Prepare and Manage Employee Turnover

I've had several conversations with staff and customers about problems resulting from the turmoil of our labor market. In April and May of this year alone a record 8 million people quit their jobs either voluntarily or otherwise. 
The labor force participation rate was 61.7% in July 2021, 1.7 percentage points below the level in January 2020, before the pandemic and the economic recession. Business owners are also dealing with supply chain issues and the busy holiday season is here as well. While I can't solve either of those issues, I can help provide some tips and solutions to help our members navigate and manage employee turnover that can mitigate the upheavals of the past two years. 

When dealing with issues over which we have little control as business owners such as supply chain issues and inflation, it's important to focus our energy and resources on what we can. Employee turnover does vary by industry but there are practices and procedures that can be put into place to stabilize staffing issues and create growth. With so many people leaving the workforce, it's prudent to ask why. The why often uncovers the solution and allows us as business owners to put things in place that address those points before they become issues. 

Employee turnover is the percentage of employees who leave your company over a specific period of time--for whatever reason. To figure your turnover rate divide the number of employees who have left by the average number of your full staff and multiply that times 100. A high turnover rate can cost a business thousands if not millions of dollars and impact morale and productivity. A recent Gallup pole calculated the cost of losing an employee at about half to twice their annual salary. The lower the turnover rate, the better for the staff and the bottom line. One of the businesses we purchased had an initial turnover rate of 70% (an industry known for having a revolving door) and with some managerial changes, along with some procedural and policy changes, we brought it down to 24%--way more manageable. The changes had what I call multiplier effect, whereby addressing the turnover rate we saw residual positive impact in customer experience and loyalty, staff morale and productivity, and increased traffic. But back the Why of the Great Resignation. 

A poll conducted by Hubspot Marketing of 500 marketing professionals in both Business to Business (B2B) and Business to Consumer (B2C) companies revealed that 41% of respondents cited lack of work-life balance as the reason for their high turnover. Another 37% cited lack of flexible work schedules for the turnover. Another reason given (29.9%) was changing career paths altogether or chasing their passions. 

Burnout was another reason given and this speaks to the impact that the Pandemic has had on the American workforce. It shifted the way we think about work and purpose. Going back to "normal" is not likely to happen for better or for worse. Companies are having to rethink the way they hire, engage, and keep employees and I covered this in an earlier blog. 

The post pandemic mindset prioritizes time and meaning. For the business to become an "employer of choice" where employees feel that they are contributing value and meaning through their work consider the following:

•    Right People Right Seats-when interviewing for a specific position, focus on the character traits needed for the job, not just the skills. Choose a candidate that has the capacity, skills, and passion for the job and the company. Do they fit with your company values and culture?
•    Innate Talent-Equally important is to hire those that have innate talent and the ability and desire to learn quickly. Look for those that can work in any part of the company even if you don't have an immediate opening. 
•    Pay Well-Compensation means more than dollar signs to today's workforce. Create a compensation package that offers the very things research has shown are most important to workers. You may not be able to offer all those things and a little creative brainstorming among your company leaders can also be a morale booster. 
•    Orientation-Onboarding is one of the most important aspects to getting new employees to buy-in not just to the job, but the company culture and mission. Review your onboarding process or get help creating one that covers; company story, values, mission, vision, community engagement, their role, opportunities to contribute, opportunities to grow, procedures for communicating within the company, along with specific company points. 
•    Performance Reviews- Be consistent with performance reviews and promotions. Performance reviews allows you to stay connected with the morale of your staff and shows them that you value their contributions. An employee that feels confident to contribute their best is one that feels valued. Don't just focus on their work, share with them where the company stands, what struggles the company is facing, what successes the company has had. Invite them to share ideas. 
•    Team Building/Focus Groups-Host regular team building/brainstorming session either by department or company-wide to engage employees, get them invested, and gain valuable feedback. Focus groups help inform the business on what's working in the individual areas of the business and what may need some tweaking. When employees know that their experience and expertise are utilized to improve the business, they perform from that positive mindset. 
•    Reward Great Performance-Make sure you regularly recognize outstanding performance of both individuals and departments either through a bonus or by awarding them charge over more important projects. Trusting your employees with important projects lets them know that you believe in their work and value their input. A sense of ownership goes a long way in producing loyalty. Maybe your employee would rather have more flex time than a raise or bonus. 
•    SMART Goals- Set Specific, Measurable, Attainable, Relevant, and Time-based goals for each employee. Allow Department heads to set SMART goals for the whole department. When employees have direction and can participate in the process of setting those goals they work intentionally, and they know what is expected of them in their role. If GOALS are merely passed down from the top based on top-level data, important information of the day-to-day issues gets missed and the employees can feel unimportant, which effects their morale. 
•    Processes-Establishing processes (or best practices) for all the important aspects of your business helps provide structure, capture potential issues, capture relevant data to improve decision-making, and mitigate the impact of outside influences such as a pandemic. When there are proven practices or steps to follow for a particular job, it gives employees the confidence of knowing what to do and how to do it. Knowing they can provide feedback on those procedures empowers them to perform at their best. 
•    Staff Adequately-If you are short staffed, it is better to adjust your hours/production to continue to produce at the same level of excellence than to push staff to the point of breaking. In the restaurant business we always started a wait and clearly communicated the situation to the guests right up front. This gives them the choice to stay or choose elsewhere if they are in a rush. It's better to provide a solution up front than to scramble and try to explain why you failed to perform after the customer has gotten upset. Having this procedure in place avoids stress and you have the confidence of knowing you are interviewing in the meantime. Problem identified, procedure in place, panic averted. 
•    Professional Development/Cross Training-Provide opportunity for personal/professional growth and company cross-training such as a mentorship program through the Chamber or within your own company. If an employee is interested in training for another position within the company, allow them to start out training with that position lead once a week at first. This allows you to look to fill the position that becomes open while honoring the employee's desire to grow. A planned transition is much smoother and internal promotion is less costly than hiring a brand-new employee. 
•    Work Friendships-Encourage staff to socialize during off-time and even planned company social time. Studies show that employees with close friendships at work are much more likely to stay and be more engaged in their job. 
•    Equitable Pay for Performance-Pay attention to those that are hitting their goals consistently and make sure they are compensated fairly. If a manager that gets paid more is consistently missing their goals but still gets a higher rate of pay than the goal-hitting employee, discord will follow. Create a pay scale or bonus program that allows you to be flexible and reward those that put forth their best work and beyond, regardless of title. If the manager doesn't meet the department goals but one employee rocks it every month, give them the bonus. Employers can reduce employee turnover in many other ways. Hopefully, the tips and links above for reducing employee turnover will trigger many more ideas when you think about your workplace environment and culture. When you filter your idea generation through the mantra of, "Always do the next right thing," it's a win-win for employees and employers.