Staff Loyalty & Turnover

Staff Loyalty & Turnover

November 01, 2012 at 1:30 PM

What's the right balance?

Staff loyalty and staff turnover both have an impact on your business. Ultimately high staff loyalty should have a significant positive effect on your business, while at the other end of the spectrum; high staff turnover will generally have a significant negative impact on your business. Ideally high staff loyalty and low staff turnover is what every business is striving for. The secret is knowing when you might need to increase staff turnover to increase staff loyalty.

There are many factors that drive staff loyalty which we will look at in more detail in a coming article. One factor that we will look at today is the impact that “having the wrong people on the bus” has on your business.

Firstly, let’s look at what strong loyalty means for your business. Assuming you have the “right people on the bus”, strong loyalty means high morale and consistent and satisfied service for your clients (there is significant evidence to show that businesses with high staff satisfaction have higher customer satisfaction). This is a foundation that your business needs to be built on.

When staff leave, it starts the tedious task of back filling the position, or stretching your resources to cover, until it is permanently filled. Filling the position means advertising, interviewing, training, handing over matters, a dip or total loss of client satisfaction, clients start to lose trust and wonder if they have been double charged for things and the list goes on (an on). All of these mean that any staff turnover costs you a significant amount of money. Conservative estimates at the cost of turnover are between 50-75% of the annual salary of the position you are replacing. So from a cost point of view, you don’t want any turnover!

But what if the people you have hired are not the right fit, and even worse show no signs of ever wanting to leave? We have just spent sometime coming to the conclusion that low turnover is good right? Well not if you have the “wrong people on the bus or perhaps in the wrong seat”.

In terms of the wrong seat, it is sometimes as simple as people having the right attitude but having the wrong skill set for the role that you have put them in, or vice versa. Given the cost of replacing staff, it is often worth considering if another role would better suit them.

Ultimately, having the wrong people on the bus means a direct hit on client satisfaction for those associated with those staff, but it also means that the environment is often toxic for the other staff around that person. Staff that are not the right fit are generally either not producing at the levels you expect, or the impact they have on those around them is toxic and starts to spread. Either way you need to get them off the bus!

As a quick aside, if you find that you are often, or even sometimes, hiring people that turn out to not be the right fit, then it might be more costs effective for you to seek some help with recruitment.

Summarising, high staff loyalty and low turnover should be your business goal but there are times when you might need to increase your turnover to increase your staff satisfaction and loyalty. Building loyalty and reducing turnover is a constants and ongoing constant process of:

  1. Recognising the importance of Loyalty
  2. Constantly monitoring your staff for right fit and right attitude
  3. Working with them to find a better fit if its possible
  4. If they are not a fit at all, get them off the bus!
  5. Working at employing the right people with the right attitude
  6. Working to build Loyalty into your culture (more about this in an upcoming article)

Firm Foundations Australia works with firms to help assess, measure and improve their staff satisfaction and loyalty. Be on the lookout for a future article on steps you can take to improve your staff satisfaction and loyalty.

Tags: Management Leadership Staff Engagement Staff Satisfaction Staff Loyalty
Category: Leadership

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