Magazine article HRMagazine

5 Ways to Manage High Turnover

Magazine article HRMagazine

5 Ways to Manage High Turnover

Article excerpt

In industries where employees come and go freq uently, HR professionals take a comprehensive approach to stem the tide.

When she joined hydraulic cylinder manufacturer HYDRAtech/CRC Inc. four years ago, Human Resource Manager Jennifer Minto, SPHR, promptly adjusted her traditional approach to turnover.

To recruit trade workers and "retain the staff we currently had, we would have to be creative," says Minto, whose Denmark-based company employs 75 people in its U.S. division, a plant in rural Robertsdale, Ala.

Minto and her team addressed her industry sector's high turnover among machinists through innovative recruiting, including forays into radio advertising and LinkedIn Groups, new training programs, salary studies, and an apprenticeship initiative. Yet, Minto also flexes her left-brain skills to combat turnover. Every quarter, her team recalculates the cost of replacing and training workers to help clarify the cost of turnover and the return on investments designed to reduce it.

Like other HR professionals in high-turnover industries-as well as those who manage high-turnover pockets in organizations where overall turnover rates are relatively low-Minto says the key is a comprehensive, proactive approach.

Christine Deputy, senior vice president of human resources for Dunkin' Brands Inc. in Canton, Mass., agrees that effective turnover reduction requires a multi-pronged effort and a "holistic approach."

Business Impacts

Turnover reduction is likely to become important for most organizations as the economy improves and the demand for many skills increases. Talented employees who stayed put during the challenging economy will be more likely to accept better offers from other organizations.

When turnover is high, business leaders face increased costs associated with recruiting, selecting and training replacements. Other, more-difficultto- quantify effects also arise, such as declines in productivity, morale, customer satisfaction and innovation.

"We depend on trained, skilled machinists," Minto explains. "Skills gaps or capacity gaps have a huge effect on the remainder of our shop and on our ability to produce our product in a cost-effective manner and ensure on-time delivery."

HR professionals in many industries routinely confront the skills gaps caused by turnover. The annual turnover rate averages 15 percent across all industries, according to the Society for Human Resource Management's (SHRM) Human Capital Benchmarking database. In contrast:

* Companies in the services industry, such as accommodation and food and drinking establishments, have the highest annual rate at 35 percent.

* The arts, entertainment and recreation industry has a 27 percent turnover rate.

* The retail and wholesale trade industry has a 22 percent turnover rate.

* The health care and social assistance industries have a turnover rate of 20 percent. Some types of health care companies have even higher turnover, notes Harry Kostyk, PHR, human resources manager for Bonnie Brae, a 253-employee residential treatment center for adolescent boys in Liberty Corner, N.J.

"It's difficult to find turnover rates for our specific industry segment," Kostyk notes. "We tend to get lumped in with hospitals, yet we're not anything like a hospital," he says. "It's also difficult to get an apples-to-apples comparison of cost-per-hire rates in the industry because different companies calculate it differently." A standard for calculating cost-per-hire was developed by a task force led by SHRM operating under the auspices of the American National Standards Institute. A turnover standard is in development.

Working with figures he obtained from the New Jersey Department of Labor and the Alliance for Children and Families, Kostyk calculated a segmentspecific annual turnover rate range of 20 percent to 40 percent. But other industry and business-specific obstacles remain on the path to lowering Bonnie Brae's annual turnover rate, which was 19 percent the past fiscal year. …

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