February 27, 2018
The state of the hiring cycle is in flux. The rise of the gig economy and an increasingly unstable job market — regardless of which phenomenon you believe led to the other — are indisputable. Retail corporation’s bigger benefits packages for part-time employees offer a modicum of stability that can lure employees away from their previous positions, increasing the frequency of employee turnover.
And as the churn rate nudge upwards, startups are at the greatest risk: They depend on relatively few employees, and stand to lose the most productivity to the tectonic shifts triggered when an employee pulls up their roots.
Steven Kramer, CEO at the workforce management software business WorkJam, has his own theory detailing the four-phase cycle of employee turnover. He filters it through the retail sector, but it’s a concise way to explain the company-wide ripples that a worker’s leaving ultimately causes in any industry.
Phase 1: Experienced Employees Leave
“Long-term associates leave their jobs for many reasons: scheduling conflicts, lack of training, change in management, or mismanagement. Whatever their reason, many retailers’ best, most experienced associates leave to pursue other opportunities,” Steven told me.
There’s no preventing this phase — at least, not directly. As with any other cycle, we’ll come back to this step eventually.
Phase 2: Onboard New Employees
In the second phase, retailers choose to onboard new employees. As a result, managers will clock hours through their efforts to recruit, hire, and train replacements for their former associates. The result is a temporarily unbalanced workplace as both the manager and the new hires work harder than normal in order to overcome a learning curve, leaving the other employees to pick up the slack.
“During these intensive weeks,” Steven explains, “other associates overextend themselves, but the retailer is still left understaffed. Further, because they’re busy onboarding, managers fall out of touch with frontline associates.”
To minimize the troubles, managers can produce a more streamlined process to help onboard associates in as efficient a manner as possible. Have you configured their computer and email accounts? Do they need a security badge or a guidebook to their new software? Can they find the cafeteria, copy machine, and restroom on their first day? Collecting all these facts and needs into two locations can help boost efficiency: Create one field guide for new hires, and one checklist for you as the manager to fill out before the new hire even shows up for their first day.
Phase 3: New Hires Start Work
This phase comes with its own inefficiencies, naturally, as managers and their subordinates must shift from training mode to the day-to-day grind. Rapid and honest communication is key.
“Managers often come to find that their new hires come with different scheduling preferences and are able to work fewer types of shifts than their experienced counterparts. The new hires don’t have all the training they need to fill every role. Even though managers may hired a number of new members, they are still understaffed,” Steven says.
Granted, this phase isn’t as bad for productivity as phase two is: If you’ve done your job well, the new hire and the rest of the associates should click together sooner rather than later. But even at its best, the situation still leads right into phase four.
Phase 4: Revenues Drop
You can bring in smart and experienced employees, but it’s impossible to match the workplace-specific experience that a seasoned employee can bring to their position. Even though your new hires are likely well-equipped for the job, they’ll be less familiar with your products or services, and as a result will be less likely to serve as effective brand ambassadors, Steven explains.
“Until the new associates become as knowledgeable as the experienced ones who left, customer experience is impacted, leading to lost sales opportunities and missed revenue targets,” he says.
Worse, this phase leads directly back into the ongoing employee turnover cycle: “The scheduling headaches of onboarding and hiring combined with lost revenue create a cycle of attrition, causing more experienced associates to leave, looking for new hourly work. And just like that, retailers find themselves back in phase one.”
“All of this might seem hypothetical,” Steven notes, “but the costs of this cycle are very tangible. Over half — 63 percent — of managers believe that the retention of a single employee could bolster monthly revenues by six percent or more. Employee turnover perpetuates poor returns for retailers.”
But there’s a catch: A good manager can’t make their decisions based off of whether an employee might leave, and no one can see the future in order to prepare prior to this employee turnover cycle kicking off. For the most part, employee churn is not only impossible to avoid, but is actually a sign that a workplace is healthy.
“Great bosses tend to prize talent and creativity over the stability of their staff,” one Fast Company article warns, “They usually won’t hesitate to hire a person who’s ‘intellectually overqualified,’ who seems like ‘too much of a high flyer,’ or who might not ‘stick around.'”
So if you’re not using managerial decisions to fix a turnover problem, is there a solution to all that lost revenue?
The only way to streamline the inevitable four-stage cycle you’ll kick off whenever an employee leaves is to put your efforts towards reducing the effects of the turnover process that follows. Open communication and an efficient pipeline are your best defenses against a turnover problem.
By speeding up the slow learning process and mitigating the revenues lost, you’ll work towards stopping stage four of the cycle from rolling right over into the next stage one. “Fixing broken scheduling practices, improving training, and improving communication in the workplace,” according to Steven, are all fixes that can help boost employee retention in the long term.
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