Why Do We Need to Keep Hiring New People?

High turnover refers to a workplace where employees stay with the company far less than the industry average. Turnover ranges from 400% in many telemarketing positions, where the average stay is three months, to years.

When your company's turnover is higher than average, it adds increased training and recruiting costs while operating income remains about the same. Factor in decreased productivity due to a greater percentage of the workforce being new hires, and turnover is downright expensive, even in low skill positions.

What causes higher turnover, and how do you get it under control?

High employee turnover can become a self-fulfilling prophecy. There are several reasons why this feedback loop arises once turnover rises.

• When a business experience high turnover over a long period of time, managers risk developing a view of employees as short term visitors. When this happens, there is little investment in new employees since the costs are likely lost when the person leaves. Without training to develop loyalty to the company or even the skills to do the job well, many employees leave in frustration or once a better position is found.
• A business with high turnover over any significant time period develops a reputation of high turnover. Then new employees arrive with the expectation of a short stay. The short stay can be based on the desperate need for a paycheck, a starter job or to fill in a layover between contact positions. Staying for a few weeks or months before moving on to another job is accepted by individuals and attracts those who intend to leave quickly. The business then suffer turnover because it attracts those planning on leaving soon.
• When turnover is high, employees can be left alone without the connections to friends they made upon hiring. When everyone else has bailed, the threshold has been lowered for those who may choose to follow their friends simply to remain among those who are familiar.
• The cost of recruiting and training employees is an overhead cost. When recruitment costs are high due to high turnover, this can result in lower pay for new hires. Lower pay can reduce the quality of staff, thus hurting morale of those who must pick up the slack. Low pay and low morale drives good employees away.
• The need to keep seats filled in order to prevent hiring new people can in some cases result in tolerance for incompetence or poor performance. Morale suffers and turnover rises among those the company most desperately needs to keep.
• When lower quality new hires enter the workplace, they place a greater burden on qualified employees who have been there a long time. When the labor intensive process of training never stops taking up time and resources, many employees will look for new employers where they are only expected to do one job, not two.
• Review your hiring process from the initial requirements definition. Are you putting in too many requirements? Do you then hire someone who is closer to a jack of all trades than the expert you need? When you post jobs with requirements that almost no one on the planet, you could end up pushing qualified people away who apply for positions for which they are a perfect fit and hiring those who are barely qualified but satisfy many requirements in some regard.
• Do you fail to follow up with your interns and contractors when they refuse an employment offer?
• Are you neglecting to hire the people you just trained to do the job? Sometimes there is a constant stream of interns and contractors because Human Resources doesn't have a fast enough process to hire these individuals after their term ended. For example, contractors can rarely wait three months for HR to come back and offer them a permanent position.
• Do you have too many interns and contractors, hampering the productivity of employees while demanding they do both the job for which they were hired and manage non-employees?