Coping with Turnover

How can you convince an employee to work for you, and more importantly, to stay with you? Companies across the country are getting creative in an effort to stem rising turnover rates, particularly without adding undue expense to the bottom line.

For many companies, it's not a question of if employees will leave, it's a question of when. And while it may wreak havoc on sales, customer service and quality control, some turnover is a good thing. While it can never be completely eliminated (nor would you ever really want it to be), some companies have successfully effected procedures to reduce it.

Turnover on the Rise

Statistics from The Bureau of National Affairs, Inc. (BNA) shows turnover at a ten-year high. The increase likely reflects a level of confidence on the part of workers that they are willing to change jobs. That confidence emanates from healthy national indicators of a flourishing economy, not the least of which is the lowest unemployment rate in years, making it truly a workers' market, particularly in Collier and Lee counties.

With the recession hitting the country during the second half of 1990, workers were--not surprisingly--less likely to leave their jobs, a trend that continued through 1994. It literally took years to regain the confidence bolstered throughout the 1980s to start making job changes.

Turnover is typically highest during August and lowest during the last quarter of the year. While employment decisions are not likely to be made during the holiday season, they commonly occur around the "back to school" period.

Bucking the Trend

Nowhere is turnover more rampant than in the hospitality business, and that has particular ramifications in our area, where the industry turnover rate is 100 to 125%.

A wonderful example of how one hotel improved its turnover rate is the Doubletree Guest Suites in New York City, which has made phenomenal leaps in transforming a nearly 50% rate into an unheard-of 15%. To accomplish this, the hotel implemented peer hiring in 1995-the first Doubletree to do so. The turnover rate at a typical New York hotel is 100%.

So successful was the endeavor that the hotel has planned a new goal: Have every single person in the hotel trained to be an interviewer by 2000. Once a team member interviews someone, they're ensuring that person will stick around, and it becomes a kind of mentoring program.

The company is in the process of acquiring Promus Hotel Corp., a move that will expand hotel operations from 274 to 1,200 establishments that encompasses sites in Latin America and includes such brand names as Embassy Suites, Homewood Suites and Hampton Suites. The acquisition, expected to be completed by the end of the year, will increase the total number of workers from 29,000 to 40,000.

Peer hiring is in place or being instituted at over 200 Doubletree-affiliated hotels. Employees take the opportunity of hiring coworkers seriously; one housekeeper insisted upon interviewing candidates in a guest room.

Additional measures at Doubletree include mentoring program. Someone who is a dishwasher might have a mentor in the kitchen. Also in place are bonuses for hiring referrals, payable in part upon hire and again at 60 or 90 days. The company pays market rate wages. There's a 50% match in the 401(k) plan in the form of stock, which is non-restrictive and can be sold at any time by the employees.

Opinion surveys are done twice a year in 18 languages for distribution at the company's hotels in the United States and Mexico. Results showed that 93% of workers said they enjoyed their job. The company is proactive; if they hear someone is leaving, human resources is active.

The goal for all Doubletree hotels is 30% turnover rate, and that goal is lowered each year. The company's overall rate is currently nearly 60%, which places particular significance on New York's 15% rate.

Retention remains a major focus at large companies. AT&T is doing away with department affiliations on an experimental basis and will allow its employees to move from project to project. At Texas Instruments, a second and more portable pension plan is being offered, which is more easily transferred to a new job, even for employees who leave the company after a few years. Other companies, including Xerox, offer bonuses and raises to lower-level employees, makes benefits more readily available, and provides flexible work schedules. All this in effort to combat the median length of service, which is seven years.

High-Tech Yields High Turnover

Massive strides in the technology industry and increases in the sheer number of companies in the high-tech field have created dire turnover rates and thus have become a significant problem for those companies. Figures from the Information Technology Association of America (ITAA) translate to companies desperate for an answer and willing to go the distance in recruiting and keeping talent.

Average turnover rates for software development programmers/analysts are at 38.7%. Somewhat less--but equally concerning--are software systems engineers and applications systems analysts at 34.6% and 25.4% respectively. The total average turnover rate of exempt and non-exempt employees is 25.8%, a figure common in the industry yet nearly crippling when taken in context with the national average of 10.8%.

Compensation has literally been turned on its head. It is not unusual for certain technology workers to have held 10 jobs in two years. Supply and demand is such that the market for skilled workers is in their hands. They make the determinations.

A crucial tool for employee retention in the technology field is stock options, where they are used by companies and expected by new hires. But those who rely heavily on such options would do well to keep an eye on Washington, where legislators angry with skyrocketing executive compensation rates aim to change the way stock options are reported on earnings statement. The McCain-Levin bill, which was not enacted at this time, has the potential to severely infringe upon the profits reported by many technology companies.

Employee Empowerment

Ownership is an important step companies can take in reducing turnover. There are different kinds of ownership--stock being just one. Allowing decisions to be placed in the hands of workers (such as peer hiring), empowering them to make changes that will yield higher productivity, instills a sense of ownership and evokes pride on the side of the employee.

Offering reasonable accommodations may help encourage employees to stay on. If a talented employee wants to try telecommuting, set them up and work with them. It may be that your company is willing to facilitate the arrangement at least one day a week, which could be one day more than the competitor is willing to offer and thus provides the employee with incentive to stay with you.

If in the end a worker gives notice, it doesn't hurt to counteroffer. But often y