Autopaychecks Blog June 2013: The High Cost of Employee Turnover

High Employee Turnover is Expensive and Frustrating.

The cost of finding and training a new employee to the point where they actually make you money is staggering.  On average a new employee does not begin to make you money until their productivity reaches about three times wages.  In many cases that may not happen for nearly a year.  So as you can imagine, making good hiring decisions and investing in good training are critical.  As an employer the faster the new worker gets up to speed and productive the better off you will be.

The first step in this process of successfully finding and retaining the right people is how we hire.  Here are some helpful hints.

1-      Make a very specific list of the responsibilities or tasks your new hire will be required to perform.  Put together a detailed job description.  Know why you are hiring and have clear performance goals in mind.

2-      Interview with standardized questions so that you can fairly compare candidates.

3-      Do skills and aptitude testing.

4-      Do background screening, especially for key positions.

Responsibilities and Tasks:  As you make this list of what this employee will be doing and be very specific.  Write it down.  Sit down with current experienced employees and ask them what the description should include.  As business owners we can get disconnected with the everyday tasks that our people do.  This will become your job description and define your expectations.  Employees who know what is expected of them are much happier than those who do not.

Interview:  When you conduct your interviews think about doing so with two interviewers.  My wife and I conduct interview together.  We both see the world differently and interpret people differently.  We pick up cues and make observations in very different ways.  I think men and women typically see the world from very different perspectives and that is valuable.  We work from a standard set of questions and take time to write down the answers.  One observes while the other asks questions and writes responses then we switch.  After we conduct the interview, we take 5-10 minutes to “debrief”.  We share our observations at that point while it is still fresh.  This method has been very successful for us.  When you actually conduct the interview, make sure that the questions you ask are “open ended”.  Never ask “Yes or No” closed ended questions.  The idea is to draw out information, attitudes, perspective, world view, strengths and weaknesses out of the applicants mind.  Open ended questions begin with and invitation to “share” – “Tell me about…..”, “How would you respond if….”,  “What would you do if…..  Write out and practice asking good questions – you may only get one chance to do this.

Do Skills and Aptitude Testing:  In our experience lots of applicants overstate their qualifications and in some cases the just flat lie.  Over the years we have found that certain tests are key to getting the right folks on board.  This will be different for every industry and you will need to experiment to find out what skills are critical for you.  With a little research you will find firms whose business is testing.  There are specialist for sales assessment, computer aptitude and more.  They can be expensive, but hiring the wrong person is much more expensive.

Background screening:  We encourage all of our clients to do criminal background screening on all new hires.  Criminals don’t wear signs to announce their intentions.  Education is one of the most frequently lied about topics on resume’s – so check that out as well for critical positions.  Do credit checks on folks who handle money or have access to other folk’s money.  Understand that normally good people are more likely to do bad things when they are under extreme financial pressure.  If you hire a new receptionist for your real estate office, law office or doctor’s office and don’t do good background screening on them you are putting your client’s privacy or finances at risk.  If your employees “touch” the public, go into your clients homes or offices and you don’t do a sex offender screening on them you have not done your due diligence.  If that person commits a crime you may be implicated because you did not do what you could have to protect the interests of your clients.

Hiring well is the first key to reducing employee turnover.  If you put the right people in the right seats in your business you will be much happier and so will your customers.

One last thing.  Treat your people well, invest in them, treat them with respect and give them the opportunity to grow and earn more.  If you do you will help yourself to proper along the way.