How to reduce the risk and impact of high turnover

Marine Klein
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In my last post I looked at some of the actions to take when employees leave. I argued that a certain amount of turnover is inevitable and positive. But what if it is happening on such a scale that it is putting your business at risk?

One of the downsides of a positive economic climate is that employee turnover increases. No matter how good an employer you are, there are likely to be competitors who will want to “poach” your top managerial and sales talent as well as your most profitable engineers.

And no matter how loyal your employees have been in the past, the prospect of increased pay, joining a bigger firm or getting more responsibility is likely to tempt them to move elsewhere.

Just as in football there are fewer and fewer Steven Gerrards ready to stay with one club year in year out, gas engineers and plumbers are more inclined to switch teams than in the past.

All employees who leave create a loss of productivity which comes at a great cost to the company – especially if their post isn't filled immediately.

No matter how loyal your employees have been in the past!

There are also hidden factors. For example loss in morale, loss in sales and customers due to poor performance plus the legal costs that can arise if the separation is not amicable.

The truth is that there is no optimal level of turnover for full-time employees. The total cost depends on the job and the performance level of the individual doing the job.

If you’re following the tips I gave you in my last post, and keeping records (for example you should save a summary of exit interviews) then you’ll have taken an important first step in reducing the risk and impact of high turnover.

Some of the advice that follows is more readily applicable to larger organisations. However, in a smaller organisation the emotional and human impact of valued employees leaving can be much greater.

Ultimately, each organisation needs to decide for itself what voluntary turnover targets are acceptable to them, and then take the necessary actions to redress the situation.

  • Spend a year collecting the voluntary turnover figures for your organisation to get a sense of how turnover fluctuates throughout the year (internal benchmarking).

  • Calculate voluntary turnover for high performers as this is what has the greatest negative impact on your business.

  • See if there are any trends by level of seniority and experience, age group, gender and function (e.g. engineers and office staff).

  • Look through your exit interviews for trends on why people leave.

  • Determine where the voluntary turnover rate spikes and if the turnover is acceptable or unacceptable.

In a smaller organisation the emotional and human impact of valued employees leaving can be much greater.

 

Every gas, electrical, heating or plumbing company, whether large or small, needs to consider “succession planning”. Unfortunately, very few do.

Read also: Seven things to remember when your employees leave! 

1. Succession planning

Build a process to hand over knowledge, system access and other information when an employee leaves.  Without a policy you will not only waste a lot of your own time and that of your employees – it could also have a serious impact on good customer relationships. You can hope for the best but you should always plan for the worst

If you recruit through an agency, brief it in advance with a detailed job description for your next joiners so that you can post ads at short notice. If (for example) you notice that a lot of younger employees tend to leave just before the summer months, you might even want to pre-empt this by advertising for new staff in the spring.

When you lose an employee, there is a risk that a huge amount of knowledge will walk out the door with them. It could be technical knowledge of specific makes of boiler that nobody else in your company knows so well.

Get this information documented so that it can be shared with the whole team. Ensure that customer-specific information such as who to call at what number is captured in your customer database. This will also minimise the risk that employees who leave will take customers to their new employer.

 

2. Handover of responsibilities

An engineer who has jobs that are scheduled for completion after his leaving date should hand them over to another engineer to ensure that they are completed successfully. This might also involve introducing the new engineer to the customer.

However, this does not just apply to engineers. Say you’ve assigned the responsibility for sending out service reminders to a particular person. Very often that person will want to retain the responsibility. It’s only human nature.

But rather than letting them say “I’ll take care of the service reminders when I get back from holiday” take the opportunity to get them to teach the process to a colleague. Then, if they decide to leave, you will be less dependent on their good will to make a clean handover of responsibilities at the last minute.

 

3. Time for a reorganisation?

If a key member of staff, such as your Sales and Marketing Manager or Chief Engineer leaves, look for ways to turn the problem into an opportunity. You may have an ambitious and highly competent engineer who could step up into the vacant position, but who might leave himself if he ends up feeling passed over.

Look for ways to turn the problem into an opportunity.

Perhaps you already feel that your organisation needs a bit of a shake-up. Reorganisations can be highly disruptive – but staff acceptance is higher if people see that it has been made inevitable by someone leaving.

 

4. Review your salary and bonus structures

Did your analysis of voluntary turnover reveal any trends? It could be that this reflects an inappropriate remuneration policy.

Are young engineers leaving after just one or two years’ service?

In this case competitors who offer a pay hike will be the main beneficiaries from the time and money you invested bringing them to peak performance. Perhaps you should review your salary and bonus structures so that such people stay longer.

If an exceptionally high-performing engineer tells you that he has received an offer from another company you might consider making a counter-offer. But this should be a last resort as it could incentivise others to go job hunting.

A good manager will identify when a high performer seems frustrated before he starts looking for other options.

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