The problem of employee turnover is serious and costly in many industries today. Some companies experience turnover rates of 300 percent and more. A company that normally employs 10 people would have 30 employees come and go in one year to experience a 300 percent turnover rate.
The problem consumes huge amounts of management time that is better spent on other activities. In addition, the costs of recruiting, hiring and training may be the largest hidden costs in many companies. Some business owners report that the cost of training an entry-level employee now exceeds $1,200.
According to many human resource experts, there are several causes for employee turnover. The first is the practice of hiring employees whose skills or personality traits are not compatible with the critical factors and functions of the job. Hiring an introverted, detail-oriented engineer for an outside sales position is an example of such a mismatch.
Another cause is the way other members of the company treat newer employees. Unfriendly co-workers, supervisors who lack real leadership skills and managers with unrealistic expectations contribute to high employee turnover rates.
An additional turnover element is inadequate or unclear communication. All members of the business team must be able to understand what the others are saying. High-turnover companies always have deficiencies in the communication process.
Another reason for "revolving-door personnel" is inadequate training. If an employee doesn't understand what to do and how to do it, the frustration level will increase and the employee will often leave at the earliest opportunity.
Adverse working conditions can also cause turnover. An unsafe environment, difficult hours, unsanitary working conditions or uncomfortable work spaces are all potential causes of dissatisfied employees.
Another common cause is a pay scale below the prevailing wage rate. If you are the lowest paying company in an area, you become the employer of last resort.

Turning the tide
The best ways to lower turnover rates actually begin before you hire anyone. You should carefully analyze every job to determine the critical factors related to it. For example, a retail sales clerk needs strong communication skills, knowledge of selling and the ability to initiate contact with strangers. On the other hand, key factors for success in a mechanics job might include the ability to work in one place and the persistence to perform steadily at repetitive work.
After you identify key success factors, you should create a job description that clearly defines them. The more clearly you detail the job requirements, the more likely you are to find candidates that match them.
Several companies sell test instruments that you can use to evaluate a potential employee's personality traits and behavioral characteristics. Contact the nearest human resources association to learn which tests might be most appropriate for you. You will find these profiling tools useful in evaluating current employees, too.
The next step in reducing turnover is using good interviewing techniques. Many good articles and several books are available, including some from the A.R.A., with advice on interviewing and selecting good potential employees. Check with the reference desk at your local library.
Once you've found the right candidate, training should begin as soon as possible. Most small-business owners who are reducing their turnover rates tell me their training process never stops.
Another important factor is to reward those employees who perform their jobs well and motivate those who need a little encouragement. Remember, people require different motivation. A pat on the back may help one, a kick in pants another, figuratively speaking of course.
A final thought on turnover. To improve anything you must be able to measure it. Once you begin to measure turnover, you can begin to develop your plan to improve it.