Staff turnover: how to manage it in view of employee engagement
Recruiting tips |

Staff turnover: how to manage it in view of employee engagement

Talking about turnover in the company means not only dealing with a situation that affects all companies but also making a deep reflection on oneself, on what one offers to employees, on one’s own value proposition, on the objectives one sets for oneself, and whether they have been achieved.

But what is the meaning of the word turnover? In the world of work and human resources, the term turnover refers to the flow of people hired and discharged within a company.

Staff turnover doesn’t just affect employees who are affected or decide to leave voluntarily, but it also cascades to bosses, management, and everyone else who works within a company.

Think of someone who works in a team with people who are constantly rotating, in which case they are unlikely to find a level of harmony that will allow them to complete a project without too much effort. In the same way, when it comes to forming a new team, a manager will also have to deal with the choice of people to whom to rely or not.

We try to get to know more about it in this article.

SUMMARY

What is employee turnover?

In the years of the crisis, from 2008 onwards, we have become increasingly accustomed to the expression turnover, partly because many companies, as we know, have been forced to reduce staff, to move several divisions across borders, and to try to stay afloat. And this has certainly also affected what is defined as physiological turnover, i.e. the natural process of employees entering and leaving. This occurs when there are people retiring or the flow in (with more strategic hires) and out (through layoffs) of staff from the company is increased.

When turnover becomes pathological

If by physiological turnover, however, we mean the normal level of entrances and exits closely related to the way of doing business today, and which is part of the normal organization of work, there is a turnover that instead is alarming: pathological turnover.

As the word, or rather the adjective itself, suggests, this type of turnover is the victim of a “pathos” or internal suffering. It is therefore a situation that is often the culmination of a bad organization of work, stress of workers due to errors in human resource management, lack of transparency, poor prospects for the future, tasks not assigned or not made explicit, as well as deep cracks within the team, excessive shifts and much more.

Pathological turnover is not part of the company’s plans; on the contrary, it can create serious problems in the case of orders taken and to be completed within a certain period of time (in this way the company must make up for it by hiring employees on a temporary basis, with all that this entails), but also with regard to corporate branding, i.e. the company’s reputation and its ability to attract talent.

When there is a turnover of this kind, the first to leave the company tend to be the most qualified employees who, not only are easier to find other opportunities but often, when they are not yet sure of the step to be taken and are on standby, are passive candidates much sought after by companies.

In these cases, it’s enough for an HR person to sense the situation and find the right time to make their offer for a highly qualified candidate who doesn’t feel understood to decide to drop everything.

turnover

In addition to the loss of qualified employees, pathological turnover also results in “losses” on an economic level. As we have said, this is not a planned time so there are additional costs to be considered related to new recruitment, tight timelines, onboarding etc.

As a result of this process, there will be a normal decrease in productivity and an increase in workload for other employees. What’s more, when a person with a high level of seniority and who had been with the company for years, maybe even decades, goes away with it the skills acquired over the long term, the knowledge of the company and the company culture, the people, the customers themselves.

Why prevent pathological turnover

This is why it is increasingly important for a company, be it small, medium or large, not only to identify this phenomenon while it is occurring, but also to anticipate and prevent it with concrete corrective actions (making adjustments to the organization, verifying what is being done, what has been done and what will be done).

The actions that HR, assisted by company management, can take to limit pathological turnover can be very varied. Among these for example are:

  • company climate analysis and exit interviews;
  • staff training and development plans;
  • reviewing remuneration policies based on seniority but also on the market;
  • setting up or reviewing an incentive program;
  • involve staff in strategic choices and in achieving objectives;
  • be transparent and communicative by focusing on all possible means to facilitate internal communication (updating the intranet, company website, blog, social media, continuous appointments that involve everyone);
  • focus on corporate communication to make the brand increasingly attractive in terms of employer branding and talent acquisition.

We will focus on this last point in the next paragraph, but here we would like to mention the possibility of giving pathological turnover a positive meaning by referring, for example, to exit interviews, i.e. interviews with people who are about to leave the company.

This is a situation that can be reversed in your favor: those who are about to leave should not have any particular qualms about telling you why they are doing so, and the interview could be a moment to collect data, analyze them, understand what employees think, what the “trends” are (everyone is inclined to leave, the company is not working well, personal reasons). At the same time it can be an opportunity to get information on what competitors are offering in terms of compensation, benefits, but also talent acquisition policies. In addition to this, it can be a time to understand what drove the resource to work at the company for several years.

All of this can help to create the so-called replacement tables, a tool that is created by cross-referencing organizational information with information about people. This is done by mapping resources, establishing the different roles and relationships between people.

The relationship between turnover and talent acquisition

Talent acquisition and employee retention should be considered on the same level. Often, the focus is on the former, while neglecting the latter, taking for granted the resource that has already joined the company.

Yet employee retention is no less important than talent acquisition, even though it may not seem very exciting. On the other hand, it is often the case that leaders aim to captivate people, get them to follow them, without worrying about nurturing this relationship over time. This reasoning is also counterproductive in economic terms: a company’s commitment to acquiring talent involves an economic and management expense (employing staff, solving any problems, allocating resources, organizing space, etc.).

It is therefore necessary to ask “But why do people leave?”. The reasons may be the most varied. According to a study conducted by Job Seeker Nation 2018 by Jobvite, almost 30% of candidates leave their jobs in the first 3 months. One of the main causes is a mismatch between expectations and the work they were called upon to do on a daily basis. Next, resources leave their jobs because they are not in line with the company culture or because they have experienced some rather unpleasant moments in the work context (a fight with a colleague, verbal mistreatment by a manager). On the other hand, it is not uncommon to encounter employees who leave their bosses and not the company.

Although it is difficult to act on the motivations just mentioned, you can try to intervene on the expectations of resources. How? By working on retention and aiming to cultivate a relationship with candidates even before they join the company. In other words, avoiding that a candidate finds information left and right about his future job (online reviews, opinions of those who have worked in the past, etc.), creating a direct line of communication with those who deal with the management of human resources to be certain of the validity and truthfulness of the news.

This modus operandi allows candidates to discover the company’s culture, mission, values, and even the details of the job they are interested in. Doing this in the talent attraction phase is crucial to the retention of people who will later be selected.

Also according to the Jobvite study we mentioned earlier, company culture has a big influence on employee “attrition.” For this reason, it is important to develop a proactive attitude, trying to “educate” by informing those who aim to enter a company.

Let’s say there are two talented people, both willing to accept an offer because they are interested in the job, the sector and the product offered by the company.  Let’s assume, however, that only one of the two is ready to stay in a competitive and highly demanding environment; it goes without saying that the other will soon fall out of love with the company. If, on the other hand, the other person has the necessary information in advance, they can make their own assessments and understand whether the firm is right for them.

Doing things this way, giving candidates the opportunity to learn more about the company – by providing them with content, interviews, articles or simply explaining everything verbally – even before they apply for a particular position, means that there will be less of a mismatch between what the person expects and what they will actually find once they are hired.

Focusing on talent acquisition to stem pathological turnover also means pursuing a competency-based recruitment process. What does that mean? Instead of focusing on companies and positions that are in line with the candidate’s history, it means focusing on the resource’s new skills and enhancing its hidden potential.

recruiting skills

On the other hand, recruiting like this is a proven method for retaining talent and building loyalty. Being evaluated and asked for what you know how to do, think about it, is not only a huge attraction but also a way, subsequently, to feel important, valued. And this, as we know, has a huge impact on the bond you can create with the company.

In addition to this, there is internal mobility, i.e. the fact – another fundamental element for talent acquisition – that candidates are aware that they always have opportunities for growth and development in conjunction with acquiring new experience and skills in their work: being able to practice in the company what they will be able to learn outside of the work context.

Therefore, talent acquisition strategies can have a huge impact on employee retention and on keeping employees longer and longer.

Also – and not even that much – the recruiting marketing strategies that a company deploys also matter a lot.

How to calculate human resources turnover

The analysis of internal data and comparison with the labor market are useful for planning hiring, training and internal mobility plans. Of course, if you’re faced with a turnover situation, you can’t just rely on gut feelings, far from it.

It is necessary to analyze mathematically what is happening in order to have a real sense of how serious the process is and what needs to be done, and within what timeframe, to stem the phenomenon.

To calculate the turnover rate, therefore, we need to

Divide the number of employees who left their jobs by the total number of employees since the beginning of the reporting period.

Let’s explain: if a company has 150 employees and 3 have left since the beginning of the year, the turnover rate will be 3/150 x 100 or 2%.

It goes without saying that you can either do the overall company turnover calculation or calculate it by individual departments and divisions.

The direct and indirect costs of turnover

calculate turnover

The relationship between turnover and talent acquisition

It must be remembered that turnover has costs to consider. We can make a distinction between what are direct and indirect costs:

  • Direct costs are immediately visible, i.e., the costs of attracting people and placing them: research and selection of personnel, the placement itself, training, organization and setting up the company space.
  • Indirect costs are those that are not immediately perceived: reduced productivity, loss of knowledge, increased workloads, dissatisfied customers, stress, lack of trust, negative publicity that affects both the employees themselves and those interested in the company.

Achieve employee engagement easily and effectively

In light of what we’ve said, how do we achieve employee engagement? How to engage candidates during the candidate journey? How to avoid turnover? Here are helpful tips from both the company’s and the candidate’s perspective.

  1. Promote internal mobility

Never neglect employees and treat them as if they were special. After all, you’ve already hired them, they know and are part of the company. That’s why, in order to avoid dissatisfaction, you need to focus on internal mobility, making them understand that it is possible to change roles, offices or divisions, if you have the right skills and experience.

This will be an asset to you both in fostering employee engagement and attracting hypothetical candidates. Knowing that you don’t always have to stay in the same job, but that you can demonstrate your potential, be active and challenge yourself in other contexts is very important.

  1. Anticipate backfills

Backfills are positions that open up when someone leaves the company. HR needs to anticipate what will happen.

This is possible if you keep abreast of what is going on inside the company and if you frequently consult the database with employee profiles. Let’s assume that in a company there is an employee who has been in the same role for 3 years. If you are not satisfied with your employee’s performance, you should think about promoting him (perhaps by offering him a role in which he was interested at the time of the interview).

It is important to remember that, in order to avoid business attrition, it is necessary to interpret the numbers. To keep track of the selection process, software such as In-recruiting is useful. In this sense, you can highlight certain aspects of the candidates that, although they may have seemed irrelevant at the time of the interview, may come in handy later, evaluating the possibility of involving the employee in initiatives that would enhance his or her value.

Let’s take a concrete example: years ago you hired an excellent project manager who lately has not been very satisfied with his job and who, among his past experiences, has one of coordination in a publishing house, which he remembered as a good period in his life. The company is planning to do some publishing and rather than outsource all the work to an external supplier, you could propose that the project manager take care of part of this project by giving him a chance to demonstrate something he can do that would make him happy. This work could sit alongside his current one and help him find new blood.

  1. Consider employee referrals and first impressions

As for candidates, it’s important to remember how strong the employee referral is. First impressions of new hires also have a big impact. Engaging new employees early on significantly reduces turnover; in fact, those with structured onboarding experience will likely be inclined to stay longer with the company precisely because they felt welcomed from the start. This can also be monitored through onboarding software.

  1. Create a great candidate experience

Taking care of the candidate experience, how the candidate feels during the recruitment and selection process (important, special or just one of many) is fundamental to creating a bond with the company.

Not putting the person at the center of every step of the selection process, using inappropriate words, not trying to empathize – it can be counterproductive to turnover. This reduces the likelihood that the company will be chosen by valuable candidates and, should they come into contact with it, they will do so with qualms, creating a precarious relationship.

Even this phase of the selection process can be optimized by relying on a recruiting software focusing on interviews or personalized feedback to the candidate, to better manage the relationship with the company.

These are all aspects that affect candidates, but also those who are already inside the company: if there is attention to people from the beginning, it can only be an advantage and one more reason to become loyal and not jump ship.