The national unemployment rate recently fell to 5.5%, according to a Bureau of Labor Statistics (BLS) report for May. That’s a two-point decline since May of 2013. A closer look at the current numbers reveals a 4.5% unemployment rate for all adults at least 25 years of age, and 2.7% for workers having at least a bachelor’s degree. Also, in April (the most recent data available), the number of job openings rose to 5.4 million — the highest rate since this survey began in 2000.
Do You Know What it Really Costs to Replace a Valued Employee?
More than you think. If the employee performs a critical role in your business, the total cost of replacing that person could range from 90% to 200% of the employee’s annual salary. This is according to Wayne F. Cascio — the current chair of the Society of Human Resource Management, a respected business professor, and author of Managing Human Resources: Productivity, Quality of Work Life, Profits.
With those figures in mind, it should be obvious that a proactive approach to retaining key employees is far less costly and disruptive than replacing them. Bear in mind, money isn’t always the top motivating factor. Some workers want additional development through skills training, mentoring and goal setting — all of which make a good employee even more valuable.
The key purpose of the stay interview is to find out just what it would take to hold on to certain employees. Give them opportunities to tell you what job attributes are meaningful to them. You might be surprised.
Another key indicator used to evaluate the labor market is the BLS “quits” rate, which quantifies the number of employees who left jobs voluntarily. According to the BLS report, the quits rate is an indication of the willingness or ability of workers to leave their jobs. Last April, 2.7 million workers quit their jobs. That represents 1.9% of the workforce, the highest level of voluntary departures in seven years.
More Employees Quitting
As you would expect, the quits rate varies by industry sector. For example, the lowest rate, 1.1%, occurred in the manufacturing sector. The highest three were:
- accommodation and food services, 3.9%,
- leisure & hospitality, 3.7%, and
- retail trade, 2.8%.
Still, in each sector, the quits rate has risen.
Although the sectors represented by the lowest and highest quits rates generally correspond to the highest and lowest average pay levels, it’s not all about cash compensation. One tactic to keep turnover at your organization as low as possible is to incorporate the “stay interview” into your human resource management practices.
What Exactly is a Stay Interview?
It’s the opposite of an exit interview, in which you try to determine the factors that led to a worker’s decision to leave your employ. Ideally this type of preemptive measure will cut down on the number of talented employees lost.
A stay interview, conducted periodically, is distinct from a performance review. Its basic goal is to determine why the employee continues to work for you, so that you can, within reason, keep those factors alive.
For example, valued employees might say they appreciate working under a particular supervisor who doesn’t micromanage. Assuming that supervisor’s “hands off” methods have worked well overall, that’s a good reason to retain the manager in question and encourage his or her approach.
Value of Dialogue
In addition, stay interviews are more effective than satisfaction surveys, because they involve dialogue — and, therefore, may produce deeper insights. Whereas a standard survey is generally limited to the written questions at hand, a dialogue allows for a two-way conversation.
Here is a list of questions typical of those recommended by employee relations experts for use in stay interviews:
1. What factors about your job exhilarate you the most?
2. What would you like to change?
3. How would you describe the perfect job for you?
4. If you inherited a pile of money and didn’t have to work, what would you miss about your job and about work in general?
5. Outside of work, what are you passionate about?
6. What do you miss about your last job?
7. If you could, what would be the top three things you would change about your current job?
8. What do you think about the vision and mission of this organization?
9. Do you believe we are living up to those ideals?
10. What career goals do you have, and can you envision accomplishing them here?
11. Have you considered looking for a job with another company, and if so, what were you looking for?
12. If you have applied for other jobs and gotten offers, what made you stay here?
Once you have considered the questions you want to have answered, you should also prepare those who will conduct the stay interviews.
Some employers worry that a stay interview could backfire by causing unrealistic employee expectations for workers who stick around. But, when handled properly, the interviews generally won’t lead to this. To avoid misunderstandings, specifically train your managers to conduct stay interviews, rather than rely on the same procedures used for other types of interviews. Here are a few guidelines:
- Select your interviewees, if necessary. However, if time permits, it might be better to interview all employees.
- Document and discuss the feedback. Occasionally employees will give you some “wish list” items that are currently lacking in their jobs — for example, performance bonuses. Although you can’t fulfill every wish, ask your managers to record every suggestion made and be prepared to seriously consider some of them. Otherwise, employees will perceive the stay interview as a hollow gesture.
- Leave compensation changes out of the conversation. Sometimes during a stay interview an employee might ask for a raise. To prevent confusion and awkwardness, clarify upfront that the purpose of stay interviews isn’t to negotiate compensation changes but to honestly discuss the positives and negatives of each participant’s employment. This doesn’t mean a supervisor and employee couldn’t discuss a raise, but actual changes should generally be associated only with a performance review or specially arranged meeting.
Call it a Bargain
Compared to the resources it takes to replace just one valued employee, the time needed to conduct stay interviews is a bargain. Work with your human resources adviser to come up with the questions and procedures that best suit your organization.