Making the case for reducing employee turnover

November 5, 2019
Making the case for reducing employee turnover

So, you want to reduce employee turnover, and you already know how you want to do it? Great. All you need to do now, is get buy-in from your board.

Unfortunately, simply proving that you have a turnover problem might not cut it. It might not even be enough to prove that you know how to reduce that turnover. You see, sometimes, HR has to work a little bit harder than other departments, to get the investment they need. It is one of life’s many injustices.

You see, while you and I both understand why it is important to reduce employee turnover, it’s no guarantee that senior management has this same understanding. So in order to make a compelling case, you may have to do a little extra work.

The trouble with HR metrics – why running the numbers doesn’t always work

HR metrics are super important to track within your organisation. Instead of just taking a stab at what’s going wrong, HR metrics let you measure quantifiable issues.

But unfortunately, getting buy-in from your board is not as easy as simply tracking one of your key HR metrics, and then producing a chart that shows why you need to do make a change. Why? Because in order for that to work, the people you’re presenting to, need to understand why that metric is important. And often, they don’t.

Therefore, when you make a comment like “our turnover is too high”, you might get a response like “so what?”

The real impact of high turnover is often misunderstood

“As an HR professional, I have certainly had this discussion in different workplaces” says HR consultant Susan Power. “The counter argument is that some turnover is good, to get rid of dead wood.”

I can understand why this ‘dead wood’ mindset exists. But I also think that it suggests that the real impact of high turnover is misunderstood.

This is because I believe:

  1. It’s more effective to train your employees to be better at their jobs, instead of starting from scratch every time something goes wrong. More on this later.
  2. If you have a high volume of genuine ‘dead wood’, then you’re probably not recruiting properly in the first place. In what world would constantly re-recruiting ever fix a problem that was being caused by recruiting in the first place?

Of course, I probably don’t need to tell you this. I am probably preaching to the choir. But what you must consider, is that just because you can see the logic in reducing employee turnover, senior management might not.

“Many organisations track turnover and recognise the cost of it” says Susan. “The bigger challenge is getting board members and executives to invest.”

How much does turnover actually cost?

Some board members will only listen to information that relates back to profitability. This is especially true in those weird cases where HR reports directly to the Chief Financial Officer or equivalent.  So how does the cost of employee turnover actually impact a business?

Well, Bersin and associates puts the average cost to hire at around £5,311.  So every time a position is vacated, you’re having to spend more than 5k just to fill it again. But I’m not sure that figure quite considers the actual cycle of ‘turning an employee over’.

If we look at research by Oxford Economics, the figure flies past £30,000. This is because the Oxford Economics study takes into account not just the cost of hire, but also the cost of lost productivity from the previous employee, and the cost of getting the replacement up to full productivity.

But while the precise costs are difficult to put a number on, the study does conclude that “there’s no doubt that retaining or retraining staff is often a much more cost-effective solution than replacing.”

How to make the case to your executive board

Making the case for a new retention initiative can be a challenge. But there are plenty of good tips to help you make your case compelling, and get your voice heard.

I went into this earlier in the year, in my article ‘how to convince your CEO when you work in HR’. Without going into too much detail, there are four things you can apply from this article, when you are making a case for reducing employee turnover:

  1. Find case studies. Look for stories from other companies respected by your board, and show them that successful businesses work hard to keep turnover low. I’ve included an example for you below.
  2. Run the numbers. Put together a quick financial model, on what the cost of turnover is actually doing to your business bottom line.
  3. Put your solution into context. Sometimes, your proposed solution seems big and scary to your board. But if you can contextualise the cost of what you’re proposing, in terms of the benefits you’ll achieve using points 1 and 2 above, then you’ll strengthen your chances.
  4. Get the legal green light. If your solution requires a big business change, run it past your lawyers or solicitors, if you can. Showing that there is minimal risk to your business case, can be the reassurance your board members need.

How one HR professional saved her company over £100,000 by cutting turnover

Jennifer Griffiths is now the head of HR for Circle IT, but she actually fell into HR after starting her career in operations. And actually, it was her work reducing turnover that helped propel her into such an influential position within her organisation.

You see, Jennifer had noticed that a lot of employees were leaving, and she wanted to do something about it.

By launching an employee survey and finding out exactly why people were heading for the door in droves, Jennifer was able to make big business changes that reduced employee turnover from 54% to 15%. In the end, employees were happier – and so were senior management. After all, later evaluation revealed that Jennifer’s efforts had saved her company more than £100,000!

You can watch her story right here, in the form of a short documentary I filmed last year.

(And you can share this video with senior management if you feel it will inspire them to take turnover seriously.)

 

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