Richard Davis, SPHR, SHRM-SCP, is chief people officer at SIB Fixed Cost Reduction, headquartered in Charleston, South Carolina, with an office in New York. Davis was a former vice president of human resources for Barnes Healthcare Services, a large regional HME and home infusion provider in Georgia and Florida.
Since the mid-1990s, reimbursement rates for homecare products and services have declined. In the same 20-plus years, the cost of doing business has increased significantly. Every provider has been forced to do more with less, and no significant relief is in sight.
Innovative companies have leveraged technology to create efficiencies, and most companies have been proactive in reducing expenses. Still, it is a daily business struggle.
The most expensive line item in any budget is personnel. Wages and benefits can encompass 30 to 50 percent of a profit and loss statement—and this is in hard dollars. The expense does not take into consideration turnover costs, low employee engagement or marginal employee performance.
When I first began in human resource and operations management in the health care industry, finding the best employee for fit was always our goal when hiring. In the 1980s and 1990s, employee retention was not really discussed. Turnover was examined, but employee departure was generally blamed on poor hiring practices. Little was done to discover the why of an employee’s choice to move to another company.
In today’s competitive employment landscape, with its horizon of cool technology companies, discovering this why is even more important.
Employee turnover is expensive. Employee Benefit News estimated in a 2017 report that turnover costs employers 33 percent of a worker’s annual salary when hiring a replacement worker. Estimates on total turnover costs have been as high as 3½ times wages and benefits paid to an employee. These costs do not consider the negative impact on employee morale and productivity from high-turnover environments.
Why Employees Leave
In exit interviews, the top reasons survey respondents gave for leaving their jobs, in order of frequency, were: career development, work-life balance, manager’s behavior, compensation and benefits, and well-being (confidence in the stability of the company). According to a Work Institute 2017 Retention Report study of 34,000 respondents, 75 percent of the causes of employee turnover are preventable.
Lack of a work-life balance—better described as a healthy work-life integration—can create resentment and dissatisfaction, causing good employees to quit. In the homecare industry this is a significant problem, as many providers are expecting fewer employees to do more work. The situation is compounded when both spouses or significant others work and thus have less time together.
Feeling undervalued or unappreciated causes many good employees to start looking elsewhere. Everyone wants to be rewarded and recognized for doing a good job. Just getting a paycheck for a job well done is not enough, especially since the number of millennial and Generation Z employees is increasing in the workforce.
Lack of communication and management feedback make it difficult for good employees who wish to grow to fully develop in their jobs. When one is left wondering “How am I doing?” the incentive to stay with a company begins to diminish.
Many managers have been promoted and lack basic people skills. Over the years I have seen this often with homecare providers: An employee may begin as a service technician, move up to become a warehouse supervisor and then eventually be promoted to general or branch manager. Length of service and tenure were the deciding factors in promotion, not ability and skill set. When growth opportunities do not exist, good employees will likely quit.
Most of these situations can be prevented. The magic that retains top performers and attracts the best talent begins during the recruiting process. This must be complemented with a structured and consistent onboarding process, followed with an ongoing employee development plan. Lastly, an effective talent management system must be in place.
Before the recruiting process begins, hiring managers need to determine the proper core competencies for each position. For instance, reliability, integrity, problem-solving and communication would be core competencies for a service technician or driver. A structured interview process must be developed with questions based on these core competencies.
Placing an ad on a job board or a company applicant tracking system without first spending the necessary time to determine the needs of the position will result in hiring decisions based on emotion. Organizations should invest in hiring managers and train them on proper interview techniques. I have discovered that most providers have experienced but untrained employees making hiring decisions. Skipping this first and crucial step in the hiring process makes finding and retaining the best talent more difficult.
Once a candidate is hired, a structured onboarding process should be in place. There should be frequent contact with a candidate until the first day. How a new employee is treated before they begin work speaks volumes about the company and has a significant impact on long-term retention of good employees.
There should be a plan and an agenda for each new hire: what the new hire should expect, an agenda for day one, training and providing an understanding of the requirements of the job. Effective onboarding begins when the employee signs the offer letter and extends to the first 90 days of employment. How this process is structured and managed can significantly improve employee retention.
The Secret Sauce of Effective Talent Management
Effective talent management, which has the most significant influence on retention, contains four ingredients: expectations, communication, accountability and consequences. The secret sauce is blended into the day-to-day management of all employees.
The first ingredient is establishing the expectations for the position and for performance. These expectations must be clearly communicated. The how, why, what and where must be specific. Never assume the employee knows what is expected. Take as much time as necessary to explain the goals and what results are expected. Employees who are unsure of what is expected soon look for other jobs.
The second ingredient is frequent, clear, positive and encouraging communication. Constant feedback to the employee about performance in relation to the established expectations is vitally important. No employee should wonder how they are doing.
Daily, weekly and monthly conversations should be the norm for everyone.
The third ingredient is holding everyone accountable for meeting the clearly communicated expectations. This step requires communication that does not berate but rather redirects when performance is not meeting expectations. Good employees leave an organization because they observe others not being held accountable to a standard. It must be done.
The fourth ingredient is fair and consistent consequences when performance does not meet the expectations that have been defined. Always focus on the behavior and/or performance when engaging in determining consequences. At this stage, an employee must know what expectations are not being met, be reminded of the expectations and understand what will happen if the performance and/or behavior persists. Good employees leave when they see that not meeting expectations by others results in little or no consequences.
Even with compressing reimbursement rates, increasing government regulation, escalation of audits and changing rules, almost everything in this article can be implemented at a company with little to no cost. It just takes discipline and intention. It is well worth the effort
to retain the best employees and succeed in winning the employee turnover battle.