In a recent study, nearly all executives surveyed believe that retention of new hires is an issue in their organization and the majority see new hire retention as an issue to “a great extent.”
As anyone involved in recruiting knows, considerable time and effort is spent recruiting talent, especially top talent. So keeping the talent that you’ve worked so hard to find and hire should be a concern and priority for organizations and their executives.
Especially when as many as 1 in 4 new hires will quit in their first six months.
Let that sink in for awhile. One out of every four people who accepts your job offer will be providing their resignation letter (or something of that sort) within six months. If it ever seems like you’re spinning your wheels hiring for the same position, this statistic may explain that feeling.
And aside from the precious time you’ll never get back, there are big costs associated with turnover. According to the Society of Human Resource Management (SHRM), the average cost to fill an open position is $4,129.00, and it takes an average of 42 days to fill an open position. Whether that number is a reasonable reflection of the cost it takes to fill your average opening depends on many factors, but what it likely doesn’t include is the cost of having that job open for 42 days. Is that position a direct revenue generating role? What is the cost of scheduling overtime to compensate for the missing employee? Is being understaffed impacting your client retention or customer satisfaction? The list goes on. And that likely doesn’t take into account the cost of onboarding and training your new employee once they start.
Given that as much as 25 percent of employee turnover occurs in the first 180 days of employment, other studies have shown 20 percent turnover in the first 90 days, which can be a lot of time and money spent on your newest hires (and potentially their replacements). It also leaves a lot of unanswered questions but namely one: They just accepted your job, probably with some degree of excitement and gratitude. So why does a new hire quit?
Better Job Fit
It’s been said that “success breeds success.” Likewise, employees who do well in their jobs are typically primed for advancement. So what happens when someone is unsuccessful in their job? Sometimes the company provides management or training support, but generally at some point, either the employee chooses to move on or the company makes the choice for the employee. The ability to be successful is not only important to the long-term career for employees, it’s also important in the short term. Feeling accomplished and competent impacts our self esteem and our happiness. So it’s not surprising that feeling successful in one’s job is the key factor in a recent survey on the State of the American Workforce. According to the survey by Gallup, “Sixty percent of employees say the ability to do what they do best in a role is ‘very important’ to them. Male and female employees, and employees of all generations, place the greatest importance on this aspect of a job.”
By setting appropriate expectations for candidates about the work they will be doing, you set both the candidate and the company up for better success. Give candidates clear insight into what the jobs entail at your company. Share “Day in the Life” videos for key roles and write high-quality job descriptions that talk about the goals of the role, not just the duties. Consider giving candidates a project, a job “try out,” or allow them to shadow someone in the same or similar role. Increasing the transparency during the recruiting process allows candidates to better understand what they are signing up for so they are less likely to have buyer’s remorse after they begin to find it’s different than expected.
Nevertheless, helping to set your employees up for success only begins during the recruiting process. By giving employees the tools they need to do the work once they start, organizations can help their employees feel like they are contributing successfully and to the best of their ability. While effective onboarding is important, training and support should not end after new hire orientation. Reinvest a fraction of what turnover would cost your company into ongoing support of new hires through their first six months. Many companies use strategic 30-, 60- and 90-day training plans to help keep new hires engaged and growing their skills. This type of consistent and open dialogue also allows both managers and employees to share concerns as they arise.
Better Company Fit
Ever walk into a party or an event and have the thought, “I don’t belong here”? It’s awkward, uncomfortable and generally an exit plan is concocted soon thereafter. Showing up for work at a new company and realizing the company fit is wrong can feel the same way. We spend an average of 30 percent of our entire lives at work, so employment in an environment you don’t enjoy can make a big impact on our overall happiness and wellbeing. It can also mean a lot of lonely lunches. And that matters in a big way. In fact, it has been found to be so influential that Gallup includes the statement, “I have a best friend at work,” as one of only twelve key dimensions for successful work groups, and sees it as a key to retention.
Having friends at work is an important factor that impacts retention, but it also enables people to get things done. Few people work truly alone as individual contributors. In nearly all roles, employees must rely on colleagues to accomplish tasks or drive results. Having good relationships can be a critical piece of the puzzle for how to be successful in complex, and sometimes political, work environments. Allowing candidates to meet multiple people during the interview process in informal ways, such as introductions during an office tour, can help both the company and the candidate determine if there is a good cultural fit. Ongoing, companies can help foster collegial relationships through both structured and informal programs, such as mentorships, company outings, and even regular changing of seating arrangements. Building cross-functional workgroups has shown to be beneficial to the organization and can also aid in allowing employees to meet coworkers with whom they do not work with regularly.
In addition to creating a strong network, the ability to connect to the company’s results and mission are also an important factor. As an example, Millennials believe that business success is more than the bottom line. According to the Deloitte Millennial Survey, 63 percent reference the quality of its products and services, and 62 percent reference levels of employee satisfaction as key indicators of business performance. In this same survey, when asked about various factors influencing their decisions at work, “my personal values/morals” ranked first. So employees who feel that their values do not align with organizational values, may find themselves facing not just an unpleasant work environment, but also a daily moral dilemma. Sharing your values proudly on your career site and in your recruiting materials is an easy way to let your candidates know both what you stand for and what you expect. You give them a chance to buy into your values or to opt out of the recruiting process with your company. Use interviews as a way to identify cultural alignment to those values, and to also show candidates how the company lives these values through activities and actions.
Company brand still ranks as a key factor in how people make decisions regarding the companies that they want to work for. So when a company takes a hit in the press or loses industry prestige, the fall from grace can impact an employee’s pride in the logo they wear or the business card they carry. They may also feel it will impact their ability to be successful. Consider the sales person who feels she represents a brand that no longer has credibility in the marketplace. Think about an accountant who worries that he may have difficulty finding his next job due to recent penalties levied against his firm by regulating bodies. These are real challenges for employees, and do influence their decision to continue or end employment with their companies. That’s why internal and external PR is important. Let both your employees and candidates know the great things that are happening within your organization. This can be done through posts on the career site and intranet, newsletters, and signage around the office. And when things don’t go right, be sure to take ownership and share how your company is getting back on track.
Better Life Fit
Sometimes the opportunities that lure away new hires present a seemingly more direct or immediate benefit to their lives. While compensation is not the top factor influencing job decisions, it has a consistent presence as a significant influencer. According to the Gallup survey, “roughly four in 10 employees (41 percent) say a significant increase in income is ‘very important’ to them when considering a new job.” With many other factors feeling ambiguous or emotionally driven, more money can be a big sway. Yet, what candidate may neglect to calculate is the total compensation package including benefits, educational reimbursements and other substantial perks. Benchmarking, or clearly communicating all of the benefits provided, can help put the paycheck in perspective.
One of these other benefits that can sometimes be missed is the cost and time savings of an easy commute. Prospective employees rarely test their commutes during peak travel times because interviews onsite are typically mid-day. Often the commuter optimistically estimates and may be dismayed by the realities of daily commuting. And that’s a real problem because studies show that overall happiness can be influenced by satisfaction with a work commute. While academics have shown a correlation, corporations have also been able to find a connection between commute distance and key indicators of turnover risk such as absenteeism and tardiness. There is also the direct connection of turnover to the commute, itself.
Commute is important for financial reasons, but it also impacts employees for personal reasons. Time spent during a commute is less time contributing toward work, but also to personal time. This is meaningful because better balance is another key factor influencing employment decisions and changes. According to the Gallup survey, 51 percent of employees say they would switch to a job that allows them flextime, and 37 percent of employees would switch to a job that allows them to work off-site at least part of the time. So while companies like IBM and Yahoo are pulling back from their remote-work opportunities, providing some scheduling or location flexibility is one way to stay competitive and improve retention among employees who value it.
The rates for new hire turnover may seem staggering, but keep in mind these are your employees closest to the job search. Gallup has found that more than half of employees (51 percent) say they are actively looking for a different job or watching for opportunities. Yet, it is your newest hires who may still be hearing back from applications they had submitted during their recent job search. They may still be receiving job alerts from job boards or company websites from when they were in the market before accepting your job. And they are likely less invested in your company than your more tenured employees. So, setup your newest hires and your company for longer term success together. Give your candidates a clear view into working at your company and in their job, and give your new hires the support to be successful in their relationships and doing their work. After all, you probably can’t afford not to.