In a previous post I talked about the importance of customer retention and ways to minimise “churn”. Losing valuable employees can also be damaging to a business, but it happens.
Employee turnover and how to deal with it
Employees resign for many different reasons. Sometimes it is the attraction of a new job or the prospect of a period outside the workforce: the “pull” factor.
On other occasions they are “pushed” (due to dissatisfaction in their present jobs) to seek alternative employment. In many cases there are both push and pull factors.
Another reason for voluntary turnover is a change in domestic circumstances outside the control of any employer.
But it isn’t necessarily a bad thing. Most companies believe that some amount of natural staff turnover is necessary to prevent complacency or a lack of motivation setting in. Fresh blood and new ideas can be very positive.
If a poorly performing employee chooses to leave of his own accord, it may cause some short-term headaches but it also saves a company considerable time, effort and administrative costs. Not to mention the anguish involved in dismissing someone.
The average turnover rate in the UK is 15% per year – but this is a fairly meaningless statistic as there is huge variation by industry sector and region.
It tends to be higher in private sector service companies such as gas and plumbing installation and servicing.
Obviously, turnover is higher in regions with low unemployment. You will need to rely on your own instinct and common sense to judge if your own company’s turnover rate is too high. If yours is a small company that places a high value on personal service, you will want to minimise turnover.
What to do when an employee leaves?
In this article I’ll consider how to deal with the immediate situation when an employee leaves. In my next post, I’ll deal with some of the broader issues such as how to reduce the risk and impact of high employee turnover in the long term.
1. Agree terms of exit
Your employee probably has a contract that stipulates a notice period, typically of one month (if not, this is something you should address). The period may be longer for managers whose departure will have a greater impact. But you don’t have to stick to this if both parties are in agreement about a shorter or extended notice period.
If the employee is having a demotivating effect on colleagues, you might be better off letting him/her go immediately or at short notice. Remember that you need to take into account any holidays that the employee is owed.
2. Start looking for a replacement
If the employee’s departure is going to leave you short-handed, you should start looking for a replacement immediately – recruitment takes time and when you find a suitable candidate, it is likely that they will also have to serve out a notice period.
If you are really busy the ideal situation would be to secure someone in time to work with the leaver for a week or two, ensuring a smooth transition. If, on the other hand, you believe you can cope without extra headcount the cost saving might benefit your company. This is where employee performance management best practices will prove useful – see my blog post on this subject [click here].
3. Manage the handover of responsibilities to other team members
If the leaver – whether it is an engineer or member of the office staff – has specific responsibilities for individual clients or processes, then you need to make it a priority for them to hand these over.
For example, if an engineer has a direct personal relationship with an important client such as an estate agent or industrial company, it would be a good idea for him to introduce a colleague on a service call, or simply for the two of them to make a courtesy visit.
If an office support person knows his or her way around your computer system better than anyone else in the company, that knowledge needs to be transferred.
4. Sort out P45 and payroll issues
Issue the leaver with a P45 and make sure that there are no loose ends on holiday pay entitlement, pension payments, tax etc. You should already have a process in place to handle this but it is worth checking it against the step by step guide on the HM Revenue and Customs website: https://www.gov.uk/employee-leaving
5. Hold an exit interview
If someone has decided to leave then it is better to part on good terms. Choose a good time to hold an exit interview and conduct it in a friendly and open atmosphere.
Treat it as an opportunity to gain insight into the real reasons why they are leaving (people are more likely to give you honest answers when they have nothing to lose). You might get some ideas on how you could improve your business.
Don’t hold back from saying that you are sorry to see the employee go and that you wish them good luck for the future. If it is a highly valued member of staff you might also want to say, “There is always a place for you here if things don’t work out!”
6. Remove the employees email and system accounts
It is surprising how many companies forget to do this! It is frustrating for customers if they send emails to employees who are no longer with you. Leaving database accounts with engineers or office staff who have left can cause administrative headaches.
So you should close off access to systems and set up email forwarding to a colleague. Also, there is a security risk if this is not handled properly. If the employee is going to a competitor you don’t want them to be able to access business-critical information, and open but unused accounts leave you vulnerable to hackers.
7. Hold a farewell party
A farewell event, especially for an employee who has been with you for some time, is not only the right thing to do – it is good for the morale of your remaining staff. Ideally this should be done on the employee’s last day, but certainly after the exit interview.
The leaver’s colleagues may take the initiative in organising the event and a leaving present but the company boss or employee’s manager should participate and ideally make an appropriate speech in recognition of their contribution.
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