to hang onto their jobs. Others' performance will improve, moving them back into the productive group. Still others will turnover and either quit or be terminated. In this example, annual turnover is 150 people, necessitating the hiring of 150 new employees.
Don't surrender to turnover. While some is unavoidable, chances are excellent you can at least cut turnover in half by using assessments to put good people in the right jobs. You can plug the profit leak by better hiring, and by dealing proactively with the people who are marginal performers. Here's how.
By using assessments, employers avoid the mistake of hiring people who will not meet the needs of their organizations. Most companies have effective hiring systems resulting in hiring people who have worthy attributes, skills, and training. However, the system breaks down when the qualified person is put into a position that does not quite fit who they are. What you have is a job mismatch, not a job match, and both the job and the individual suffer for it. The company's productivity suffers also.
Using the assessments, along with customized job benchmarks assures greater compatibility between employees and the work they perform. The importance of job match cannot be overemphasized. Of all the predictors of job success, none is more important. Yet, it is the one ingredient missing from most placement processes.
Leaders who recognize the status quo as a threat to their organizations are using assessments to reduce turnover and increase their productivity by dramatic reductions in the number of employees who are marginally productive. The results speak for themselves where it counts most, on the bottom line.
Author Resource:-
Jim Sirbasku is co-founder and CEO of Profiles International, a leading provider of human resource management solutions and employment assessments for businesses worldwide. Learn more about how assessments can help your organization stop turnover - visit our website.
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