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Employee Turnover and Maximizing Staff
Retention
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Presentation Outline
Reasons for staff turnover
Costs to the business of this turnover
Maximizing staff retention in order to enhance business profitability.
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Analysing the Reasons for Staff Turnover
Staff turnover disruptive, expensive and affects team morale.
A study of 12,0001 employees found that people will leave one company and
go to another for the following reasons:
1. exciting work and challenges2. career growth, learning and development
3. working with great people
4. fair pay
5. supportive management/good boss
6. being recognized, valued and respected
7. benefits
8. meaningful work and making a difference9. pride in the organization, its mission and its products
10. great work environment and culture
1. Love Em or Lose Em, Getting Good People to Stay, Kaye B, and Jordan-Evans S, Berrett-Koehler Publishers 2002, p.10
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Analysing the Reasons for Staff Turnover
11. autonomy, creativity and sense of control
12. flexibility: work hours
13. location
14. job security and stability
15. diverse, changing work assignments16. fun on the job
17. being part of a team
18. responsibility
19. loyalty, commitment to the organization or coworkers
20. inspiring leadership
Even if employees are paid well above the market rate they will still leave ifthey are not enhancing their skill set or if they dont have the social bonds to
keep them in the workplace.
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Analysing the Reasons for Staff Turnover
The Exit Interview
The Exit interview is the best way of ascertaining the reasons why
employees are leaving the company
A structured series of probing questions that are specific to both the job and
the individual.
Rather than a quick thanks for working with us and all the best in the new job
chat.
A properly managed exit interview will elicit useful information that can then
be used to assess the workplace and make improvements to prevent
additional resignations.
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Analysing the Reasons for Staff Turnover
The Exit Interview
Exit interview questions include the following:
1. Is the job that you were doing what you expected following the information we
gave you during the interview?
2. What additional information should we be giving new employees regarding the
scope of the job that they are being interviewed for?
3. What were the best aspects of the job?
4. What aspects would you like to see improved?
5. Were you supported with a good induction and initial training?
6. What advice would you be giving to the next person in your role?7. What types of candidates do you think are best suited to our culture?
8. If we were to rethink this role what other suggestions could you make?
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Costs of Employee Turnover
A study found that the turnover cost for every employee who leaves ranges from90% to 200%2 of their annual salary. Highly skilled professionals can cost up to 5
times their salary.
In assessing the cost of replacing an employee consideration needs to be given to:
The business lost when the role is vacant
The disruption to an existing smooth-functioning team when existing employees are
required to take up the departed employees workload
Work put on hold until a replacement is found
Lost customers and business opportunities because relationships have been severed
Loss of shared knowledge
2. Abbot, De Cieri and Iverson, Costing Turnover: Implications for Work/Family Conflict at Management Level, University of Melbourne 1998 (cited in The ProfitablePractice, CCH Australia, 2002, p.258)
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Costs of Employee Turnover
Lost supplier relationships
The gains made by competitors by employing your employees
Lowered morale and productivity of existing employees
The costs involved in hiring advertising, agency fees, management time involved in
interviewing and selection testing
The direct employment costs of the new hire salaries, sign-on bonuses, moving allowances,
superannuation, workers compensation, payroll tax, office furniture, IT equipment.
The time it takes to train a new person
The socialization of the new person into the group
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Costs of Employee Turnover
It is a useful exercise to calculate these costs for your particular business. You will
be aware of the significance of the role that is vacant, the business that you are
losing and the disruption that the vacancy is causing. These costs can be
considerable and can be many millions of dollars when significant accounts go to
competitors.
Consider how much money your organization would save by reducing turnover and
how more effectively your organization could use the dollars associated with
recruiting and training new employees eg employee development and enrichment
programmes.
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Costs of Employee Turnover
There are many implications when someone leaves an organization, but consider
the following scenarios:
When a Sales Representative leaves territories are vacant and the doctors are
receiving the competitors messages, therefore losing marketshare.
When a Product Managerleaves supplier relationships are lost, the new Product
Manager doesnt have the personal chemistry to work effectively with the advertising
people; is unfamiliar with the marketing mix and overall brand strategy so therefore
competitive opportunities are lost.
When a Senior Managerleaves there is a loss of high level networks with keydecision makers therefore business takes longer and can be more costly (the best
deals cannot be negotiated because the personal relationships are not there)
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Costs of Employee Turnover
When a Clinical Research Associate leaves, clinical trial project management
milestones are not met, local investigators lose confidence, regulatory timelines are
lengthened, local health economics data is not being collected and the entire pre-
marketing strategy is affected.
When Regulatory or Health Economics staff leave relationships with both the
government and head office are lost, resulting in delayed submissions.
When the Receptionistleaves the phone doesnt get answered resulting in lost
business; or an inexperienced receptionist cannot identify key callers or visitors
resulting in a decrease in customer service and lost business.
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Maximizing Staff Retention
Maximizing staff retention saves the company money.
There are a range of initiatives to minimize turnover and it starts with the interview
process.
Candidates become attracted to the vacancy because they have seen the
advertising and have heard positive reports about the company in the marketplace.
Creating and nurturing these positive thoughts within the candidate marketplace, and
thus increasing the pool of candidates available for interview, are central to a
companys Recruitment Brand Management strategy.
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Maximizing Staff Retention
the Recruitment Brand Campaign
When devising a Recruitment Brand campaign the following questions should be asked:
What impressions do the candidates have of our company?
What types of people suit our organizational culture?
What is the personality of our department?
What are the key benefits of working for the company?How will these benefits be communicated?
Answers to these questions then drive the advertising strategy from the text of the ad
through to the entire feel of the campaign in order to communicate the right messages
to the right audiences.
Very few companies invest in recruitment brand campaigns to differentiate their offerings to
the candidate marketplace. Those that do have a larger candidate pool from which to
choose.
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Maximizing Staff Retention
the Interview ProcessThe initial interview is an important aspect of the candidates introduction to thecompany, however many managers treat this interview too casually.
Behaviourally based interviewing is the strongest technique to assess a
candidates suitability for a particular role.
The premise here is that past behaviour and performance is the best predictor of
future performance.
This can be achieved by asking candidates:
Prepared questions
Probing for fuller answers
Understanding what the candidate is capable of doing
Understanding what the candidate wants to do.
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Maximizing Staff Retention
the Interview Process
During the structured interview interviewers want to find out:
How the candidates have handled various situations
What they did
The results of those actions
in order to uncover the true nature of the candidates knowledge, motivation and
values
With this insight an assessment can be made in terms of the candidates
organizational fit. If the candidate is the wrong person to add to your existing groupthey wont form the necessary informal networks to share knowledge and enhance
group productivity and turnover will be an issue.
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Maximizing Staff Retention
the Interview Process
To augment the interview process a number ofemployment tests can be used
including:
a. IT and Office skills
b. Role plays
c. Writing tests
d. Presentations
e. Analysis of clinical papers
f. Psychological tests
g. Sales aptitude tests
h. Management and leadership assessments.
These tests can be invaluable in reducing turnover because the employer cangain an accurate understanding of the candidates skill set so there is no
misunderstanding once they have joined the company.
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Maximizing Staff Retention
the Interview Process
To decrease turnover it is necessary to ensure that the candidates have a good
experience throughout the entire interview process. How they see the company in
the future will depend on how they remember their first experiences.
With successful candidates it is advised to:
Move them quickly through the interview process (good candidates have high
expectations of quality and service and dont favourably view delays)
To take time to clarify expectations so there is no misunderstanding of what the role
involves
To excite the candidates but not to oversell the job
To stay close to the candidates throughout the process continuing to probe for attitude,
motivation and organizational fit.
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Maximizing Staff Retention Induction and
Socialisation
Once employed, new recruits should have a good induction and socialization
experience.
This involves:
Meeting with other employees
Understanding the structure of the company, what the different employees are
responsible for, and how they are expected to interact with employees in other
departments
Who to go to for help
How to use the office IT and telephone systems
Training in procedures and processes.
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Maximizing Staff Retention Induction and
Socialisation
During this period employees will also learn how to socially adapt to their new
workplace. They will need to understand the social norms of acceptable behaviour
and the unwritten rules for interaction.
Without this knowledge they may make social mistakes that will affect their smooth
introduction.
Following an effective induction employees then form a psychological contract
with the company to deliver what is required.
The new employees then identify with the new company and build productiverelationships with their management, peer group and subordinates.
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Maximizing Staff Retention throughout the
employment relationshipAfter the new employee has joined there are a range of initiatives that a manager
can do to retain their staff including:
Ensuring that their jobs are interesting
Their career goals are supported
Information is shared with them
They are connected with others in the organization
That they are respected and valued
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Make their jobs interesting
Employees need opportunities for personal challenge and growth. If good workers find out that
they are no longer receiving these necessities then they may decide that they have outgrown the
company and consider leaving. The simplest way to enrich jobs for individuals is to ask them
questions such as:
What skills do you have that you are currently not using?
In what areas would you like increased responsibility?
In what ways would you like your job changed?
Managers therefore need to focus onjob enrichment for their employees if they wish to retain
their services.
A major cause of turnover is workplace boredom. Job enrichment is not difficult, but it does
require staying alert to opportunities for all your employees and working with them to enrich their
jobs.
Maximizing Staff Retention throughout the
employment relationship
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Support their career goals
Discuss your employees futures, openly and frequently. Involve them as you discuss their
abilities, choices and ideas.
Employees dont expect all the answers, but they do want you to listen to them and to offer your
perspective.
They will also benefit from specific feedback with examples of their performance and how it
relates to their future goals.
Take time out to have in-depth discussions with them about how the industry is changing over the
next 2-5 years and what skills they will need to compete for roles in the new environment.
For instance, should they be completing further business studies, a qualification in health
economics, gaining exposure to new therapeutic areas or undertaking overseas assignments.
Maximizing Staff Retention throughout the
employment relationship
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Share information with them
Make your employees feel part of the organization by telling them what is happening.
Information sharing is important at all times but critical during periods of change (downsizing,
mergers and acquisitions).
If employees are worried about events and dont have sufficient information they are likely to
worry about their job security and update their resumes.
Maximizing Staff Retention throughout the
employment relationship
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Share information with them
Managers must give information as early and as honestly as possible and this will make
employees feel important and valued. These employees are likely to have insight into the specific
problems and may be able to offer solutions.
The role of the manager is also to help employees look into the future, by providing information
that helps the employees development and career advancement.
Employees want to know about the companys direction and goals, the industrys future and the
emerging trends that may affect career possibilities. Employees with this information will feel
more confident in their future within the company.
Maximizing Staff Retention throughout the
employment relationship
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Get them connected
Employees need groups of colleagues who can support them, offer information or help, or just
listen to them.
Connections are a major reason why people stay with a company. Managers need to give attention
to strengthening the bonds between people in their team and others within the organization.
Employees need to link with others to get their jobs done effectively. Managers need to be asking
their staff who else in the company do you need to be liaising with to optimize your role?
Relationships with others will help employees get their work done and will give them insights to
enhance their productivity. As employees are linked to other functions within the company their
knowledge and skills will grow and they are more likely to stay.
Maximizing Staff Retention throughout the
employment relationship
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Respect them
Even if employees are well paid and have opportunities to learn and grow, if they dont like their
bosses or co-workers they will leave. It is unacceptable for anyone to exhibit the following
behaviours:
acting in an arrogant or condescending manner
intimidating staff
slamming doors and pounding tables
swearing and behaving rudely
showing disrespect
being sexist, bigoted and using inappropriate humour
humiliating and embarrassing others
deliberately ignoring or isolating some people. and the list goes on.
These behaviours do occur and they do cause staff to leave.
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Summary
Examined the reasons for staff turnover
Identified the costs to the business of this turnover
Suggestions regarding maximizing staff retention in order to
enhance business profitability.
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