You post ads, place “We’re Hiring” signs outside your building, offer sign-on bonuses and spend time interviewing, all in the name of hiring employees. Then they join your company and what happens? They leave within the first 30 days or even earlier.

Employee turnover is estimated to cost companies from 0.5 to 1.5 times the annual salary of the departing employee. (Depending on their level)

You scratch your head and wonder why but continue the hiring cycle without addressing the root causes. Retaining a motivated and engaged workforce is crucial to the success of Wisconsin manufacturers of all sizes, but many are struggling with where to start in addressing the retention side of the problem – if addressing it at all – and continue to throw resources and dollars into the hiring process, perpetuating the vicious cycle.

Employee turnover is estimated to cost companies from 0.5 to 1.5 times the annual salary of the employee who departs, depending on their level within the organization. The costs are having material impact on firms, particularly those looking to grow their businesses.  The recently released WMEP 2017 Manufacturing Industry Organizational Priorities Survey identified employee retention as one of the top issues facing Wisconsin manufactures. And the cycle continues.

I recently hosted an HR Round-table on employee recruitment and retention at the Wisconsin Manufacturing & Technology Show in Milwaukee. What I found very interesting is that many of the round-table attendees were very willing to discuss what they are doing on the retention front, but few were willing to share their best practices on employee attraction. It is indeed a very competitive labor market!

Determining the root causes as to why employees leave jobs was central to our round-table discussion on retention. The generally accepted “rule of thumb” is that an employee has already made his or her decision to leave an organization within the first 30 to 60 days of employment. According to several attendees, that time frame has accelerated to the first 30 to 60 hours!

Several manufacturing round-table participants indicated that they are beginning to get into the “hearts and minds” of employees by gathering input from them either through exit interviews or surveys – rather than simply guessing. To capture that data and build plans for addressing gaps based on best practices, the Wisconsin Manufacturing Extension Partnership teams up with clients by using a tool and service offering called the Retention Value Analysis (RVA).

The RVA process uses a customized survey diagnostic tool that profiles the organization and identifies gaps and recommendations across seven key employee retention factors (mapped across a Retention Maturity Model) including:

• Company Vision, Values, & Culture
• Leadership & Management
• Communication
• Recruitment & Selection
• Career Opportunities/Training
• Compensation, Benefits & Rewards
• Work Environment

Some key themes that came out of the roundtable discussion from the WMEP Retention Value Analysis data, include:

• Competitive pay is table stakes for attracting and retaining staff. Employers must have an understanding of what the pay rates are within their geography and industry and pay appropriately.
• The supervisory, leadership and coaching skills of supervisors (particularly first line) and leaders is a critical success factor for retaining and motivating employees. The dynamic between the new employee and their immediate supervisor is a key driver in an employee’s intent to stay with an organization – particularly within the first 30 days.
• The employee onboarding experience is a strong indicator for employees staying at a job.

Here’s a closer look at the factors:

PAY

Pay used to be the silver bullet when trying to retain employees, but that’s no longer the case. The recent generation of employees are looking at other factors that impact their decision to stay with a company, including future career growth opportunity within the company; relationships with their boss and peers; the employer’s brand; and their overall work experience from the day they start. There are many sources of compensation data available to companies looking to evaluate their pay competitiveness, including the Wisconsin WORKnet.

Pay used to be the silver bullet when trying to retain employees, but that’s no longer the case.

SUPERVISOR

Many supervisors have been elevated to their roles because they were effective performers on their assigned jobs. Through no fault of their own, that does not mean that they are effective leaders of people. Training supervisors on supervisory, coaching, mentoring, and leadership skills is often overlooked, but a critical component in impacting employee stay behavior.
The WMEP offers a very effective program called Training Within Industry (TWI) that assists in building supervisory skills; improving communication, teamwork and morale; and forming a strong basis of a learning organization. As a result, quality, safety, productivity, cost and, ultimately, employee retention improve.

ONBOARDING

Perhaps the biggest opportunity for increasing employee retention identified at the roundtable is establishing a formal and structured onboarding program. It is absolutely critical that employees feel engaged and a part of the company on their very first day (arguably, even before that), particularly given the tight labor market. It was evident in the roundtable discussions that organizations had “bits and pieces” of such programs in place and viewed it as more of a “check the box” exercise and not necessarily valued as a strategic component of talent acquisition and retention.

Given the tight labor market it is absolutely critical that employees feel engaged and a part of the company on their very first day.

 

The WMEP offers a comprehensive and strategic Onboarding and Retention Framework development service offering based on best practices that address the employee experience from the time prior to an employee joining the company through their first 90 days on the job, and beyond. It partners with clients in building out a comprehensive and customized model over a four-phased timeline.

 

 

 

Finally, I will go back to my original position (and one shared by my manufacturing roundtable participants) that it is critical to have a fact-based, data-driven baseline of what motivates your workforce to stay – BEFORE jumping to any solutions. Each workforce is different. Companies can spend a lot of money and resources chasing solutions based on “gut checks” only to find that they have had minimal impact on the overall goal of improving employee retention and engagement.

Tom O’Rourke is President and Chief Executive Officer of Connolly Clarke, LLC, a human capital advisory firm, which is providing services for clients of the Wisconsin Manufacturing Extension Partnership.