Employee retention is a crucial component of a healthy and happy organization. Conversely, a regular cycle of turnover can lead to decreased productivity, increased costs (to replace employees), lowered expertise, and ultimately lower team morale. More specifically:
- Turnover is costly! The average cost per employee for turnover is nearly $15,000 according to The Work Institutes 2020 Retention Report. Some of these costs are easy to compute, such as the labor cost of retraining and job advertising. But many costs are silent killers, such as lowered organizational knowledge and productivity.
- Things almost never go according to plan. Of every 10 people who leave a job, approximately 1 is due to retirement, 3 are from layoffs, and 6 are from resignations. That means that roughly 9 of every 10 people who leave your company are doing so in a manner that was not the original plan of either the employee or the employer. And with each person who walks out, so too does the institutional knowledge and expertise that person has gained.
- The skills paradox. As the need for skilled employees continues to rise, the availability of skilled employees continues to fall. To put this in context, in the United States, there were over 7 million job openings in 2019 and approximately 6 million unemployed individuals according to the Work Institute’s 2020 Retention Report. This means that not only will it become increasingly difficult to retain good employees, since they are in high demand, but it will be hard to find replacements if they leave.
Fortunately, once an employee is a part of your organization, there are many effective methods to reduce turnover. These include measuring (and working to increase) employee satisfaction, placing a managerial focus on employee engagement, and providing clearly defined opportunities for advancement.
But there is one simple, and far too often overlooked, strategy any organization can immediately take to increase retention. You need to go back to where each new employee started — at the job posting. However, since you likely don’t have time traveling capabilities, what you can proactively do is to critically analyze your up-front recruiting practices to help you attract, and ultimately hire, the best fit applicants you can.
Here are two simple steps that will help you better align your organization’s needs with those of your next employees, and they both begin at the job posting level. This analysis can help set the stage for a successful, aligned hiring transaction. And alignment, be it cultural, skills, or experience, is critical for long term retention.
- Provide honest job previews and job descriptions
Research shows that presenting applicants with a realistic job preview during the recruitment process has a positive effect on retention of those new hires. An employer is most likely to lose newly recruited employees when their job is not what they anticipated. “I left the company because the job description did not match what I wound up doing. It was not a good fit for me” was a common survey response by workers who quit their jobs in 2019 according to the Work Institute’s 2020 Retention Report.
Being honest in your job descriptions starts the relationship off on the right foot. Candidates apply to jobs based on what they read in the job description. If you’re not honest, or if you’re fluffing up your postings to attract more and better quality applicants, you’re not doing anyone any favors. You will likely end up with a hire whose day-to-day work is nothing like the job description for which they were hired. The result? A frustrated and confused new hire and an increased probability of a short employee-employer relationship.
- Align the application with the job at hand
A job application should contain questions specific to the role for which the applicant is applying. This approach benefits both the applicant and the employer.
From an applicant’s perspective, they will know immediately that you are not using a one-size fits all generic job application and that you, as a hiring organization, took the time to craft a job-specific process that is more likely to resonate with the applicant. In addition, the applicant will understand exactly what the job entails (based on the job-specific questions) and will know if they are a good fit for the position and/or your organization.
From an employer’s perspective, job specific applications provide you with better insight into whether an applicant may be a good fit for your team. For example, organizations may want to include specific skill based questions, availability inquiries (if the job contains shift work), situational-based questions, and more. You’ll know early in the process who is (or isn’t) a good fit. And once you have started to evaluate possible strong-fit applicants, turning to pre-employment assessments can help narrow the candidate pool even further. These can range from hard skills (such as typing and math skills tests) to softer tests (such as personality) that can help determine organizational and cultural fit.
Not magic, but alignment
There is no simple way to reduce employee turnover to zero. However, every ounce of improvement matters over the long term, and one of the best ways to improve a company’s overall retention rate is to improve the company’s hiring strategy.
According to the Harvard Business Review, 80% of turnover can be attributed to bad hiring decisions. Most companies spend their retention efforts post-hire, when the data clearly shows that more energy should be spent on pre-hire efforts. Companies that recognize this and take action will reap the rewards of improved employee retention over time.