The employee Lifecycle: How to avoid the impact of high staff turnover on your operations

ciclo de vida del empleadoDo you know what the employee lifecycle means, and what it can do in your company?

Let’s put it this way: All successful companies reach the zenith of their operations through the collaboration of many talents.  In this sense and in an ideal scenario, you would want to always count on the best human quality combined with the highest professional profile to get the best of your endeavor.

Likewise, you would also want your employees to identify as much as you with your brand, because this guarantees that they will remain a long time by your side to give their best in the benefit of the company.

Nevertheless, we know that this is a merely ideal scenario and that reality always presents shades and flats and that we are not always in the capacity to manage without help. Moments of transition and conjunctures like reorganizations, alliances, sales of stock, change of brand, expansions, closings, bankruptcies and others are included among them.

And in each one of these scenarios it is precisely our personnel that ends up suffering most of the consequences of the change.  In other words, the common denominator in all these scenarios is the high staff turnover.

In any case, the high staff turnover has strong impacts on your operations. Discover them and learn to translate them into sheer benefit for your business.

What does high staff turnover mean?

ciclo de vida del empleadoThis is a question that is answered in mathematical terms: When the percentage of recruitment of personnel is practically the same as that of the personnel leaving in a short period of time, you are showing indicators of high staff turnover.

Such percentage can be as close as 7% of difference between termination/resignation and new hire and can extend up to a maximum of 10% if you manage a small payroll; 18-23% if it is medium size and up to 25% if it is large.

 

Employee lifecycle and high staff turnover: A practical example

Suppose you have an SMB that started to bear very interesting benefits thanks to your presence in social media.  For this reason, by the end of 2016, you decided to hire a Community Manager that after 3 months resigned. Then you hired another one that you had to terminate after 7 months and then you hired another one that at the date of the fiscal review, is not showing definite samples of complying with the positions’ objectives either.

When you review the performance statistics of the position by the end of the fiscal period you become aware that:

  • None of the hired personnel has even completed the learning curve at the time of review for the year’s close.
  • You tripled the effort in doing the same selection process and with that, you simultaneously increased the associated operational costs.
  • The goals related to the position were not reached
  • Basically, you wasted time, money, and effort because you did not bear any complete, positive result for your balances.

Then, the generalized sensation that you experiment is that of living in an eternal hiring state, a type of corporate loop or déjà-vu that repeats the selection processes that do not produce the results you are looking for.

If your case is similar to this one, then you should review what and how you are carrying out your personnel selection processes from a helicopter view.  Let us start from the useful employee lifecycle to give it a foothold.

Useful Employee Lifecycle

ciclo de vida del empleadoIn principle, a useful employee lifecycle is a dynamic, continuous, and smooth process that is divided in 5 stages: Recruitment, Onboarding, Development, Retention, and Separation.

Recruitment

For practical and legal effects, the effective start of the useful employee lifecycle is marked by the recruitment.  However, to get to that point we should back-up in time with the previous events that took us there.

Then, the useful employee lifecycle really starts in the need to hire a candidate to fill-up a vacancy in the company. For that, a recruitment notice for candidates that fill out a specialized profile, with specific parameters that satisfy the company’s needs is placed. With this end, we apply techniques for an active search to discover prospects of interest to come to the evaluation stage.  Eventually, this process will end up in an effective recruitment.

Now, why do we include the processes before the recruitment? Because in this stage we generally find a great deal of the problems that lead to high staff turnover.  We will see why.

Onboarding

Once we have selected and hired the candidate, the onboarding stage begins.  In this stage, the company culture is presented and the recruit is instructed about the functions, tasks, and expectations linked to the position.  Simultaneously, a sense of ownership is presented, backing is provided, and a process of gaining mutual trust is started.

It is worth noting that this period may vary depending on the type of position, experience of the recruit, associated tasks, and other particular factors. However, it is estimated that this process lasts at least one week and ends with the formal and complete inclusion of the employee to his or her duties. Likewise, this period is followed by the development stage.

At this time, we emphasize that there are companies whose onboarding period is practically zero. The corporate logic behind this reasoning is that the employee is considered to have the abilities to discover and assimilate the corporate rhythms “on the spot”.

Although this behavior is legal and allowed, it generally causes noises that interfere with the day-today work of the company.  So much so that in this model of companies a voluntary desertion is starting to register in this stage. And if no corrections are applied, it could become a general discomfort that results in high staff turnover.

Development

At the end of the onboarding stage, the development starts right away. In it, the employee shows his or her abilities, skills, and disposition to integrate and add value to the company.

Likewise, the company also shows its hand and opens the channels to let the relation prosper and while doing it, evaluates the employee’s performance in a constant manner.  In this stage the company studies the possibility of compensating the employee with benefits additional to salary such as updates, specializations, promotions, bonuses and incentives that will favor his or her performance and career within the company.

In this stage if you could get baptized, your name would be “Awakening”.  What happens is that both parties discover and get to know the good, the bad, the need to improve and the desirable of the other.  Likewise, both parties evaluate their joint future and weigh the opportunities that the panorama offers at the medium and long term.

Generally, this stage lasts approximately one year starting form the date of hire and termination, another interesting stage starts in the employee lifecycle: The retention stage.

In summary, the development stage is the conjuncture where both parties decide if they want to move forward or end their work relation.  And of course, in the case where both decide to continue with it, a step to the next stage taken.  Therefore, it results crucial and definite for both parties.

Retention

For the company, this point represents the beginning of a long term relation where the employee becomes permanent and where the work satisfaction of both parties is the premise. Equally, it is here where the probability of work desertion is the highest.  Now both parties know each other well and expect great retributions in exchange for the investment that represents for both to continue with the employment relation.

In this sense, on one hand, the employee leaves other interesting opportunities for his or her professional development in search of satisfying the demands of the company.

On the other hand, the company expects to see the retribution of the monetary investment that represents to keep this employee in its ranks.  And in both parties, more and more expectations and demands start arising to guarantee optimal levels of satisfaction, the same that both seek since the beginning of the employment relation. Another thing to note of this stage is that it is indefinite in time unless that is indicated otherwise in contract.

Finally, it is also worth noting that achieving that the employment relation gets to this stage implies a goal that many times it is not recognized justly. Therefore, it is necessary that both sides come to honest and real agreements that compel them to comply in whatever they are committed to achieve.  This way, the high staff turnover that threatens to destabilize the working climate of your company, and ends up making it less attractive and profitable is avoided.

 Separation

Lastly, we get to the final stage of the employee lifecycle: Separation. This can be due to multiple factors that come from dissatisfaction up to natural closing of the lifecycle in which even deaths are contemplated.  On behalf of the company, the separation stage consists in the management and intelligent exploitation of the reasons that drive the employee to leave the company and the resources associated with it.

This stage may end up in a duel for all the people involved and it leaves behind a learning experience worth capitalizing for future hires. In case that the circumstances allow it, it is the appropriate time to apply an honest survey about the general experience of the employee who is leaving where recommendations should be the most important part.  Each comment obtained may prevent the high staff turnover that so much money costs to affect your corporation.

Take advantage of this natural cycle to detect on time the factors that cause noise in your ranks, and to avoid high staff turnover to take over your work dynamics.  Let us see the impacts that it creates.

Impacts of high staff turnover on your operations

At a first glance, you see the economic impact. According to statistics, the process of selection and recruitment represents an investment that goes from 20% of the work package that will be offered to the candidate.  And this is only taking into consideration the low and intermediate layers of the work pyramid. In this same order of ideas, the cost of high staff turnover may reach caps as high as 150% of the salary established for each vacant position. And this only includes the associated operational expenses that are limited to the assumption of replacing personnel.

And speaking of replacements, it is necessary to stress that your associated operational expenses are not limited to the economic plane, but that they extend to the human aspect and from there, affect the morale of the working groups, and the work climate of the company in general.

Take a look at the whole picture: The rest of your employees are forced to cover and absorb tasks and activities not related to their functions while they go through the repositioning of their new reality and wait while the vacant position is filled. And this in the long run, may cause fatigue and resentment, especially if the processes is repeated again and again in a short period of time.

Finally, it is worth stressing that a high staff turnover brings as an undesired consequence the lack of group consolidation. The disruption of the flow of work and the constant replacement of personnel does not create a  favorable environment where human beings that occupy the positions can get to know each other enough to create camaraderie and synergy.

ciclo de vida del empleadoSuggestions?

  • Create alternative reward plans

If due to operational reasons you are limited to offer cash bonuses, there are other ways to compensate loyalty and dedication of your employees.  These can include programmed rest days, coupons, sweepstakes for vacation plans or technology, movie/theater tickets or leisure activities.  Get support from your network of allied businesses and let creativity help you promote a favorable environment.

  • Include specializations and updates

Just as Henry Ford used to say, there is only one thing worst than training your employees and having them leave… is not training them and having them stay. It makes a lot of sense if you analyze it well.  Reward your most outstanding employees with professional training and if they approach you with a proposal related to their functions within the company, listen to them! They will probably offer you perspectives and alternatives that elude you.

  • Follow through

If in your hiring packages you offer constant revisions and salary adjustments at determined times, carry them out.  If you offer alternative reward plans, even if they are simple discount coupons or POP material as a reward, do not make up other offers to get out of the commitment you made. In the long run, this will backfire against you and it will take you to a scenario where high staff turnover can happen… and install itself for your chaos.

  • Include automated tools for controlling the employee lifecycle

With them, you will be able to see statistics, review your interests and search and compliance parameters, get an average of the useful employee lifecycle in the company, detect dangerous behavior in its early stages, and apply correctives. There are several options in the market that we can help you contemplate.

On our behalf, we echo the process of the employee lifecycle to make you a final recommendation: Make sure to detect, exploit, and capitalize the true potentiality of your candidates from their initial interview.  Take notes, make questions, find out. Find support in social media and do not be afraid to deepen the investigation of their references.  With that, you will detect early signs that will give you insight to the abilities and disposition of the candidates that respond to your job announcements and in addition, you will hold a leading position to avoid high staff turnover.

Do you have questions or comments about your human capital process? Are you interested in incorporating automated tools to avoid high staff turnover? Contact us here! We have the best options in the market to help you protect your human capital interest and investments. Request a free demo.

 

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