Replacing Workers Costs Thousands
Greg Smith’s cutting-edge keynotes, consulting, and training programs have helped businesses reduce turnover, increase sales, hire superior people, and deliver better customer service. As president and founder of Chart Your Course International, he has implemented professional development programs for thousands of organizations globally. He lives in Atlanta, Georgia.
Employers face major challenges when they consider the increasing difficulty of finding skilled people, a younger workforce with different attitudes about work, and a growing population of older workers heading toward retirement.
A recent study shows 85 percent of human resource executives state the single greatest challenge they have in managing the workforce is their organization’s inability to recruit and retain good employees and managers.
The U.S. Bureau of Labor Statistics reports that the quarry and aggregate industry will need to replace 27,000 workers over the next 15 years.
Few businesses realize how much employee turnover impacts their bottom lines. It averages $7,000-$14,000 (U.S.) just for the process of replacing a typical employee. The question then arises, how can a business survive when the cost of turnover and recruitment runs into hundreds of thousands of dollars or more each year?
Businesses can improve their ability to attract, retain and improve productivity by applying the following five-step PRIDE process:
P—Provide a positive working environment
R—Recognize, reward and reinforce the right behavior
I—Involve and engage
D—Develop skills and potential
E—Evaluate and measure
Step One: Provide a Positive Working Environment
Have you ever worked for a bad boss? One of the main reasons employees quit is the relationship with their first-line supervisor. The fact is many supervisors and managers are unaware how their actions and decisions affect employee turnover.
A critical aspect of an effective retention strategy is manager training. Properly trained managers play a major role in an effective recruitment and retention strategy. Managers need the skills, tools, and knowledge to help them understand their employees’ retention needs and be able to implement a retention plan designed to increase employee engagement in the organization.
Step 2: Recognize, Reward and Reinforce the Right Behavior
Money and benefits may attract people to the front door, but something else has to keep them from going out the back. People have a basic human need to feel appreciated and proud of their work. Recognition and incentive programs help meet that need.
A successful reward and recognition program does not have to be complicated or expensive to be effective. Graham Weston, co-founder and CEO of Rackspace Managed Hosting, gives the keys to his BMW M3 convertible to his employees for a week. This creative way to reward employees has a bigger impact than cash. He says, “If you gave somebody a $200 bonus, it wouldn’t mean very much. When someone gets to drive my car for a week, they never forget it.”
An equipment distributor rewards each employee’s work anniversary with a cake and a check for $200 for each year employed. Twice a year employees’ children receive a $50 savings bond when they bring in their “all A’s” report card.
In addition, they reward employees with a “Safety Bonus Program.” They screen each employee’s driving record twice a year, and anyone who has a citation is removed from consideration. Those employees remaining at the end of the year divide $2,000. On Fridays, all employees rotate jobs for one hour. This builds a stronger team, unity, and improves communication within the company.
Step 3: Involve and Engage
People may show up for work, but are they engaged and productive? People are more committed and engaged when they can contribute their ideas and suggestions. This gives them a sense of ownership.
The Sony Corporation is known for its ability to create and manufacture new and innovative products. In order to foster the exchange of ideas within departments, they sponsor an annual Idea Exposition. During the exposition, scientists and engineers display projects and ideas they are working on. Open only to Sony employees, this process creates a healthy climate of innovation and engages all those who participate.
TD Industries in Dallas, Texas, has a unique way of making its employees feel valued and involved. One wall within the company contains the photographs of all employees who have worked there more than five years. Their “equality” program goes beyond the typical slogans, posters, and HR policies. There are no reserved parking spaces or other perks solely for executives—everyone is an equal. This is one reason why TD Industries was listed by Fortune magazine as one of the “Top 100 Best Places to Work.”
Step 4: Develop Skills and Potential
For most people, career opportunities are just as important as the money they make. In a study by Linkage, Inc., more than 40 percent of the respondents said they would consider leaving their present employer for another job with the same benefits if that job provided better career development and greater challenges.
Deloitte is listed as one of the “Top 100 Best Places to Work.” They discovered several years ago they were losing talented people to other companies. During exit surveys they found 70 percent of those employees who left to take new jobs and careers outside the company, could have found the same jobs and careers within Deloitte.
As a result, they created Deloitte Career Connections, an intranet-based development and career-coaching program for all employees. During the first week of implementation, over 2,000 employees took advantage of the program and viewed internal job openings.
Career Connections doesn’t just provide new job opportunities, it also offers a host of career development tools such as self-assessments, tools to develop resumes, and articles on various job-seeking strategies within the company.
Skilled people will not remain in a job if they see no future in their positions. To eliminate the feeling of being in a dead-end job, every position should have an individual development plan.
Step 5: Evaluate and Measure
Continuous evaluation and never-ending improvement is the final step of the PRIDE system. The primary purpose of evaluation is to measure progress and determine what satisfies and dissatisfies your workforce. The evaluation process includes the measurement of attitudes, morale, turnover and the engagement level of the workforce. Here is a checklist of items that should be included in your evaluation and measurement process.
- Conduct an employee satisfaction survey at least once a year.
- Initiate interviews and surveys concerning the real reasons people come to and leave your organization.
- Improve your hiring process to create a better match between each the individual’s talents and job requirements.
- Provide flexible arrangements for working parents and older workers.
- Hold managers responsible for retention in their departments.
- Start measuring the cost of turnover.
- Focus on the key jobs that have the greatest impact on profitability and productivity.
- Examine those departments that have the highest turnover rates.
- Design an effective employee orientation program.
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This material has been voluntarily provided by Greg Smith (Chart Your Course International). Greg Smith (Chart Your Course International) is not speaking on behalf of Caterpillar, and the views or opinions expressed in this material are those of Greg Smith (Chart Your Course International) and may not represent the views of Caterpillar.