Gyanendra Kumar Kashyap
The cost of employee turnover for businesses is high, time
for leaders to step in
Harsh decisions with reference to asking an employee to hang
his/her boots have to be made; there are no second thoughts on this. No one is
indispensable (whatever be the potential of the quitting employee), is a clichéd
logic given to this end. Understandably, the present business dynamics believes
in ‘doing more with less’ and this quest many organizations end up losing key
people. In such cases it is apparent that statements like, ‘our people drive
the businesses’ are more at a superficial level. Of course, in the short term,
there is a reduction of expenses; yet what is not realized is the fact that the
pain (monetary and otherwise) is usually felt post the cut which is neither
reported to the CEO nor is factored into the organization’s bottom line. Besides
what makes more sense is to know the additional ‘ramp-up’ costs that is
required to bring a new hire to the same competency level as the departing
employee. A reason as to why this is not factored in an organizations bottom
line could perhaps be the lack of a robust process in place to estimate the
turnover costs. However, the cost of employee turnover for businesses is high,
regardless of the level of wages being paid to the departing or incoming
employees. To put a numerical value, the Society of Human Resource Management,
SHRM, estimates that it costs about $3,500 to replace one $8.00 per hour
employee. Estimates by various research sources note that it costs 30 - 50
percent of the annual salary of entry-level employees, up to 150 percent of
middle level employees and up to 400 percent for specialized, high level
employees. Given these numbers and its implications, it makes sense to put in
place workplace policies that improve employee retention can help companies
reduce their turnover costs. Can leaders play a role here? If yes, then what
can they do to retain and motivate employees?
It is a common phenomenon that employees are drawn to
leaders who offer optimism and new possibilities, not despair. Thus leaders can
improve their ability to retain top talent and at the same time support broader
business objectives by understanding and adopting practices to promote
long-term employee engagement. At this juncture it is important to understand
that engaging and retaining high-potential leaders requires more than
traditional incentives such as competitive pay, benefits and good physical
working conditions – high potential can easily be lured by rivals with all the
more better pay and benefits. Leaders can earn the loyalty of employees by
putting in place a disciplined engagement strategy, listen to their employees
on two levels – what they say and what their unsaid emotions reveal, and encourage a consistent follow-through from
senior management. They must develop sophisticated programs to address the
problem of retaining their best people and finding more to further accelerate
their growth.
Researches point to several practices that a leader can use
to retain and engage talent and yes positively impact the bottom line too.
Create a sense of purpose: Engagement and retention improves
when people understand how they connect to the ‘Big Picture’ and how they make
a difference. Feeling connected to the people one works with helps create a
sense of purpose.
Provide meaningful work: Allowing people to do what they do
best and make a significant contribution is critical to engagement and
retention. Leaders should actively listen and acknowledge the employees current
roles as well as their aspirations for the future. Knowing what types of work they find
stimulating, what they would consider a dream assignment and taking measurable
steps to help them progress toward those career goals would be like icing on
the cake.
Solicit ideas: Leaders can solicit employees’ opinions on
business challenges and workplace issues. Involving people in decision making
gives them a sense of control in uncertain times, shows them that they are
valued and that their opinions matter. While it is good to publicly recognize
and reward the sources of ideas, it is equally important not to discount
employees whose ideas are not used. It is best to meet with them one-on-one,
thank them for providing thoughts, and explain how their idea could lead to
another initiative later on. This also helps in improving decision acceptance
rates.
These are not exhaustive; giving honest feedback, setting
tough yet realistic goals, enhancing trust and communication et al would go a
long way in engaging as well as retaining people – who matter. In essence, leaders
need to do more with more - more interaction with employees, more
communication, more partnering, and more coaching. Only then can they create
the work environment necessary for increased productivity and employee loyalty.
Else employee retention will continue to remain an expensive proposition.
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