Marketing & Biz

How To Reduce Employee Turnover And Improve Poor Performance

By Jennifer Barnes, the CEO of Optima Office, a firm that provides Fractional CFOs, COOs, Controllers and HR professionals for businesses.

Turnover can be detrimental to an organization. I run a fast-paced consulting firm where we provide ongoing part-time and fractional support to businesses of all sizes. When someone leaves, I may need to tell seven different companies that they lost their controller. Those are seven very painful calls to make. Retention in the outsourced accounting and HR world is crucial because people like consistency. Also, HR and accounting roles are important and sometimes take a long learning curve, so we’ve made it a priority to reduce employee turnover.

In order to retain employees, you need to find ways to keep them happy and feeling appreciated and make sure they get the proper feedback they need to learn and grow. Oftentimes, people quit because of their boss. When employees get stressed out, do not feel appreciated, are not listened to, are taken advantage of, are not paid well or the organization simply doesn’t value their team, the company will not be able to keep them!

There are a few ways to calculate employee turnover, but as a general rule, you divide the total number of terminations in a year by your average number of employees in a year and multiply it by 100. To determine the average number of employees in a year, you add the number of employees at the beginning of the year and the number of employees at the end of the year and divide it by 2. Here is an example: You have 60 employees at the beginning of the year, you hire 10 employees and 8 employees quit. You have 62 employees at the end of the year. Turnover rate = 8 (number of terminations) / ((60+62)/2) = 13.11%.

Some companies do this monthly. You can divide the number of people who left your organization each month by the average number of employees at your organization. At my company, our goal is to keep annual retention above 85%.

As mentioned, in order to have high retention, you need to keep your team happy. You must listen to them, coach them, give them feedback, make them feel appreciated, pay them competitively and recognize them as often as possible. Find out what is important to your employees and then execute accordingly. Creating and maintaining a culture that is consistent and where relationships are created and fostered is crucial to long-term success. My motto has always been “happy staff equals happy clients,” and I live by that in my everyday management of my team.

Sometimes, however, employee turnover is caused by poor performance that leads to termination. Poor work performance can be anything from issues with attendance to work quality that does not meet your standards. But poor performance can often be improved! Sometimes work performance is due to a lack of training or the tools necessary to properly perform the job. It can also be based on outside influences, such as family issues. I often share with employees that no one is perfect, and there are often times when there will be peaks and valleys in an employee’s overall performance record.

Open lines of communication are important. Some may say to use performance evaluations as a form of communicating poor performance, but I disagree. Employees should be coached as an ongoing management practice. Too many times employees are shocked when they get a bad performance review, having no idea that their performance is not up to their employer’s standards.

Instead, you need to start by making sure that the employee understands the responsibilities of their job. Ideally, all new hires should be given a copy of an accurate job description, which should be the guide that both you and the employee can use to determine how well the employee is performing. As soon as there are problems (missed deadlines, incomplete work, etc.) there should be an informal inquiry as to what the problem was in meeting the deadline, for example. A good way to keep track of these informal discussions would be a spreadsheet or simple notation somewhere indicating where and when the discussion took place and what was discussed.

If performance issues continue, there should be more formal coaching sessions. A good way of memorializing the discussion is by taking notes of what you discussed and any previous informal coaching sessions regarding performance and send an email to the employee summarizing your meeting. After those methods, if the employee ends up not bringing their performance to an acceptable standard, you may need to let them go. However, by looking at poor performance as a solvable issue, you can approach it collaboratively to help improve the situation.

Going above and beyond for your team not only adds to their loyalty, but it adds to their overall well-being and the success of your company.


Forbes – Entrepreneurs

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