A few months ago, there was an article in The Cleveland Plain Dealer, or cleveland.com, that provided some perspective as to why employees quit their jobs. Some of the reasons included a lack of respect from the supervisor or manager, lack of appreciation for the work being performed or for abilities, and lack of ability to improve skills or promotion opportunities.
In fact, there’s also another article that says employees should not stay at a job longer than a year or two because it decreases income. The author explains that an annual raises may now not be enough to cover inflation. He also says it used to be recessions helped employers keep salaries and raises to a minimum but now employers have learned to extend that idea to a regular occurence.
No matter why employees decide to leave, one of the responsibilities managers have is to keep employees from leaving or reduce turnover. As a new manager, I was told turnover costs are manageable and turnover rates need to be kept to a minimum to control those costs. Over and over again that was stressed, and, you know, it is exactly true.
The problem with managing turnover is managers sometimes think it’s okay to let people go. That is NOT managing turnover. In two different reports, one from Harvard Business Review (HBR) and the other from the Society of Human Resource Management (SHRM), consultants said it’s okay to lay people off if there’s duplication of work, employees are underperforming, or if there hasn’t been a lot of turnover and there is a need to remove supervisors. Those are other managerial problems that have nothing to do with turnover and can be addressed in other ways.
The National Restaurant Association says the 2014 turnover rate of 66.3% in the hospitality industry is okay because the employees are teenagers or students and others are switching jobs in the industry and that’s normal. But if the turnover rate is 50% or greater, that means for every employee I hire, I’m losing one, and maybe two as in this case.
By having to hire all the time, which that requires, it takes away the concentration from other business areas that could help to build it. The money I lose from having to train, the loss of productivity and not to mention the customer service I may not be able to provide are huge costs to my business.
According to an Inc. article, it may be difficult to put an actual dollar amount on certain areas related to turnover but it does have a significant impact to the bottom line. Other areas impacted in addition to those in the above paragraph, there also is the lack of knowledge that can impact customer service and the increased workload on remaining employees until a replacement is hired, trained and is a productive member of the organization.
So how can managers avoid and reduce turnover issues? One way is to address the pay and benefit issues. During 2015, the retail industry saw a decrease in interest in retail jobs (Business Insider, October, 2015) and has not yet made a strong recovery from the recession so this week Macy’s in New York listened to their employees during contract negotiations. Macy’s agreed to a substantial increase in wages and provided improvements to health care coverage. Another concern of the employees that was addressed were scheduling issues particularly at holiday time (New York Times, June 17, 2016).
The high turnover rates in some retail stores has caused them to re-think their pay structure. Wal-Mart, Target, TJ Maxx have started to improve their wages as other retail establishments have lower turnover rates with higher wages. (Business Insider, October, 2015).
But pay, benefits and scheduling are not the only things to decrease turnover. These improvements may only be short-term in nature but what can help more long-term can be through employee engagement such as what we have emphasized over and over again. Involving people in the day-to-day operations can be a huge benefit in reducing turnover. Although we don’t know if this occurs but if Macy’s and the union that represents the employees in New York City have a labor-management committee that can be a great way to involve employees. Hopefully, those other than leadership are involved on both sides. Employees in non-union workplaces can also be involved day-to-day decisions.
Also investing in employees longevity such as ongoing training and educational needs can be important for managers to show they value employees. Any organization that does that or any combination of strategies identified can help keep employees from leaving the organization.
In a response to the high turnover in the hospitality sector, one article (Hotel Marketing Strategies)suggests leaders may have to change themselves and their style to change the workplace culture. As the author, Josh Tolan, says, “It’s easy to point the finger at employees, but is your turnover problem actually closer to home?”
Josh Tolan also makes another great point at the end of the article, “Employee turnover is a huge problem in the hospitality industry, but it doesn’t have to be.” He’s right – it doesn’t have to be and that’s in any industry or workplace!