HR Article :- Employee Turnover – What is Poor Employee Retention Costing You?

March 4, 2009 at 9:09 pm (General HR, HR Articles)

Chart Employee turnover is unavoidable.  It is a fact of business life as are its associated costs.  Or is it? The costs of employee turnover can be staggering, ranging anywhere from 1/2 to 5 times an employee’s annual wages dependant upon his or her position.  It is neither possible, nor desirable to completely eliminate turnover from your organization.  Some of the costs associated with employee turnover are unavoidable and must be expected to occur in the normal course of business.  BUT NOT ALL THE COSTS!!!  You can do something about these turnover costs…

Before you can start to combat the costs of employee turnover, you must be aware of what these cost are and what they entail.  There of course are some obvious costs that come quickly to mind, but there are also numerous other costs that you may have never considered that can have a serious impact on your bottom line.


The Hard Costs:

Turning over one employee can cost around ½ of a low skilled hourly workers annual wages plus benefits, while losing a member of C-Level upper management can cost 3 to 5 times his or her annual wages and benefits.

Consider this:  if your firm has a turnover rate of 25% (about the national average) and employs 40 employees each earning Rs.2,50,000 annually, your costs of turning over 10 of these employees over the course of a year will be at least  Rs. 12,50,000!  What could you do with an additional Rs. 10,00,000+ in resources?

Severance pay can also be a huge part of employee turnover costs.  This is especially true with highly skilled employees and high-level management.  These are wages on which you will never see any return on you investment!

The costs of recruitment:  Each time an employee is lost the hiring and selection cycle must start again.  These costs can be significant:  advertising costs to announce your job opening to the masses, cost of recruitment agencies, background checks, reference checks, drug testing, cost of overtime pay, temporary help and much more.

Hiring costs:  Once you’ve made a hiring decision, the costs of turnover don’t stop, but rather continue. Sign on bonuses, relocation costs, and any increases in salary level necessary to attract new talent all add up quickly.  The time spent by HR managers to orientate and train the new employee can also be costly and unnecessary.  These are all tangible costs that could be avoided with a better employee retention.


Other Costs:  Some Food for Thought

There are clearly a number of turnover costs that can be easily quantifiable, but these costs often times are just the tip of the iceberg.  There are numerous turnover costs that will never appear on any balance sheet or income statement that can have a serious impact on your firm’s bottom line.

Low_productivity First of all consider the affects on productivity that are caused by turnover.  It takes on average 8 weeks to recruit and hire a new employee.  During this time production can seriously falter.  Other employees have to pick up the slack in production, often taking on tasks and responsibilities they are unfamiliar with or untrained in.  This can drain team morale and further hurt production.  The negative affect on production caused by turnover doesn’t stop when a new employee is hired.  There is always a learning curve associated with any job; for some it can be short and insignificant, while for many others it can be a considerable period of time.  During this time it takes a new employee to “get up to speed” with the rest of the team, production will never be as good as it could be.

There can also be a significant loss in business due to employee turnover.  Many employees enjoy a loyal following of customers with whom they share a real connection.  The father of a close friend of mine is a great example.  As a parts dealer for an automotive service center he worked with many customer on a regular basis and formed a real bond with these customers.  They trusted him and knew they he would do whatever possible to help them.  When this individual left that position and went to a competing service center, so did almost all of his loyal customers.   Little did the firm know that the customers were loyal to the employee, not the company – and they paid dearly when they were unable to keep him on board.

Another serious cost to companies when they loose employees is the loss of organizational knowledge.  Many employees are able to become experts in the field they work in and when they leave, so does that knowledge.  These employees are no longer available to share this knowledge and mentor junior members in the company.  Once again these costs are near impossible to quantify, but there is sure to be an affect on the bottom line.

What You Can Do About It

The stakes are clearly high when it comes to retaining good employees within your organization.  Undoubtedly some industries are more susceptible to experience higher turnover than others.  Turnover in the Accommodation and Food Service and Leisure and Hospitality industries average over 50% annually.  If you compete in these industries, or any other industry susceptible to high turnover rates, you know and expect that turnover is going to be a challenge, but it doesn’t need to cripple your company’s ability to be successful.

A Harvard University study reports that 80% of employee turnover can be attributed to mistakes made during the hiring process.  The implications of this are huge: up to 80% of your turnover can be blamed on hiring mistakes.  The problem lies in the employee selection process.  Simply put the wrong people are being hired for the wrong jobs.

A Michigan State University indicates that traditional hiring techniques – résumé reviews, interviews, and reference checks only provide a 14% likelihood of a successful job hire.  ONLY 14% !!!  Your odds of winning a hand at Blackjack are significantly better at around 40%.  If you rely only on traditional hiring practices you are truly gambling with the future success of your organization.

Chart_up_2 The Michigan State University study does offer hope in regards to these horrendous odds of hiring the right employee.  The effective utilization of powerful personality assessments are shown to increase the likelihood of a successful job hire to 75%!!!. The power of these assessments is staggering and provides a powerful insight into the values, behaviors, and attributes the job candidate possesses.  This information can than be compared against a Benchmark established for the job position and an informed hiring decision can now be made.   The results are incredible.

Now go Maximize Possibility!

Source – The Rainmaker Group

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Scruples :- Part 1

March 4, 2009 at 4:44 pm (Etiquettes, General HR)

It had always been said, that views and thoughts differs from people to people, But being a part of the HR Fraternity, there always been view about “What would you do.!!!!”.. Here are some of the most famous scenarios where you are asked what you would do in that situation…. Lets though our Scruples …answer this questions… Please be Fair & Please be Honest…atleast to urself ;-)

Its a small pack of 20 Questions and not to burden you with much thought… will send you in parts of 5 Questions each.. Lets put our thinking hat on for this…..

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1. You’re at a hotel and conference center. You’ve arrived to your meeting early, and have not have a chance to eat breakfast yet. On your way to your meeting room, you walk by another meeting and there’s a table full of food and beverages outside the room. Your meeting has no food. Would you help yourself?

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2. Your manager congratulates you for a brilliant suggestion and hints at a promotion. Your employee gave you the idea. Do you mention this to the manager?

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3. You’ve made a verbal agreement with a vendor. A competitor offers you a deal for 50% less. Do you take it the deal?

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4. A colleague is out of her office. You notice her paycheck stub on her desk. Do you glance at it?

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5. Your manager demands to know what a co-worker is saying behind his/her back. It’s not flattering. Do you tell her?

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Happy Thinking,

Pinal

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HR Humor :- Why HR ppl sometimes avoid taking Calls…

March 4, 2009 at 4:28 pm (General HR, HR Humor, Jokes, Pictures)

Confused HR - Pinals Cubicle

Confused HR - Pinal's Cubicle

Have you ever wondered why HR people ignore your calls? It’s because of people like this:

I overhear my receptionist fielding a phone call about a job. I hear her say to the person on the phone “What can I help you with?….I’m sorry the position has been filled…The position is filled…Yes, we’ve filled that position.” At this point my interest has perked because it’s obvious the person is not listening to her.

The receptionist promptly puts the man on hold and comes over to me. She proceeds to tell me that the man has asked if we can send him his resume back. I tell her no. She returns to the phone and tells him we need to keep the resume on file for a year. He proceeds to ask for a copy of it then.

So I pick up the phone and have the following conversation with him:
Me: Hi, can I help you?
Man: The position is filled?
Me: Which position?
Man: The cleaner.
Me: The maintenance position? Yes, we’ve filled that position.
Man: Was that part-time or full-time?
Me: That was a full-time position.
Man: Do you have any other part-time positions?
Me: No we do not currently. It’s rare that we have part-time positions available.
Man: Okay then. ::Hangs up::

Yep, this is what we deal with.

Cheers,

Pinal

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HR Article :- Five Ways to reduce staff resentment when hiring new employees

November 15, 2008 at 2:27 pm (General HR, HR Articles, Labor & Employee Relations, TD and OB)
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Most small business owners think of their employees as a family. But there are times when this family feeling is tested, especially when new employees are hired. It’s only human nature for current employees to feel threatened when new employees are brought in: Is my job in jeopardy? Will a new employee be made my superior? Will my salary be reduced? These questions and others are natural and inevitable–although they will seldom be voiced aloud. In today’s Workshop, contributor Jeffrey Moses lists five ways small business owners can help reduce employee anxiety when new hires are announced.

Bob Adams, author of Streetwise: Small Business Start-Up (Adams Media Corporation, 1996) includes the following thoughts about reducing employee resentment when hiring new employees:

1. Communicate with existing employees before hiring takes place. Employees at a small business are often a close-knit group, with most having strong attachment to the company and the company’s management. These employees should be told what positions will be filled, in which department new hires will work and whether supervisory positions are being filled or created. This is the first and most important step in reducing employee resentment.

2. When hiring will directly impact the job description or responsibilities of current employees, they should be assured that their positions are not being undermined or threatened in any way. If an employee has been doing a good job, say so–and make sure that the new hire realizes that the existing employee is a valued member of the team.

3. If youÆre hiring supervisory positions, be sure to make the position available to current employees first. If you don’t give existing employees the chance for advancement, you’ll lose their confidence.

4. When new hires become part of a team or department, give the existing members of the team input into the actual hiring decision.

5. Never simply assume that once a new employee begins working, there will be no added friction within the company. Talk with veteran employees regularly after new hires begin work. Don’t let too much time go by without finding out if employee resentment or anxiety is building.

Regards,

Pinal Mehta

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Simple Exit Interviews Help Reduce Turnover

November 15, 2008 at 2:18 pm (General HR, HR Articles, Labor & Employee Relations)
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There’s turnover, and then there’s turnover. There’s the kind we welcome, as when a marginal, pain-in-the-neck employee quits, and the kind we dread, like when a valued employee resigns to go elsewhere. Once an individual’s decision to resign has been formalized, there may not be much that can be done to prevent the loss of that employee. But we can, however, take steps to learn why valued employees leave and use what we have learned to help prevent similar losses in the future.

Exit interviews are often described as locking the barn door after the horse has been lost. But the purpose of an exit interview is not to reverse an individual’s resignation, but rather to reduce future turnover by learning the reasons for leaving so conditions that might be driving good people away can be addressed constructively.

Many large companies put every departing employee through an elaborate exit interview and accumulate statistics related to departures. But a constructive exit interview doesn’t need to be lengthy or complex, and not every departing employee needs to be subjected to such an interview. There’s little sound reason to pursue the occasional welcome instance of voluntary turnover, and certainly no reason to exit interview persons leaving because of retirement or disability or those whose departures are unavoidable (for example, resignation owing to spousal relocation).

People leave their employment for various reasons. When examining voluntary departures of good employees, look most closely at those who leave for other employment and those who resign for “personal reasons.” The most frequently encountered reasons for leaving include, in no particular order:

  • Lack of recognition; the feeling of being unappreciated, of never having one’s contributions recognized.
  • Poor quality of supervision; unhappiness with how one is treated by superiors.
  • Personality conflicts; frequent differences with coworkers and supervisors often cause one to seek a new work environment.
  • Lack of advancement opportunity; the perceived opportunity for promotion and growth is important to many employees, and its absence prompts some to find work where this opportunity is more likely to exist.
  • Money, often important in one of two senses: the desire for a larger income; or seeking change because of a belief that one is unfairly paid relative to others.

Valued employees often consider changing jobs because of unhappiness with some aspect of the work situation, and often their reasons relate to how they believe they are treated. Look at the role of the immediate supervisor. Recognition, quality of supervision, personality conflicts and perhaps even a portion of perceived advancement opportunity fall within the immediate supervisor’s sphere of influence. In other words, the supervisor’s relationship with the employee is often the strongest factor influencing an employee to either remain or depart.

Departing employees are most likely to speak honestly if exit interviews are conducted by someone other than the immediate supervisor, say perhaps another supervisor, the immediate supervisor’s manager, or, preferably, whoever usually attends to human resource matters. Even when undertaken by a neutral party, some departing employees — usually those leaving for “personal reasons” — may say nothing negative for fear of affecting future employment references.

What to do when learning of employee unhappiness in an exit interview? Over the course of one, two or a few exit interviews you’re not likely to accumulate sufficient information to act upon. To be reliable, exit interview information must be accumulated until certain patterns begin to emerge. Once a pattern emerges, however, you’ll have a reasonably clear idea of what needs attention if you are to head off some undesirable future turnover. A pattern may tell you that a supervisor’s style is objectionable, recognition for work done is scant, workload is unfairly distributed, pay and benefits are lagging behind the community or any number of other undesirable circumstances. Once this information is validated through repetition, steps can be taken to address the problems.

Your company’s exit interview questions may be customized to your unique circumstances, but some suggestions can be offered. Following are several sample questions.

  • How do you feel you were treated by your supervisor? By your coworkers?
  • How well do you believe your work was recognized and appreciated?
  • Do you feel you were given adequate training and assistance in learning the job you were expected to do?
  • What’s your opinion of the opportunities for transfer or promotion within this business?
  • How would you describe the general morale of the employees with whom you worked?
  • How fairly was the workload distributed among you and your coworkers?
  • What could be done to make this company a better place to work?

An exit interview won’t always tell you everything you’d like to know, but it’s often a constructive start on learning why good employees leave.

Regards,

Pinal Mehta

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Workplace Etiquettes

October 10, 2008 at 3:10 pm (Etiquettes, General HR)
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Here are certain guidelines to follow in a working environment.

How to welcome newcomers

  • Newcomers should be welcomed by their seniors and colleagues.
  • They should be briefed about their jobs and company practices.
  • Staff at any level should be introduced to any newcomers they encounter.
  • Courtesies should be extended to everyone you meet, irrespective of whether it’s the receptionist or the CEO.
  • Avoid asking personal questions regarding the newcomer’s educational qualifications/ parentage/ marital status/ age/ income etc.
  • Our names are an important symbol of our identity. Do not mispronounce, misspell or mix-up anybody’s name.’
  • Using someone’s first name usually implies that you are superior to him, decidedly equal or friends. Therefore, it is best to start off formally. Use their surnames, preceded by Mr, Mrs or Ms. He/ she can then easily suggest that you use a first name.

How to show courtesy towards colleagues

  • Greet everyone you encounter cheerfully and with a smile on your way into the office. On your way out, remember to thank the receptionist / office boys etc.
  • Good bosses, employees and colleagues don’t forget their manners. Remember ‘please’ and ‘thank you’.
  • Always show your appreciation with a smile.
  • Small talk and light chitter chatter at work is essential; it expresses friendliness without demanding attention. Whether you talk about the traffic or the weather, the vital message is that you are all part of the same team.
  • Be polite to hired help like peons, drivers, delivery boys etc.
  • Do not talk loudly when you talk over the phone or to your colleagues. Talk in a soft and clear voice.
  • Take instructions with grace and give instructions gracefully.
  • On occasions like birthdays, staff members should receive a personal gift, good wishes and words of appreciation from the boss and colleagues.
  • Always be considerate. The last person to leave the office should not have to switch off all the lights, air conditioners and computers. For example, when a photocopier runs out, whoever used the last sheet of paper should refill it.
  • When you are going to get yourself a cup of tea, coffee or a cold beverage, offer to bring one for your co-workers as well.

How to make yourself likeable and pleasant to work with

  • Don’t be a whiner who is always complaining and miserable with his/ her lot in life.
  • Never use words like ‘can’t’ and ‘won’t', nor phrases like ‘I’m busy’ and ‘that’s not my job’.
  • Do not criticise anyone — that’s not your job. And if you get criticised, be professional about it. Do not take it personally.
  • Keep personal conversations down to a minimum and keep out of earshot of others.
  • It is shabby to look through people’s computers, emails or letters — and don’t ever make the mistake of sneaking into people’s personal property like handbags or wallets. Be responsible for your own property and valuables. If you lose your expensive items, everybody else becomes a suspect and nobody likes being one!
  • Never borrow anything from someone’s desk without permission and when you do always return it in good condition.
  • Do not misuse office property. Keep your workplace orderly. Do not infringe on other people’s space.
  • Be friendly with colleagues of the opposite sex but know where to draw the line. Don’t get involved needlessly in any situation which could lead to embarrassment and could potentially damage not only your reputation, but that of the organisation as well.
  • Do not get indulge in office gossip or discuss delicate topics (religion, politics, money, sex etc).
  • Do not fidget or make unnecessary sounds which can be distracting to your co-workers.
  • Maintain stringent standards of personal hygiene. Do clean up after yourself when you use the restrooms so the next person using it does not have to scrunch up his/ her nose!
  • Do not convert your desktop into a place of worship. Since you might be working with people who follow different faiths, it might be better to display a vase of flowers instead.
  • Use office privileges like sick leave etc thoughtfully so that you don’t burden your co-workers with extra work.

Business meeting etiquette

  • Be punctual. If you are late, apologise briefly but sincerely and immediately give total attention to the meeting. Those who wish to leave early should ask their seniors’ permission beforehand. Leave quietly, with an ‘excuse me’ and catch the eye of the person who is talking at that point.
  • Dress well — it gives a good impression.
  • Always remember to switch of your mobile phone.
  • If there is an established seating pattern, accept it. If you are unsure, ask.
  • Do your homework; get all your facts and figures in order. Go prepared.
  • Acknowledge any introductions or opening remarks with a brief recognition of the chair and other participants.
  • When discussions are underway it is good business etiquette to allow more senior figures to contribute first.
  • Never interrupt anyone — even if you disagree strongly. Note what has been said and return to it later with the chair’s permission.
  • When speaking, be brief and ensure that what you say is relevant.
  • It is a serious breach of business etiquette to divulge what has been discussed at any meeting with a third party — consider it confidential.
  • Thanking the person who organised the meeting is not only good etiquette; it is also a sign of respect.

Keep competition within the organisation healthy

  • A team tends to behave like a human body, accepting what is part of it and rejecting any alien tissue. People are accepted if their behaviour mirrors the group norms.
  • Faults and blunders usually take place due to lack of communication. Find out the cause of the mess-up and solve the problem so that it is not repeated.
  • Curb your annoyance and control your temper.
  • Do not strive to pull a colleague down just to get the approval of the boss. This will backfire on you in the long run.
  • Back-stabbing and petty talk is not only unpleasant, it is in poor taste.
  • A secure and efficient worker never grudges another’s success. Envy and jealousy among co- workers ruins the working environment for everyone. The following notice, seen on several office walls, gets the point across well:

‘This department requires no physical fitness programme. Everyone gets enough exercise:

  • Jumping to conclusions
  • Flying off the handle
  • Running down the boss
  • Knifing friends in the back
  • Dodging responsibility
  • Pushing their luck!’

Regards,

Pinal Mehta

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