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Mitigating Costly Worker Turnover

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Contingent workforce strategies have emerged in part to combat the shortage of specialized talent needed to quickly develop and implement customer and internal-process solutions. A reliable source of competent external employees can help organizations deal with fluctuating demand, changing regulations, and emerging market opportunities. It can smooth over the rough times created when key employees quit or retire.

Ironically, this last benefit – serving as a salve for the difficulties caused by worker turnover – only works if your company has in place a workable plan for retaining contingent workers as well as full-time staff members. With workers in all classifications – full-time, part-time, and temporary employees, as well as independent contractors, freelancers, and statement of work contractors –enjoying virtually endless career choices, reducing turnover and securing labor supply is at the top of every company’s must-do list. The booming global economy has created millions of jobs as companies expand and entrepreneurs harness technologies to fill consumer needs. This greater demand has led to more and more worker attrition as full-time employees job hop for better opportunities or opt for the freedom and flexibility of the gig economy.

Organizations must be creative and observant to attract and keep their internal workforce and make themselves attractive to non-traditional talent. Winners in the battle for talent will be those that understand worker motivations and implement controls and perks to meet them.

The stakes are high. Turnover is expensive and disruptive. According to the 2017 Retention Report published by the Work Institute, it costs at least 1/3 of a departing employee’s salary to find, hire, and train his or her replacement. In the meantime, the vacancy requires additional morale-sapping effort from other workers, productivity declines, and quality may suffer.

For a variety of reasons, organizations owe it to their workers, their customers, and their shareholders to build fully functional programs for reducing turnover and increasing retention of key workers.

Taking Stock

The first step toward keeping critical skills in-house or on-call is to determine how your current policies influence workers’ decisions to remain on your payroll or accept contracted work with your company:

  • Review: Use historical data to determine your turnover rate and other important metrics. Collect information on current and former employees’ tenures, compensation levels, salary progressions, performance review scores, job satisfaction levels, etc. For former employees, include their reasons for leaving.
  • Benchmark: Chart your year-to-year turnover, accounting for any anomalies such as the Great Recession, mergers or acquisitions, strategic pivots, etc. Use these results to compare future turnover among executives, managers, and the rank and file, especially for before and after pictures of new initiatives or changes in the full-time/contingent worker dynamic.
  • Target: Set an acceptable/ideal level of worker attrition based on job descriptions. Some turnover may be advantageous, infusing the company with new ideas, more diversity, and greater flexibility.
  • Predict: Armed with this information (perhaps enriched with third-party data) statistical software can highlight current workers whose profiles identify them as likely to quit or be terminated. If they are key employees, you can take actions to train, mentor, compensate, promote or otherwise intervene in order to keep them.
  • Interview: Talk to departing workers, whether they are retiring, taking a position with another firm, or moving on to their next contract, to determine what you are doing right and wrong when it comes to keeping workers satisfied. Answers may shed light on your promotion, management, onboarding, culture, compensation, communications, or other important policies. Conduct similar interviews with employees and contingent workers currently working for you to solicit feedback and suggestions for improvement.

Meeting Needs

If you find you’re having trouble keeping full-time staffers and/or enticing consultants and freelancers to accept return engagements, chances are you’re not meeting their needs in one or more of three broad categories. Why and How People Change Jobs, a study presented by LinkedIn, found that workers who left because their employer or client did not satisfy them in these categories would not have left had they been made to feel more valued. To place your company among the most favored working environments among both traditional and contingent workers, build best-in-class programs that address three key areas:

  1. Training and Development
    Full-time and contingent workers both want to expand their abilities and experience in order to make themselves more marketable. Staff employees angle for promotion and additional responsibilities. Freelancers and consultants are interested in adding skills that will make them eligible for a wider range of future assignments. Workers who feel trapped in positions that do not challenge them or teach them new business acumen will be the first to look for more expansive opportunities outside the organization. Companies intent on retaining their most skillful workers will not only develop a range of training opportunities, but will also delineate clear career path for workers who wish to take on new tasks and more strategic roles. This, of course, benefits both the worker, who earns more money and builds job security, and the organization, which locks in key skills and holds onto institutional knowledge.
  2. Culture and Inclusion
    New employees and non-traditional workers need to be made to feel at home within the organization. Including all classes of workers in brainstorming and decision-making processes reinforces their belief that their contributions are appreciated and their work is important to the company’s mission. Building a positive culture also includes taking care to understand what motivates workers. For traditional employees, motivations may include a secure income for their families or forming camaraderie with coworkers. Contingent workers may take positions in order to sharpen skills or gain experience with emerging technologies. When building workforce culture, consider how your organization makes assignments, handles discipline, motivates workers, celebrates successes, and otherwise communicates and interacts with colleagues at all levels. As more workers leave traditional employment and younger generations insist on greater work-life balance, companies respond with creative work arrangements. Flex time, telecommuting, and similar initiatives can keep workers interested and devoted.
  3. Management and Leadership
    Getting away from a disliked manager is one of the most common reasons workers leave their current positions. Firms that want to keep top-performing and skilled workers will invest in managers and supervisors to ensure they project the companies’ policies and values. Higher-ups will demonstrate trust of their charges and embody the organization’s mission to lead by example. They will effectively manage change and strive to adapt their leadership style to find methods that each worker will respond to.

Expanding your contingent workforce is one way to avoid the vagaries of turnover among staff. Using a higher percentage of consultants and freelancers makes it easier to scale your workforce to meet fluctuating demand and irregular project scheduling. Metasys has built a best-in-class service aiding clients in crating total workforce solutions. To find out more about our comprehensive answers to your staffing challenges, contact Metasys now.

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