Keep People Longer - Reduce Turnover Costs and Lost Institutional Knowledge

I was recently chatting with a friend, a former GM at a Fortune 50 company on the topic of human resources; how this department fits into most organizations, and how they are often, unfortunately, sidelined as a department more focused on handling benefits, firing and disciplinary actions.  The conversation then jumped into some of the trendy things companies do to in the name of excellence such as letting go the bottom 10% of the employees, and he raised some examples of how what might in theory be a good idea, gets quickly perverted, and defeated the intent of the idea.

• Hiring Managers regularly hired staff that they intended the next time the purging took place, as they had their favorites that they were not about to loose.  This practice resulted in a lot of churn and unnecessarily drove up on-boarding expenses.
• Managers regularly released those employees that were older than themselves, and sacrificed a lot of experience and institutional knowledge as a result.
• Managers made sure to keep those of the same race and nationality, and let go of others that did not look like them.
• While the company stated the intent was to release the bottom performing 10%, there was no metrics, or measures that were applied.  The decisions were subjective, and as the previous examples show, many of the factors used to select the unlucky individuals had nothing to do with performance.

Turnover is a natural part of any organization, but I challenge the benefit of creating a policy that embraces a revolving door for employees.

Numbers vary by organization, but I've seen about $7,500/employee, at a financial services firm I worked with, as the cost of replacing a departing employee.  Are you curious as too what it costs in your organization? This employee turn over tool will give you a good idea. The cost of replacing an employee is not cheap, and this tool only touches the tangible costs, it does not cover, the loss of institutional knowledge, the learning curve to bring the employee up to the same level as the previous employee, the loss of productivity of other employees who are disturbed/disrupted by the release of their colleague and friend.

Some tips for reducing employee turnover:

Have a Kick the Tire Period: Make sure the new hire is a good fit for your company improves retention, having a trial period allows both you and the new hire to assess whether the relationship works, and what you both signed up for is what you're getting.

Create Advancement Opportunities: Employees become frustrated if they do not have the opportunity improve their skills or pay grade. Provide access to training opportunities such as workshops, seminars, conferences, and even certification courses. Once they’ve mastered new skills, offer raises and promotions.  Align these training opportunities with future potential for both the employee and the firm and not based on past performance.

Offer flextime: Working parents are especially likely to leave a company if they cannot fit family obligations into their schedules. By offering eligible employees flexible work hours and telecommuting when possible, you are increasing job satisfaction and your ability to attract a wider pool of talented candidates.  An internal survey from PricewaterhouseCoopers (PwC) found that 93% of workers who made use of flextime considered it a major factor in their decision to remain with the firm.

Keep your team happy and healthy: In addition to a traditional benefits package (health insurance, retirement plan, paid vacation), consider offering sponsorship to sports events, and other networking, and cultural events, that allows people to connect outside of the work environment and share experiences together.  Create opportunities that the team might not otherwise be able to participate or do on their own.

Create a Sense of Community:  PwC they had non-profits such as Habitat for Humanity that they committed to, their leadership took work days and bused staff to the sites to work together and connect outside of their regular jobs.  These opportunities created great bonding for the employees and goodwill for the firm.

These are just a few ideas, do you have any to add?