There’s no question that recruiting and hiring an employee is a time-consuming process. The DHI Group reports that it takes an average of 13 to 31 working days to fill a role for a number of industries. And you could triple this average for skilled trades.
Hiring people also involves significant cost, ranging anywhere from $5,000 to $10,000.
The time and money spent in hiring is only going to increase as labour shortages in Canada become increasingly acute. According to a 2018 study conducted by the Business Development Bank of Canada, the labour shortage is “here to stay”.
This is not a very cheery outlook for employers but, in the immortal words of J.E. Lawrence of the Nebraska State Journal, “it is what it is”. The question, then, becomes how best to deal with the situation. Once you have gone through all the effort and the cost to find and secure the right person, you would be well advised to focus on keeping him or her.
Your Appreciating Assets
Josh Bersin, industry analyst and founder of Bersin by Deloitte, sums it up nicely when he says:
People are what we call an “appreciating asset”. The longer we stay with an organization the more productive we get – we learn the systems, we learn the products, and we learn how to work together.
The economic value of employees over time is displayed in this graph which shows that while most employees are initially a “cost” to an organization, they become more and more valuable in the course of time. The length of time it takes to increase an employee’s value is largely in the hands of the company itself.
Employee retention is not a matter of “good luck”. It is a matter of planning and proactively executing the steps. Those employers who fail to plan for retention and outright ignore the signs of an unsatisfied and uninspired workforce often suffer from costly high turnover rates.
According to a recent CBC article, a startling number of Canadian employees are ready to quit their jobs according to the results of a Nielsen survey. This survey gathered data from more than 1,000 Canadians and 1,000 Americans. Overwhelmingly, more than one-third of respondents indicated that they are actively seeking a new position and another one-third stated they would be willing to leave their current company if a better opportunity came along. Even more telling, most survey respondents stated that, upon being hired, it was immediately clear whether they’d be with the company for the next year.
What Does it Take?
If you thought it’s all about the money, you are mistaken. Compensation definitely plays a role, but not to the degree that you might think. Salary is a “hygiene” factor. Too little money definitely creates high turnover, but over-compensating people will not make up for a poor work environment.
The top reasons that people exit companies, in descending order, are:
- Dissatisfaction with pay and financial rewards
- Insufficient opportunity for advancement
- Insufficient learning and development opportunities
- Feeling unappreciated
- Poor work/life balance
- Boredom from lack of challenge
- Dissatisfaction with the workplace culture
A comprehensive engagement program can address all of these issues.
An organization who provides competitive compensation, advancement opportunities, personal and professional development programs, employee recognition, and flexible hours has a much greater chance of retaining their appreciating assets.
The Impact of Frontline Managers on Employee Retention
It’s not all up to senior management. While they play a crucial role in developing and implementing company strategy and policy, the frontline managers and supervisors are critically important in shaping and maintaining the culture you want.
Frontline managers make up 60 per cent of a company’s management force and directly supervise up to 80 per cent of the workforce. Needless to say, engaged frontline managers and supervisors engender an engaged workforce. They care about the company, they care about their jobs, and they care about the people who report to them.
Effective frontline managers:
Coach their reports and actively promote their development
Align daily priorities with organizational goals
Recognize and show appreciation for discretionary efforts and achievements that align with the company strategy and culture
Engage themselves and each individual on their team and focus on what matters most for them and for the organization
The result? Employees who are engaged at work are 59 per cent less likely to look for work elsewhere. It definitely pays to find creative ways to engage your workforce.
An engagement strategy, to be effective, must be encompassing and ongoing. A successful strategy will include the following elements:
- Define your company’s culture
- Develop a succession plan
- Create and implement a system of onboarding
- Learn what motivates your workforce
- Develop a career path partnership
- Celebrate successes and reward your employees
- Provide your employees with the “big little things”
- Provide the training they need and want
- Objectively measure employee performance and provide feedback to them
Low Turnover Companies
Senior management is also a critical factor in employee retention. Top companies understand that management is the face of the company and effective managers breed effective employees. No one understands this better than the former Chairman and CEO of Schering-Plough, Fred Hassan. He grew the company exponentially over a span of six years by cultivating the natural skills of management professionals and favoured engagement over hard production numbers.
Other leading companies have followed Hassan’s lead. For example, Netflix revamped its process to focus on retaining employees starting in the hiring process. Netflix recruiters began to focus on employee character in the recruitment phase and, once hired, treating employees with respect and trust. By simply treating employees like adults, Netflix reduced its turnover rate to an all-time low of 8 percent.
These are just a couple of examples of how focusing on employees’ strengths can have a major impact on retention. Planning for success is key and this begins with a collaborative approach. Companies should be organized in a way that allows management and employees to engage with human resources professionals. This gives everyone the opportunity to learn about other areas in the company and develop a thorough understanding of what drives a successful company.
The First Step
It all begins with finding the right person, one whose skillset and personality provides a good fit with your company. Durham Recruiting has developed its highly successful Kellow Approach, a propriety system of sourcing, assessing, and matching candidates who meet your needs.
When you’re looking for that perfect fit, call Durham Recruiting at 905-579-2950 or email us at firstname.lastname@example.org
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