Hiring the right people for the right job is crucial to the growth of any business. But finding the right person might be a journey; you could end up having to hire and fire a few times before you find someone who fits right, resulting in a high turnover rate for your business.
That’s not exactly a bad thing. Sure, there is the obvious operational hassle of finding and hiring someone new (excessive turnover can cost an organization around 33% of its employee’s compensation package). But high employee turnover goes beyond operational issues.
High turnover rate is a term with a cloud hanging overhead. At first blush, you’d think a high turnover rate is the result of poor management, as is the conventional wisdom of consultants. However, there could be a few factors at play here, chief among those is the reason for the employee’s departure.
Did They Quit Or Did You Fire Them?
What about those employees who chose to quit? Ask yourself why they quit. There are some common reasons why, including:
Feeling Resentful and Mistreated
Rudeness, assigning blame, playing favourites, these are some of the ingredients to a toxic work environment.
Forced to Choose Between Personal or Work Life
A work-life imbalance doesn’t sit well, especially with the current, younger workforce.
The Job Wasn’t What was Expected
A job can vary from what was promised during an interview and this can lead to mistrust.
Lack of Coaching and Feedback
Effective leaders know how to help employees give their best, and when that is lacking, it can only hurt your business.
No Raises or Promotions
Competitive wages, benefits, and making an employee feel valued are critical to a motivated workforce.
Shaken Confidence
Employees know when a company is doing well and expect to be considered a part of that success, and need to see that instead of being treated as expendable.
Then again, maybe they are no longer with the company because you made the decision to let them go. While it could be a costly decision in the short-term, you’ll reap the benefits over time. This can include:
Improved talent
Jack Welch, former CEO of General Electric, implemented a policy of annually purging the bottom ten percent of performers, a policy deemed cruel by some, but GE has long been recognized for its leadership.
Prevents Complacency
Complacency can have two impacts on a business: promoting an atmosphere of “group-thinking” and a decline in risk-taking.
Performance Incentives
Regular turnover, through promotion or termination, can ensure an environment of constant opportunity and motivation for remaining employees.
Remaining Competitive
Companies with static employment could reach the point where they are unable to compete effectively with their hungrier competition. Ridding yourself of those employees happy with the status quo could give you a competitive edge in the long run.
High turnover rates among new employees can also point to problems within your onboarding and training processes. Whatever the reason, it is important to identify and address the reason behind a high turnover rate.
It Might Not Be High Turnover After All! Depends on Your Industry
However, don’t be fooled: there is no magic number when it comes to employee turnover. Every organization and every industry is different, even here at Siva. Different stressors and factors. Look at the turnover rates of your competitors. Pick the top five organizations in your industry and see what they’re facing. Doing so will give you a better idea of what other leaders in your industry are dealing with.
Look at the type of turnover you’re experiencing. Is it just low-performance employees leaving or are your highly-skilled workers leaving? It’s easy to replace the former, far more challenging to replace the latter.
Find Balance
Ultimately, terminating an under-performing employee is your choice alone. Make sure you’re doing it for the right reason, that you’re not firing someone with potential.
To ensure you’re keeping valuable workers, start from the bottom. Build confidence in the employees falling on the lowest rungs of your organizational ladder. Just because a team member hasn’t figured out their upward trajectory yet, it doesn’t mean their skillset won’t come in handy later on.
To prove you see the value in these workers, offer educational and coaching opportunities. You’ll be in a better place to identify those multi-skilled team members while you go, saving you the trouble of hiring from outside when it comes time to fill positions in other departments.
