What business owner or manager has not dreamed of having perfect employees? You know, the ones that come to work every day on time, perform their job competently and correctly, and stay with you for years.
Particularly if you are in the retail business, you may already have given up on that dream. But, don’t! You can significantly reduce your turnover using these steps.
1) Compute the cost of your annual turnover. Why? It will give you the motivation to persevere through the rest of these steps!
A CAP study found that the cost of replacing an entry level employee is equal to 16% of their annual salary. So a $10 an hour employee would cost over $3,300! For those in mid-range positions earning between $30,000 and $50,000 per year, the cost is equal to 20% of their annual salary. Find out just how many people you replaced last year and do the math. Even small family businesses will lose $70,000 to $200,000 per year due to turnover. Your results should serve as a good motivator to complete these steps and lick the problem for good!
2) Get a demographic profile of your “best” employees. If your problem is drivers, profile your best, most senior drivers. If you problem is store clerks, profile your best and most senior clerks. How old were they when they came to your company? How did they find out about the job originally? Why did they come to work for you? What do they like best about their jobs that keeps them working for you? What is their educational background, previous work experience, marital status, and family situation?
Profile as many employees per position as you can to get a clear idea of the trends. Putting the profile into a database or spreadsheet program will allow you to quickly identify the common characteristics.
3) Find job applicants just like your best workers. And, be fully prepared for the fact that the classified ads may be the absolute worst place to find your ideal candidate. For instance, it’s highly likely that all of your best drivers came to you through referrals from other drivers. If so, the audience you need to reach is currently employed drivers, not the deadbeats reading the want-ads. You may have to do some sleuthing to find out who the best tanker drivers in town are and woo them away from their current employers.
For store clerks, you may find your best clerks are 25-35 year old single moms. Or, perhaps your best clerks came to you right out of high school or maybe they are retirees! Whatever your findings, you must seek out those folks, always remembering that the best candidates are likely already gainfully employed somewhere else.
4) Discover why good employees quit. The truth hurts sometimes, but you need to know why people left. Conduct a survey of the folks who left you that you would have wanted to keep. Was it money? Had they perceived the position as a dead-end job? Perhaps they felt they were not treated with respect and dignity? Was it lack of training?
Have a warm, fuzzy, HR-type person conduct this survey. Try to reach past employees by phone, even if it means evening calls. Again, record all answers in a database or spreadsheet to identify the trends. You want to identify common themes that caused good people to leave your company.
5) Eliminate the problems that made your good people quit. It is useless to hire more people if the problems that made your good people quit still exist! If the most common reason given was money, evaluate your pay scale. It is very likely that when you look at your cost of turnover, it is more economical to raise pay. Also realize, however, that money is the easy answer and may not be the total problem.
Issues of respect and dignity are tougher to solve. These issues go right to the core of business philosophy. The right attitude towards workers starts at the top and works its way to the bottom. Edwards Deming, the father of the Japanese quality movement, stated that self-esteem, dignity, and the desire to learn are at the core of quality workers.
Evaluate how your company rates in providing these core values. Do you offer learning opportunities to even your seasoned veterans? Do your employees get an opportunity to “stretch” their abilities? Are they challenged?
6) Recognize outstanding workers. In previous columns, we’ve discussed pay for performance. It’s imperative that highly productive workers earn more money than unproductive workers. Also keep in mind that any incentive compensation plans must allow for each and every worker that achieves a performance goal to receive the award.
Any program, such as “Employee of the Month” where there is only one winner, and everyone else loses, is demotivating to the majority of your workforce.
7) Develop a non-biased system for incentives and raises. Most employees have bills to pay and mouths to feed. They need to know that if they perform at peak level, their earnings will reflect that performance. If you inadvertently miss an employee’s expected raise, the employee will likely be bitter and resentful since it is human nature to spend money based upon expected earnings.
Differentiate pay scale for mediocre versus standard versus top performers. This can be easily accomplished by establishing pay ranges within positions. When you administer pay, remember that actions speak louder than any policy manual.
In summary, get the right people to begin with, treat them fairly with dignity and respect, develop their self-esteem and desire to learn, and provide opportunities for growth and advancement. Take these steps and your turnover problems will be solved.
