I was reading an article the other day about Healthcare Reform and the “new” plan, and it was estimated out of the $634 Billion the government has budgeted for healthcare, roughly about $14 Billion is earmarked for the cost of employee turnover within the healthcare segment (i.e., It will cost taxpayers $14 Billion because for-profit and not-for-profit health care facilities will not do a good job keeping their people happy and this turnover will cause additional expense to the entire healthcare system do to hiring, training, loss of efficiency, etc.). While $14 Billion in the grand scheme of things is under 4% of the total cost of reform – it is still a huge number to get your arms around and reminded me that Turnover is still the single largest bottom-line item that we impact within our HR universe.
I’ve seen much less talk over the last 12-18 months on employee turnover. Because of the current economic conditions and the recession, we are all aware that almost every single employer in the country is seeing less turnover, and HR Pros are rejoicing in their great fortune, but this is the exact opposite behavior that should be occurring. With less hiring taking place, it makes each bad hire even more costly to an organization. When you’re hiring 100 employees a week, you get some budget bump from economies of scale. HR vendors give you better pricing, hiring managers give you more slack in getting candidates – both in terms of timing and quality, basically everyone sees you working your tail off and the organization as a whole is more understanding. When you are hiring 1 employee per week – everything has to be perfect (Do you feel me right now!?).
The single biggest way for you, as an HR Pro, to give back to your organization’s bottom-line is to a have a positive change to your turnover number. Keep your people, and your organization will spend less money and be more efficient– period. Study after study proves that among competitive organizations within the same industries, the organization with lower turnover will be more profitable. So, how do you lower turnover and add to your organization’s bottom-line. Let’s count the ways:
- Have a culture that is very exclusive. You want people on the outside of your organization to be saying “it is so hard to get hired there, but I want in.”
- Don’t cut corners on your hiring process (BUT – there is a fine line on being comprehensive or being over-the-top)
- Hire people better than the incumbent– don’t just backfill a seat.
- 30/90 Day Sit Down Checks. Ensure your managers are having 30/90 day checks with new employees – make your recruiters sit on these as well.
- Have a Save Strategy in place – but only if the CEO/COO are part of the process. Nothing is more powerful in a save strategy than having the person who wants to leave your organization sitting down with the CEO and telling her why they want to go to the competition. Talk about high impact!
Or, you can hope the government starts reimbursing us for every bad hire we make – as long as we get rid of the bad hire and hire a brand spanking new person, it’s win/win, right?