The SESCO Report – November 2006

The Employee Turnover/Retention Issue: Why They Leave?/How Can We Encourage Them To Stay?

There is practically no debate about the premise that high employee turnover is a bad thing and something to be avoided. There are the obvious costs of recruiting and hiring new personnel as well as the costs of training new employees. In addition, there are "hidden costs" which can be even more significant. These costs include poor customer service, the need for rework, unfocused management, poor employee morale, possibly lost customers and good employees.

Why do employees leave? The usual assumption is that people leave because they have found a better paying job. However, a recent SESCO survey indicated that this may not be the case. The survey asked employees which factors were most important in the decision to leave their jobs. Twenty-six percent said their perception of managers being inept was the primary motivator for quitting. Managers were cited for poor communication, being overly critical and petty, taking credit for their employees' accomplishments, being unclear in giving directions, rudeness and a general lack of support and performance feedback. The next significant factor (13%) in the decision to leave was "no career growth potential". "Inadequate compensation" was tied with "poor training program" and "inadequate performance appraisals" at 7%.

What measures can be taken to reduce employee turnover? Listed below are some SESCO strategies which will likely reduce turnover in most organizations:

Hire the right people ? Better decisions on the front end of the employment relationship will bring positive results. Pre-employment assessment tools and behavioral based interviewing can help an organization make better hiring decisions.

Ensure wages are internally equitable ? Paying competitive wages is important but it is not the only method to improve employee retention, nor is it a guarantee. Employees must know their position and performance reflect an equitable system of compensation. Do not hire over or too close to existing employees.

Integrate for success ? The first few weeks of employment are the most critical to lay the foundation for long-term commitment. A well-planned orientation program demonstrates commitment to a new hire. Some organizations have found that a mentoring process is very helpful. A co-worker or manager is assigned to each new hire. The mentor's role is to help the newcomer reach a comfort level within the new work environment. This rapport and relationship building can be a key element in putting the new employee on a track for success in the organization.

Phase-in training ? Rather than throw a new employee into several weeks of job-specific training right away, start with the basic, essential training. As the employee gains experience, offer further training in recognition of his or her growth.

Provide growth opportunities ? Employees are taking ownership of their careers and recognize the need to refine and upgrade their skills. Accessible and relevant training increases the likelihood that turnover rates will decline.

Motivate ? Assess the underlying motivators for work beyond the paycheck. Provide recognition, and design strategies to reinforce what matters most.

Enlist problem solvers ? When possible, invite employees to help solve company problems. A shared approach creates ownership for employees in the organization's success.

Make rewards count ? Rewards should be immediate, appropriate and personal. Receiving a bonus check at year-end may mean less than smaller, frequent pay-outs. A personal note usually means more than a generic award.

Recognize longevity ? Employees appreciate an employer who honors long service.

Improve communications ? Tell employees periodically about the advantages of employment with your organization. Utilize employee opinion surveys and benchmark competitors. Demand that good communications be a priority for all managers and measure progress.

Respect employees ? Loyalty, like respect, is a value that appears to be reciprocal. People do not necessarily commit to an organization; they commit to co-workers and culture. Employees are most content when they can become an integral part of their work community.

Train management ? Ensure management, especially frontline, is well trained and understand the importance of their leadership role.

Focus on the exit interview ? Knowing why employees leave is instrumental in understanding turnover. Tracking the reasons for departures may uncover patterns that, when addressed, will help stem further turnover.

These measures have been successful in reducing employee turnover. While each measure may not be appropriate for every organization, any organization will find some of them practical and beneficial. Implementing these measures can reduce the high costs of employee turnover and assist in the retention of a productive, loyal, and satisfied workforce.

SESCO Management Consultants can assist your organization in determining what job-related factors are important to employees and why employees may be dissatisfied and subsequently leaving the organization.

SESCO conducts literally hundreds of Management/Employee Satisfaction Surveys across the country and through this effective communications process, we can determine current level of morale, retention factors, turnover issues, issues affecting productivity, teamwork and quality and other important factors that will make the difference between a successful or unsuccessful organization.

Please contact SESCO for more information on employee compensation, employee turnover and retention issues, as well as to schedule a conference to assess your organization's employee health through our Management/Employee Satisfaction Survey.

- Bill Ford

Should You Outsource Your Payroll?

Should you outsource your payroll and related functions? This is a question many business managers wrestle with every day. Even though you may think of outsourcing as an additional expense, business managers everywhere find outsourcing payroll can:

? be done for less than it costs to do it in-house while

? increasing the productivity of the administrative staff and

? providing management with better management tools.

Thus outsourcing can produce returns far greater than the expense of the service provided. More and more business managers are critically reviewing their operations, looking for more efficient ways to focus on and proactively manage their core business and considering cost effective options for the non-core but essential aspects of that business.

Processing payroll is no longer just printing paychecks! To identify opportunities that may substantiate outsourcing to improve the efficiencies of your operations, consider the following:

1. What processes in your operations could be performed more efficiently and cost effectively than your current
methods?

2. Are there any routine, labor-intensive tasks being performed by your staff that take valuable time away from your core, mission-critical, income generating functions?

3. Which tasks and activities currently undertaken by your staff do not contribute to the profitability of your company or help give you competitive advantage?

4. Is your payroll system producing the kind of information management needs to run your business as efficiently as possible?

5. Are your current payroll systems effectively helping you control labor costs, administrative costs, compliance costs, benefit costs, and turn-over costs?

6. Are there skills your business needs internally for competency and compliance issues but do not have because of the affordability of that expertise?

7. If you internally maintain the high cost of the necessary expertise, is this the best, most efficient use of your operating capital?

8. Is your technology and personnel infrastructure adequate to provide for back up and redundancy of important, recurring functions (like processing payroll)?

9. Is maintaining the confidentiality of your employee, management or company payroll information a concern?

The answers to the above questions will help you determine if outsourcing payroll is something you should consider. Depending on your answers, you may realize that it will be well worth your time to learn more about the benefits of outsourced solutions.

Still wonder about the costs associated with outsourcing? With all the better management tools a good provider will offer, the cost associated with outsourcing may be moot. But another area to carefully study is your current actual cost per transaction for processing payroll. In other words, taking into account all the costs associated with producing payroll in-house — the labor involved in timekeeping and payroll, calculating hours worked, processing the payroll, working with employee issues, correcting errors, paying the taxes, filling out and filing the government tax reports, processing W-2's, providing for the necessary office supplies to do all of the above, and so on — how much is it really costing you to process your own payroll per payroll check? It is really less than an outsourced option?

If you already considered outsourcing but found that it was not quite what you thought it would be, you need to ask yourself if you discussed the matter with the right firm. Good professional payroll firms will offer you a group of services that are all related to payroll and employee management and when combined, will offer you greater tools for managing your business while saving you time and money.

SESCO has developed a professional partnership with Time & Pay ? a payroll and automated timekeeping provider. Please call Stephen Scheu at 423-854-9042 or visit www.timeandpay.com for more information.

Is Your Staff Eager to Serve?

When your sales and customer service staff makes a conscious effort to professionally service customers, they send positive signals about themselves and your organization. One message customers receive is: "They are important."

There are several dynamic ways to convey professional service. Take the following quiz to see how many of your staff already incorporates in their day-to-day service with customers. Give the indicated points for each YES answer, and a 0 for each NO:

1. I make certain all my customers have my direct phone number and email. (10 points)
YES ____ NO ____

2. I have stayed past quitting time to continue to serve a customer need. (10 points)
YES ____ NO ____

3. I return calls/emails to clients within the hour. (10 points)
YES ____ NO ____

4. I go out of my way to serve clients. (10 points)
YES ____ NO ____

5. I take care of customer complaints immediately and to their satisfaction or I involve management. (10 points)
YES ____ NO ____

6. When customers want to see me before normal working hours, I agree. (10 points)
YES ____ NO ____

7. I'm not against making or taking customer calls at home. (5 points)
YES ____ NO ____

8. I try to fulfill every reasonable customer request. (10 points)
YES ____ NO ____

9. I never ignore a customer call or email, even when I'm not available, and I never ask that they call me back unless I'm on another call. (10 points)
YES ____ NO ____

10. I value my customers and our relationship. (10 points)
YES ____ NO ____

HOW HELPFUL ARE YOU? Let's hope you scored at least 90 points. Customers like to do business with those that value them, and from your staff's actions, they can quickly perceive just how sincere they are.

SESCO specializes in Sales and Customer Service Training. Also, SESCO conducts Customer Service Surveys to gain customer perspectives on how you serve them.

SESCO Client Inquiry — Staff Response

Question: Can I terminate an employee during their orientation period without reason or exposing my company to liability?

Answer: The orientation period or "probation" period as many call it, offers no special protection to employers if employers elect to terminate an employee during this period of time. Once an employee is hired, he or she is immediately covered by applicable federal and state employment regulations.

The orientation period is simply an identified period of time that is designed to provide training and orientation, coaching and counseling and close scrutiny of performance and development. It is also designed to delay coverage under various benefit plans — typically health insurance.

Always have a reason for separation — do not rely on employment-at-will or because the employee is still in their orientation period.