Losing an employee is costly — very costly. Yet, many organizations don't know how to ensure that its human resource assets don't just walk away.
The US Department of Labor Bureau of Labor Statistics reports that more than 2 million people voluntarily leave their jobs each month. The Society of Human Resources Management has found that the cost of replacing an employee ranges from 50 percent of the employee's annual salary to 400 percent of their annual salary. So that employee with an annual salary of $45,000 that just gave his notice — the cost of replacing him could be between $16,000 and $160,000. And the other employee, the one whose annual salary was $150,000 — the cost of replacing her could range from $60,000 to $600,000. Not inexpensive.
In July 2013, Tompkins Supply Chain Consortium released its Supply Chain Talent Report. According to the report, the supply chain industry is expected to experience an increase in turnover within the next 18 months. Most impacted will be positions in planning, procurement, and manufacturing. Reasons include plant closures, outsourcing, and the need for specialized skillsets. There are other reasons as well. Accenture conducted a study (across industries) and found the top four reasons why employees quit their jobs are: a lack of recognition (43 percent), internal politics (35 percent), a lack of empowerment (31 percent), and because they don't like their boss (31 percent).
For managers, several lessons are there to be learned. Let's start with the simple lessons. These lessons involve flipping the negatives (the reasons for leaving) to the positive (creating reasons for staying). That is: recognize employees, empower employees, and take steps to remove from the work environment as much bureaucracy and internal politics as possible. By taking these steps the employee who doesn't like you may change their tune — a bit. If not, it is reasonable to talk with an employee and determine what the issue is. If the issue is something that cannot be addressed and if it is impacting productivity and team morale, explore transferring the employee within the company.
Other keys to employee retention include buy-in and success. Specifically, it is important to gain buy-in from your employees. If an employee is going to be motivated to not just do their job, but to excel at their job — they need to buy-in. They also need to, regularly, succeed and realize progress. A great resource on achieving buy-in and enabling success is The Heart of Change by John P. Kotter and Dan S. Cohen.
While the time and expense of retaining an employee may seem daunting, the cost of losing an employee is much greater.
If you do find yourself in the position of needing to hire a new employee, I've previously written about how to hire the pick of the supply chain litter.