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The True Cost of Turnover

April 11th, 2014

When an employee says goodbye and leaves your company to move on with the next chapter of her career, what are you really losing? What are your true costs in terms of upfront capital, and what about your opportunity costs, hiring costs for a replacement, and the time that your managers spend on this process instead of other responsibilities?

If you can answer right away, then you’re on the right track. Some degree of turnover is an inevitable cost of business, and if you know exactly what you’re losing and you’re staying in control of your staffing strategy, that’s fine. But if your answer is “I have no idea”, then you’re in trouble. It’s time to take a close look at your turnover numbers and start doing whatever it takes to keep your valuable employees on board. Keep these considerations in mind as you move forward.

Reducing Turnover: Best Practices

1. Don’t let great employees walk away without a word. When a team member decides to leave, meet with her right away (put everything else on hold) and ask what’s going on. Find out if she’s looking for something you haven’t been able to provide, and ask for 24 hours to counter her other offer. Use those 24 hours wisely. Attack salary, resources, training issues, insurance benefits and whatever else you need to make the relationship work.

2. If she’s determined to leave, glean for any possible information you can that might help you improve your hiring and retention practices. Provide her with an exit interview and detailed survey that can help you assess what went wrong and how you might prevent these issues in the future.

3. Compare this data with the data you gathered during her application and initial interview. Were there any mismatches or red flags that you missed and now see clearly in retrospect?

4. Put the lessons of items 1 through 3 into action. Don’t just document them and move on. As soon as you launch into the hiring process for a replacement, start applying what you’ve learned.

5. Hire strong employees from the start. And by strong, we don’t just mean skilled or experienced. In fact, employees who have too much skill and experience can actually be a poor choice and a detriment to your company instead of an asset. By contrast, the most promising employees are those who have the right attitude (not just aptitude) and who match the culture and personality of the workplace.

For more information that can help you make smart hiring decisions, choose the best applicants in the pool, and hold onto them for the long term, reach out to the staffing experts at Merritt.

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