Staff turnover in SA is as high as ever. While new blood in a company can be desirable for the new ideas and breath of fresh air it brings, there could be detrimental implications in several areas when turnover is constant and excessive.
Excessive labour turnover has an impact on the finances of a company, company image and staff morale with resulting negative productivity shifts. Employers may retort that nobody is irreplaceable, but if a company is experiencing rapid turnover that is hurting the overall business output, it is time to take measures to slow things down.
Slowing down or stopping excessive labour turnover takes a great deal of introspection by management, with a commitment to change on all the fronts that require it.
Jill Hamlyn, MD, The People Business
This is especially true now that business is being directed to invest in the upgrading of staff skills under the Skills Development Act. Many companies in the IT sector are wary enough as it is with regards to training staff, with the perception that skilled staff are marketable staff. Nobody wants to lose staff they have spent time and money on. Now more than ever, the challenge is to retain the people that companies have invested in.
Zero turnover is not a desirable state of affairs either. New employees have the advantage of bringing diverse backgrounds and a fresh perspective to business. It can be expected that about 5% of staff will be lost in any given 12-month period. This loss is usually due to factors beyond our control. However, where loss of staff can be prevented, companies need to be aware of factors that could have precipitated premature departure. If a company is also consistently losing only a small percentage of staff, but the staff being lost are key members of the workforce, there is also cause for concern. Quality is as important as quantity.
Preventable causes of staff loss fall under one or several of the following:
* Inflexible or non-market related payment package.
* Absence of learning opportunities with slow career growth and poor job satisfaction.
* Fear of stagnation in a company perceived not to be developing.
* Constant and irrational moving of goalposts by management.
* Lack of feedback, positive affirmation and encouragement.
* Little respect for individuality within the bigger corporate picture with limited opportunities for initiative.
* Poor leadership leading to personality clashes and a "ganging up" against management.
* Adverse corporate environmental factors such as lack of support and team spirit, excessive politics, inadequate resources, or personality clashes.
Costly exercise
It is expensive to lose and replace staff. Costs incurred are both in the financial and human spheres. When an employee resigns, costs of initial recruitment, induction, training and resources are unredeemable. Added to these are severance costs, leave payout, cost of conducting an exit interview and the processing of administration. Then come the recruitment costs as a replacement is sought: recruitment advertising or agency fees, screening costs, increased salary bill for the new employee who has usually been recruited at a premium, temporary use of contractors to fill the space left by the departing employee, and orientation costs.
These financial costs do not take into account time spent on initial interviews, reference checking, skills competency checking, rejection of unsuccessful applicants and salaries administration. Human costs find their way into loss of departmental productivity as staff morale plummets due to highlighting of perceived problems, increased workload, stress and pressure caused by staff shortages, and a decline in departmental image. Clients are also likely to be unsympathetic to the manpower problems being experienced. One resignation can sometimes spark off others, with a knock-on effect. It is not uncommon for two or three resignations to occur within a short period of time.
Slowing down or stopping excessive labour turnover takes a great deal of introspection by management, with a commitment to change on all the fronts that require it. The historical turnover rate may be calculated by dividing your voluntary terminations per annum by your average staff complement and multiplying it by a hundred to reach a percentage. If the percentage is too high, set realistic goals and targets in order to reduce it. If you have conducted exit interviews, analyse these and identify reasons for avoidable resignations and implement steps to remedy the causes. If you do not have a system of conducting exit interviews, set one up as soon as possible. These interviews should be conducted by impartial personnel or even external consultants.
Further steps toward the prevention of extreme labour turnover can be taken. It starts at the beginning with the hiring of personnel. Recruit intelligently and with foresight. Employ people who are able to complement the culture of your organisation. During the initial interviews, give an honest picture of the company. Do not raise expectations that cannot be met or make promises that cannot be kept. Insist on regular performance appraisals and goal-setting sessions. Check that management is trained and competent in the art of reviewing employee performance.
Organisational goals
Develop a plan that allows for mutually beneficial individual and career growth. Rotate staff wherever it is possible. The Skills Development Act and resulting skills development plans will allow employers to facilitate staff rotation in line with current, new or dormant skills as well as staff aspirations. Be committed to training. Consider bringing in a skills development expert if you do not have one in-house. Work with them to make a clear plan in line with organisational goals and stick to it. Stay informed of trends in salary and if possible, offer flexible salary structures in line with employee needs.
Staff are more than just employees. Encourage a management style that allows staff to think this way. Work hard to gain their loyalty through integrity and sincere care and concern. Let them know that they are important to the organisation and that their initiatives, opinions and efforts count.
In terms of the financial bottom line and the overall workings of an organisation, it makes sense to lower avoidable staff turnover. In an arena that is constantly in flux like the IT sector in SA (and in many parts of the world) where there is a glut of some skills and a desperate shortage of others, staff that make a valuable contribution to your organisation and fit in with the corporate culture are priceless. Any measures that are put into place in order to restrict unnecessary staff attrition will have a far-reaching impact on your welfare, the welfare of your staff and ultimately, the welfare of the company.
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