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Reduce Employee Turnover

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.

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!

Personnel experts will tell you there is a minimum cost to replacing one employee of at least $1,200, with some estimating the cost at $2,000. Find out just how many people you replaced last year and do the multiplication. Even small store chains 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 your problem is store clerks, profile your best and most senior clerks. Find the common characteristics and look for the same in new hires.

3) Find job applicants just like your best workers. Be fully prepared for the fact that the classified ads or job boards may be the absolute worst place to find your ideal candidate. Figure out how you attracted your best employees and use the same channel to find employees in the future.

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 a lack of training?

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.

6) Recognize outstanding workers.  In previous articles, 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.

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.

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