Each year businesses review their recruitment efforts and plan for the upcoming year, budgeting accordingly. Typically there are two main factors in mind when the budget is created: how many people do we expect to replace, and how many people do we expect to add. Both of these use data points from the previous years: expected turnover, known new hires, internal recruitment efforts, external recruiter costs, job board spend, software licenses, etc. Once the number is set we accept it and move on. What businesses often completely overlook is why their turnover is happening, evaluating if and how it can be reduced, and analyzing the overall impact on our business. Reducing this cost can eliminate backfilling some of your most expensive positions, cut onboarding costs, and boost overall company performance.
Before anything can happen you need to truly understand the scope of your employee turnover and the true reasons behind it. The first part is easy: how many people left or were let go last year? The second part requires a little more evaluation. Some turnover is easy to categorize but the root cause behind exiting employees can be very difficult to uncover. People may leave for a better opportunity, but this can mean anything. It could be salary driven, it may be that there is more growth available elsewhere, maybe there were issues with management or co-workers, it could mean that the new company simply has a better culture match. This also applies to employees that are fired or laid-off, there could be underlying issues affecting performance that unfortunately turns good employees into poor-performing employees. Performing an exit interview with all outgoing employees, regardless of why, may help you uncover the real reasons for turnover, giving you a chance to address them in the future.
Recruitment and Onboarding
Studies show that how employees are recruited and onboarded can affect their overall tenure. For example, employees that are referred by current employees typically have an average tenure of 4.7 years, compared to 4.2 years for employees that do not have pre-existing relationships with other employees. These same studies identify proper onboarding as a key factor in employee tenure, stating that when employees are properly trained and empowered they are much more likely to be successful. If you’ve been in business long enough you’ve seen rush-hires, positions that “need to be filled ASAP”, but the business was not equipped to manage the employee properly, starting with onboarding. Some go-getting employees will drive through this issue and the performance difference will be minor, but all employees that are not onboarded correctly may have their overall performance affected.
Culture and Morale
There are many ways to have a good culture, and each business is unique to their beliefs and industry. A bank or business in the financial industry may not have the same culture as a software startup. Regardless of what kind of culture you have, measuring it to ensure your employees are happy is key to a long-tenured employee.
Having a strong feedback loop is a great way to measure employee happiness. Some ways to get feedback include annual employee surveys, ability to submit anonymous suggestions and complaints, regular one-on-ones between managers and employees, and annual reviews with a section dedicated to employee comments.
At ERIN we have a golden rule to know if people truly enjoy working here. If employees are willing to tell their friends to work at our company, then they themselves enjoy it. Surveying your employees for happiness is a good start, but actions speak louder than words, and referrals speak just as loud as employees not making referrals.
Long employee tenure is a difficult feat since it’s almost impossible to solve the problem at the end of employment (when it’s most noticeable). However, if your business values the long term impact of seasoned employees then implementing some of the best practices mentioned above can significantly impact employee tenure. It all starts with leadership acknowledging the importance of tenure to the business’s mission, recruitment teams buying into the proper metrics, and management being able to adapt to an ever-changing workplace that keeps employee satisfaction high on the priority list.
Is how you recruit affecting your tenure? Source the best employees, through your best employees with ERIN employee referrals: https://erinapp.com