If you find that your colleagues tend to be different people every time you turn around, your company might have a turnover problem. It turns out there are exactly three reasons why businesses can’t retain staff.
Sometimes the buzz about a particular organization is that it’s a “revolving door” where people tend to cycle through like perches in a merry-go-round. But this analogy isn’t quite accurate. A better way to think about the employment process is the front door (where people enter), the living room (where people reside), and the back door (where they exit).
Before we talk about the causes of turnover, let’s review why this is a problem:
- Organizations rely on tribal knowledge. – There’s only so much that you can capture in employee manuals and training videos. For some elements of what a company does, there’s no substitute for being there a long time.
- Employees are expensive before they are valuable – The most costly part of an employee’s lifespan at a company is just before they arrive and the period immediately following. That’s because during the screening and interviewing process, your team is spending time looking at candidates instead of other productive work. And after their start date, there is weeks or months of training before they are ramped up.
- Departures impact internal culture and external image. This is the factor I outlined in the opening. If employees are dropping like flies, people will focus on the turnover more and getting things done less. And your company may become known as a place of short-term employment, which makes it harder to attract new people.
Turnover is a big problem. So why does it happen? Three reasons: but a big one is that front door.
Entering the Firm: Bad Hiring Practices
If you aren’t selecting the appropriate candidates for the jobs they are well-suited for, you’ll have high turnover. The author Jim Collins helped popularized this idea as “getting the right people on the bus.” Just about everyone who has worked somewhere for any length of time has experienced a bad hire. And there are many mechanisms for solving this problem, including the old expression hire slowly, fire quickly.
First, this means reaching out to the right candidates. It’s easy to put up a job ad and get countless applicants, especially if the ad is vague and the economy is weak. But none of those candidates may be what you want. Wouldn’t you rather have a small number of highly qualified individuals to consider than a large number of people who are mostly a poor match?
Second, the hiring process should include some reasonable barriers to entry that are based on mutual respect. A good technique is to include some simple instruction in the process, such as “submit your resume, cover letter, and your favorite color.” The purpose of this is to weed out people who are not detail-oriented or don’t follow instructions. No matter what the role, those two skills are essential.
Our friends at Formstack do part of the interview using their own technology, with an online form that asks questions like “What do you know about Formstack?” and “What makes you a good fit for Formstack?” Anyone not interested in answering these questions in written form is probably not going to be a good match for them, or anyone. And some companies even post a challenging question in a public place. These are all great techniques for finding great candidates.
And broadly speaking, the way most companies interview candidates is totally insane. We glance at their self-produced resumes, ask them some questions over the course of an hour or two, and decide if we like them. But in many fields, vast numbers of candidates can’t do what they say they can do.
I’m reminded of a story about a juggler talking with a circus manager for a position under the big top:
Manager: Thanks for coming in today.
Juggler: Happy to be here.
Manager: So, you’re a juggler? What can you do?
Juggler: I can juggle three balls, four balls, and five balls.
Manager: That’s great! Anything else?
Juggler: I know a wide variety of tricks and audiences love me.
Juggler: Yes, and I can even juggle flaming torches.
Manager: Great! You’re hired!
Juggler: Wait…aren’t you going to ask to see me juggle?
Most interviews never involve any sample work. So what’s the solution? As our friends at AnchorPoint note contract-to-hire can be the best option for both the company and the candidate. At the very least, ask someone to spend a day with the team (and pay them accordingly) to see if they can contribute in a way they find rewarding and you find to be valuable.
If you don’t manage those entering the firm through the front door well, many of them won’t last. That’s the first cause of high turnover. Reason two? bad culture causes departures. Stay tuned reason three.