Posted on 4 Oct 2019
Employee turnover is felt more acutely in SMEs than in large corporates because individual accountabilities tend to be broader and teams are smaller. And because SMEs are necessarily lean, very often there is no slack in the system for other people to take on additional duties.
High turnover presents a significant cost to any business regardless of its size, hence recruitment spend often outstrips any other line in HR’s annual budget. However, the indirect cost of employee turnover exceeds by far the direct costs when the loss of productivity, knowledge and business continuity is factored into the equation.
Before doing anything, it is important to gather the facts.
Employee turnover statistics
Collate employee turnover statistics to understand exactly what’s happening and to spot trends. Depending on the size and structure of the company, breakdown the data by department, location and groups, e.g. drivers, customer service, field sales team, etc. Another important metric to consider is length of service, because employees are more likely to resign within the first few months of joining. At this point they may still be still working out if the job and company are for them and they may not yet have built strong internal working relationships.
The action you take to reduce employee turnover will depend entirely on what the data tells you, but it could include:
Training line managers in interviewing skills
Line managers need to be trained to ask the right questions at interview in order to form an opinion about whether or not the person in front of them is truly right for the role and not just the best of the bunch. Their listening skills need to be finely tuned in order to pick up clues and ask follow up questions to clarify ambiguities. It takes a lot of self-discipline on their part to reject an individual when the vacancy is urgent and they are tempted to ‘take a punt’ on a candidate.
Reviewing the induction procedure
Giving a new employee a comprehensive and thorough induction is time well spent. It will help them to get to know the business and their work colleagues, and they will become productive more quickly as a result. Assigning a buddy to them is always a good idea because the new recruit may feel more comfortable asking their buddy questions than their manager, for fear of appearing silly.
Benchmarking salaries and benefits
Network locally in the industry and build relationships with recruitment agencies to keep up to date with pay rates and benefits in the region. There will always be companies who pay more than yours, but you need to be in the ballpark.
Developing first line managers’ leadership skills
First line managers are the company as far as their teams are concerned. Managers have a responsibility to coach, communicate with and give quality feedback to their direct reports and yet, very often, they have received no leadership training themselves.
Rewriting Job Descriptions and Person Specifications
It is vital to know your target when you are recruiting otherwise you risk missing it by appointing the wrong person. A well-written job description and person specification will focus your mind on the overall purpose and accountabilities of the role and the skills and experience required in order to perform it well. They will also help you to frame the right interview questions.
Communicating effectively at all levels
Good and consistent employee communication will generate a common understanding of the company’s goals and strategy, and will develop a sense of belonging in employees because they will see clearly how their work contributes to the achievement of the overall business objectives. Employee communication is difficult to get right and will never be perfect, but a good system should enable employees to communicate upwards by asking questions and feeding back their ideas, which will only increase their sense of self worth.
Conducting exit interviews
A well designed and delivered exit interview process will generate valuable information about why people leave the organisation. The feedback will enable you to identify any common trends and indicate where you should focus your attention, e.g. high turnover in one particular department.
Further information: Acas Advisory Booklet – Managing Attendance and Employee Turnover
If you want to find out more about employee turnover? Get in touch and find out what I can do for you and your business.