Simply stated, no one takes a job and immediately thinks about how they’re going to quit. Typically new hires are excited, eager to start working, and are ready to learn. Yet, according to the Bureau of National Affairs, $11 billion is lost due to employee turnover on an annual basis. That’s a lot of turnover, and that’s a lot of coin.
The True Cost of Employee Turnover:
$11 billion is lost annually due to employee turnover (The Bureau of National Affairs)
Millennial turnover costs the U.S. economy $30.5 billion annually (Gallup)
Cost of replacing entry level employees: 30-50% of their annual salary (ERE Media)
Cost of replacing mid-level employees: 150% of their annual salary (ERE Media)
Cost of replacing high-level or highly specialized employees: 400% of their annual salary (ERE Media)
But, when it comes to turnover, it’s easy to turn a blind eye. Turnover isn’t an issue for your business, right? Your employees are committed to your shop until it’s time to retire, right? Hopefully, but that’s not always the case. And, considering the cost of replacing an employee ranges from 30%-400% of their annual salary, that’s a hefty sum to gamble by turning a blind eye. The key to avoiding the costs of turnover is to take the steps to avoid it; understanding the root-cause of employee turnover is essential, and that’s exactly what we’re going to discuss today.
Reasons Repair Shop Employees Leave
One of the largest misconceptions about employee turnover is what actually causes turnover. Most people equate turnover to money, thinking employees leave the minute they’re offered a higher pay rate. While that is certainly true in some cases, there’s more to turnover than meets the eye. Trust and the relationships between businesses and employees are extremely complex, and often times play a larger role in employee turnover than money. To shed more light the subject, we’ve compiled a list of the most-common causes of employee turnover, as well as remedies to ensure your repair shop can steer clear of turnover and its associated costs.
Employees Feel Undervalued
One of the leading causes of employee turnover is simply that the employee doesn’t feel valued by the organization. Everyone wants to be recognized for a job well done, and while many associate the feeling of value with monetary value, that’s not always the case. In fact, bonuses and raises only provide temporary satisfaction for employees. Whether an employee is paid well or not, if they feel undervalued they are likely going to look to another shop for employment.
The most effective way to recognize employees is sincere appreciation, whether that be a pat on the back, an employee of the week or month program, celebrating work anniversaries, or even a pizza party here and there. Consider giving employees a t-shirt or jacket with the shop logo on it; not only does it make employees feel like a part of the team, it’s a great way to get your business name out there. Employee recognition isn’t just another task to be completed by owners and managers, it’s a way to positively enforce behaviors so they continue.
70% of employees feel as though there aren’t enough hours in the week to do their jobs.
In a recent poll by Tiny Pulse, 70% of employees feel as though there aren’t enough hours in the week to do their jobs. Employee overwhelm is a major concern, affecting nearly every repair shop. Whether you’re a mighty team of two or three, or a repair shop with multiple locations, it’s easy to let the hours creep up. And, as business needs fluctuate, it’s natural to have times when everyone is working over capacity. However, problems often arise when employees are forced to choose between work and personal life, and are amplified when the employee’s support system, such as a spouse or significant other, is faced with the same issue. In addition, work life balance is extremely important to younger employees, which is important to consider as the diesel technician workforce is aging.
The key with work-life balance is to manage the duration of the imbalance, or to compensate for it. For example, it’s early summer and the repair shop is swamped with agricultural equipment needing service before the planting and harvesting seasons pickup. In order to keep up, shop hours may have to be extended, and employees may have to pick up a saturday or two (or four..). Overtime is an awesome incentive, however if the employee is constantly working overtime it can lead to burnout.One option would be to offer a flex schedule. For example, if an employee has to work late, that time can be added to the employee’s vacation fund. Or, if an employee has to work a saturday, that employee can take a long weekend once the shop is through the busy season. This allows the employee to make up for time he missed with family and friends, or just to relax, which can boost productivity instead of leading to burnout.
Misalignment is another leading cause of employee turnover. Misalignment occurs when managers force an employee to fit a position when there isn’t a fit, and can happen at any level in the organization. It’s easy to feel the strain when there are vacant positions in an organization, but settling on an employee to fill it when they aren’t 100% perfect for the job is a surefire way to be re-hiring for the position down the road.
Misalignment can also occur when employees are promoted to management positions when they were better in their previous positions. It’s easy to assume the best technician on the team would make an awesome manager, but he may not possess the skills to manage people or he may simply want to be left as a tech. Not only does forcing promotions hurt the employee being promoted, but it can cause a strain on the rest of the staff. Misalignment in management often shakes the team and can cause other quality talent to leave.
Inconsistent Coaching and Feedback among Employees
Often stemming from management misalignment, inconsistent coaching and feedback among employees can cause turnover. Simply stated, effective managers know how to help employees improve performance and give coaching to all employees. Ineffective managers give feedback and coaching to some employees and not others, or put off giving feedback at all despite knowing giving and getting feedback is essential for business and team growth.
It’s easy to spend the most time with the employee that needs it the most, however shop owners and managers should question the effects this may have on the staff. First off, if an employee needs hand-holding, they may not be a good fit for the position, which will lead to productivity issues down the road. Secondly, employees that are independent and are able to work with minimal supervision often want some sort of feedback as well. Even if it’s confirmation that the employee is doing a great job, it’s confirmation for that employee that he is on the right path. Giving feedback to employees that are doing a great job, while coaching those that need improvement is one of the most important things a manager or owner can do to grow the business. Consider creating employee feedback and coaching forms, and set a schedule for employee feedback. Whether you meet with employees weekly, monthly, yearly, or whatever your schedule allows, understanding their concerns, and being honest with yours shows you value your team and will decrease turnover.
Zero Opportunties for Growth
Only 25% of workers feel there are ample opportunities for development in their organizations.- Tiny Pulse
According to Tiny Pulse, only 25% of workers feel there are ample opportunities for development in their organizations. What’s more concerning is that, nearly 25% of employees would leave their job for a 10% raise somewhere else (Tiny Pulse). It’s human nature to want to grow, whether that be by taking management positions, or learning new skills. Unfortunately, a lot of talent can be lost if employees feel trapped, or stuck in dead-end positions; and typically, the higher the caliber the employee, the faster they reach that place which causes them to job-hop to gain in employment status and compensation.
Nearly 25% of employees would leave their job for a 10% raise somewhere else.
- Tiny Pulse
The answer to the dilemma of employee opportunities is transparency. Good employees want to know where they are going, and great employees want to know what it takes to get there. Show employees that anything is possible within the organization, providing they are willing to gain the skills needed, and employees won’t feel as if they’ve hit a wall. And, understand that it is natural for employees to reach a peak in the organization, especially in smaller companies. The important thing to realize and convey to the employee, is that even if they can’t advance in title, or even pay rate in some cases, they can continue to develop the skills needed to be more effective in their roles. Typically, employees that feel like they are going somewhere in an organization are less likely to bite at other opportunities, even if they may be at a higher pay rate.
Faith and Confidence Shaken
Whether management is open about the state of the company with employees or they keep information to themselves, employees usually know the general state of the business. Employees know when times are tough or when the shop is shorthanded, and they also know when business is booming. Employees expect to be treated as critical pieces in a business’ success; after all, they are part of the team making it happen. It’s important to treat employees as the most important aspect of the business, and empower them by allowing employees to share in the success, whether that be celebrating a great quarter by having a company party, giving employees a bonus for a job well done, or passing out a new pair of work boots to everyone on the team.
Conversely, when employees are asked to do more and more without anything in return, they see less evidence they will share in the success of the business and will question their future with the company. Unfortunately, when faith and confidence is shaken it’s often difficult to restore, as employees will be forced to work at arm's-length in order to protect themselves and their livelihood. Unless faith and confidence are restored, either by a bonus, raise, a sincere thank you, etc., that employee will likely be looking for other employment.
Employee turnover can be one of the greatest costs for a business. They key in managing it is recognizing the signs of turnover, understanding the needs of your team, and setting aside time to ensure the needs of your team are met. While easier said than done, being proactive when it comes to employee turnover will save your business in the future. Comment with questions regarding this blog post, or feel free to reach out to [email protected] with ideas and questions for future Grow Your Business Blogs.