Tag: employee retention

Increase Employee Engagement and Retention… by Outsourcing HR

Written by Joseph Campagna on August 30, 2023. Posted in Outsourced HR, Workplace Culture and Engagement.

Employee Engagement and Employee Retention Are Hot Topics and Hard Concepts

Finding employees is still ridiculously hard and keeping them can be harder. Engaged employees are retained employees. Better Human Resources standards and practices can help. Better than just policies and programs are real live HR experts who facilitate their success.

High turnover costs companies an average of 1.5 times the gross annual salary of the position in lost productivity and then time and money for recruiting, hiring, and training new employees.

Disengaged employees lead to lower productivity and profits. You want to do everything you can to keep your best people and have them fully committed to your company’s success. One strategy that can help is outsourcing your HR functions to an expert provider.

How do you create and maintain employee engagement? Are you wearing the HR hat? Do you have an HR department of one [overworked or underqualified] employee? Is your HR function just maintaining the status quo but not getting results?

A quality Human Resource Outsourcing Service can allow top companies to tap into specialized expertise and technology that an internal HR manager likely can’t match. This article explores what might seem a contradictory concept: the benefits of outsourcing your HR Department in order to increase retention and engagement. We’ll look at how outsourcing improves recruitment, onboarding, performance management, benefits administration, compliance and more. Read on to see how working with an HR partner can create a better employee experience and stronger business results.

A Note On Displacing a Competent HR Professional

Before we dive in to just how an Outsourced HR Service can help, we want to make certain you understand the approach. If you have a competent and knowledgeable HR professional or a whole department of HR professionals who actually provide high levels of service to your employees, we highly suggest you hold onto them. Perhaps you can outsource HR projects or specialized pieces like benefit administration or compensation planning. Some top-notch HR Service companies also will come alongside and support a harried HR department or HR leader.

However, good HR people are hard to find. Our HR Consulting and Outsourcing Firm never seeks to displace or subvert a good professional doing HR internally. What we find more often than not, is someone who was labeled “HR” but really is not. We find incompetent non-professionals acting like the HR department is their own gossip hive. Or we find overwhelmed administrators who fell into HR simply because there was a need, but they don’t really know what they are doing.

Unfortunately, when non-professional HR practitioners fill an HR role, it makes all of HR look bad. It is no wonder there are books and magazine articles with titles like, “Why We Hate HR.” So, where these situations are clogging up HR operations and lowering your company’s productivity or morale, we seek to make it right and save the reputation of HR nationwide.

That is what the rest of this article will discuss.

Better Recruiting and Onboarding

Recruiting and onboarding are crucial for bringing in talented people who will stick around. Utilizing true HR experts is going to do that in ways you haven’t even considered. How so? First and foremost, HR will be transformed into a service. No longer viewed as the gossip department or compared to waiting in line at the DMV, your employees and manager will actually have structures and processes to lean on. Employees will trust more and utilize the expertise and helpfulness of an outsourced HR function.

Morale goes up across the board. The HR outsourcing service can identify and uproot problems and landmines that were never dealt with correctly before. Assisting and training your managers in personnel issues is a big perk. Removing obstacles like poor management or disincentivized compensation structures won’t hurt either.

When all of this magic happens through a virtual HR service, it will be exponentially easier to find recruits. Your employees will essentially become recruiters and cheerleaders for your company.

Additionally, many businesses lack the HR infrastructure to excel at talent acquisition. When you outsource the actual function of recruiting, you gain access to:

Expert sourcers to identify and engage qualified candidates
Sophisticated applicant tracking systems to organize hiring
Skilled recruiters who can sell candidates on your company
customizable onboarding programs to integrate new hires

With outsourced recruiting, you can fill open positions faster with great hires who have higher retention rates. Onboarding programs created by HR providers ramp up new employees for success quickly so they feel engaged right away.

Improved Performance Management

Ongoing performance management is essential for nurturing talent and aligning your people behind business objectives. Outsourced HR providers and virtual HR experts offer performance management solutions including:

– Goal setting features to create alignment
– Real-time feedback tools managers and employees can use year-round
– Performance review automation with customizable templates
– Data-driven insights into employee productivity

With these tools facilitated by your HR consultant, you can frequently recognize top performers, coach struggling employees and boost engagement through great management.

Better Benefits and Perks

Benefits administration and incentives are tricky, time-consuming parts of HR. When you outsource them, you get can realize better benefit plan designs and management suited to your budget and the employees’ actual needs.

Not to mention:

Assistance selecting the right benefit plans and rates
Enrollment and communication of benefits to employees
Administration of open enrollment, changes, reporting and more
Compliance guidance on regulations like HIPAA, ERISA, COBRA, and more.

One of the greatest advantages of an HR outsource service is widening your exposure to new and innovative benefits and incentives. Pet insurance, Employee Assistance Programs, and specialized plans like employee discounts are just a few of the incentives your current HR person hasn’t had time or knowledge to explore. Since an HR service works with many different employers and industries, the HR experts there are often on the cutting edge of benefits and incentive trends.

By outsourcing benefits and incentives, you provide comprehensive and competitive benefits that make employees feel valued. And you ensure legal compliance to avoid fines and lawsuits.

Speaking of compliance…

Compliance with Complex Employment Laws

Staying compliant with employment laws is crucial for any business, but these days the laws change frequently and lawsuits that make their way through the courts are hard to keep up with. HR law intricacies can be hard to navigate for a busy HR professional but even moreso for someone who is not really an HR expert. There are numerous federal, state, and local laws that dictate how employers must treat employees in areas like:

Discrimination – Title VII, ADA, ADEA, and local laws protecting certain groups
Leave time – FMLA, state sick day and family leave laws
Pay equity – Equal Pay Act, FLSA, and state pay laws
Workplace safety – OSHA regulations
Hiring issues – E-Verify, ban the box, background check laws
Benefits – ACA, COBRA, and HIPAA regulations
Unemployment insurance -Complex state UI laws

Even simple areas like overtime and expense reimbursement have legal nuances that are easy to overlook. Just one misstep could result in audits, lawsuits, or costly government penalties.

Partnering with an HR services firm gives you access to a team of actual HR experts who make it their business to keep up with legislative and best practices compliance. They stay on top of frequent regulatory changes so you don’t have to. Trusting HR to knowledgeable professionals ensures you meet all requirements, no matter how obscure or complicated. With true HR pros handling compliance, you can avoid legal pitfalls that could destroy a company.

Improved Employee Experience

All of the outsourced HR functionality above combines to create a better daily experience for your people. Employees who are well-recruited, onboarded, managed and supported are much more likely to be satisfied and engaged. Other ways outsourced HR can improve the employee experience include:

Employee self-service portals for quick access to info
Convenient access to HR reps
HR Help desk support when employees have questions
Internal communications to keep everyone informed
Handbooks, manuals, and policies to establish standards

Complaint and reporting avenues to voice concerns securely

By partnering with an HR provider, you show employees you care about their needs and development. This, we know, drives retention and engagement.

HR is Really About Your Bottom Line

HR is Really About Your Bottom Line

As a business leader, you have finite time and energy. Outsourcing HR allows you to focus your efforts on the business of YOUR business, not HR administration. With an expert partner managing HR, you can focus on customers, service delivery, production, sales and the core business mission.

In the end, outsourcing HR functions like recruiting, onboarding, performance management, benefits, and compliance can provide powerful advantages. It gives you access to expertise, technology and capabilities that likely aren’t feasible internally. Employees enjoy a far better HR experience that keeps them satisfied and engaged. This leads to higher retention, productivity and profits. If you’re ready to transform HR at your organization, consider outsourcing your HR department. You can create an exceptional employee experience that retains your top talent.

Bad Managers Are Costing You Good Employees

Written by Joseph Campagna on July 14, 2023. Posted in HR Consulting, Manager Training, Outsourced HR.

Employee turnover is inevitable for any organization, but excessive turnover that causes skills and knowledge to frequently walk out the door can significantly impact a company’s bottom line. Excessive employee turnover can significantly erode institutional knowledge and morale.

The Financial Impact of Losing Valuable Employees

In this post, we’ll explore some eye-opening statistics on the financial toll turnover takes on businesses. We’ll look at the main reasons employees choose to leave jobs, particularly in regards to career development and poor management. And we’ll briefly touch on some best practices that can enhance retention, which we’ll cover in more depth in our post.

The Hard Cost of Turnover

Replacing an employee is expensive. From recruitment to training, turnover necessitates a significant outlay of resources. The Center for American Progress estimates that turnover costs for those making under $50,000 per year amount to 20% of the departing employee’s salary. For an employee making $45,000 a year, that’s $9,000 in replacement costs. In smaller firms, the costs are even higher. (Midlands Tech)

According to the definitive research by Deloitte: “Estimates of the cost of losing an employee ranges from roughly 1.5 – 2.0x that employee’s annual salary.” (Josh Bersin)

Further, the higher the pay rate or the higher the skill, the more it costs (G&A Partners):

Entry-level/non-skilled	30-50% of employee’s annual salary
Service/production	40-70% of employee’s annual salary
Clerical/administrative	50-80% of employee’s annual salary
Skilled hourly	75-100% of employee’s annual salary
Professional	75-125% of employee’s annual salary
Technical	100-150% of employee’s annual salary
Supervisor	100-150% of employee’s annual salary

For higher salaried managerial and executive positions, turnover can cost up to 213% of the employee’s gross annual salary according to The Center for American Progress. That means for an executive earning $100,000, turnover could cost well over $200,000 when you factor in temporary coverage, recruiting and interviewing, onboarding, and productivity loss.

Across industries, businesses are shelling out billions in response to turnover:

Lost productivity costs U.S. businesses $1.8 trillion every year. (Matthew S. O’Connel)
Turnover costs U.S. businesses an estimated $1 trillion annually. (Matthew S. O’Connel)
Employee turnover has cost US industries more than $630 billion. (Work Institute, 2020)
The healthcare industry loses $38 billion annually from turnover (National Healthcare Retention & RN Staffing Report)
Companies as a whole lose over $1 trillion yearly due to voluntary turnover (Work Institute)

At the organization level, turnover related expenses are significant:

It can take 1-2 years for a new employee to reach the same productivity level as a high-performing employee who leaves. (Josh Bersin)
Even after hiring a replacement, it takes months for them to become productive.
If the team member who left could bring in $100,000 in revenue, your company will experience $25,000 less in income and profits for those months. (Forbes)
A 100-person organization that provides an average salary of $50,000 could have turnover and replacement costs of approximately $660,000 to $2.6 million per year. (Gallup)
The cost of talent shortages is projected to reach $435.7 billion for the US (Catalyst)

With numbers like these, it’s clear that reducing voluntary exits needs to be a priority for employers.

Employers need to spend the equivalent of six to nine months of an employee’s salary to find and train their replacement. (SHRM)
For companies who experienced extended job vacancies, 81% reported it had a negative impact on their company.
Among these are not getting work done (28%), disengaged or unmotivated workers (27%), low employee morale (25%), revenue loss (25%), and delivery time delays (22%). (Express Employment Professionals, 2020)
“Keeping one salesperson for three years instead of two, plus ensuring better management and onboarding, produced “a difference of $1.3 million in net value to the company over a three year period.” (Maia Josebachvili)

While some degree of turnover is inevitable and brings in fresh ideas, excessive churn saps company resources.

Why Do Employees Resign? Lack of Growth and Poor Management

To reduce voluntary turnover, organizations need to first understand why people are motivated to quit in the first place. One of the main factors driving resignations is lack of career development.

In a Gallup survey, a shocking 93% of millennials said opportunities for professional growth are very important to them at work.
Yet according to the Work Institute’s retention report,
25% of employees leave due to lack of career development,
while 29% resign due to lack of learning opportunities.

This data indicates that today’s workers, especially younger generations, are willing to jump ship if they don’t feel their current job is helping them gain skills for the future or move toward their long-term career goals. They expect managers to take interest in their aspirations and provide developmental assignments, training, and promotions that align with their professional objectives.

Bad Managers Ruin Companies

However, one of the most significant yet overlooked drivers of turnover is poor management.

More than half of employees (60%) say a less-than-ideal work environment, unsupportive managers, and dull work duties can speed up their resignation. (Zippia, 2020)
More than a third of parting employees said they were motivated more by their unhappiness than by the attraction or availability of an outside opportunity. (Monster.com)
One in four left a job because they feel their company leaders did not treat them with dignity. On the other hand,
One in five resigned because their company was unable to support their well-being. (Limeade, 2020)

As Joe Campagna, owner of My Virtual HR Director notes, “A bad manager often was an excellent individual contributor who was promoted because of their job-specific skills or knowledge. Without proper management training, an excellent employee can become a terrible manager.

The employer is extremely hesitant to reprimand or fire the terrible manager because the employer remembers how great the manager was as an individual contributor. So there is exponential bias due to the investment in that manager’s tenure and past performance.”

This dynamic makes it very difficult for organizations to recognize they have a poor manager on their hands. The bad manager usually even has great technical expertise. But the lack of essential people skills like communication, accountability, and emotional intelligence is crippling.

So why does this manager get promoted in the first place? Often because management sees their standout individual performance and assumes they’ll excel in a leadership role. But without equipping them with management training and evaluating their fit, it’s a recipe for dysfunction. The team suffers from the manager’s unsupportive style and lack of guidance. Morale and engagement plummet. And eventually, the manager’s reports come to resent the work and culture.

Turnover rises as employees seek open positions with managers who value their development and provide effective coaching. According to the Work Institute survey, 18% of employees leave due to unsatisfying job responsibilities, while 23% resign due to poor management. Clearly, leadership capability has a massive impact on retention.

Managers Are More Influential Than Most Companies Realize.

According to Gallup, Fifty-two percent of voluntarily exiting employees say their manager or organization could have done something to prevent them from leaving their job.
Over half of exiting employees (51%) say that in the three months before they left, neither their manager nor any other leader spoke with them about their job satisfaction or future with the organization.
According to 60% of employees in the US, the most important contributor to job satisfaction is the people at work. (The Conference Board, 2019)

What Can Managers Do To Make Them Stay?

The leading reasons why an employee would stay at their current job include recognition (21%) and
a good working relationship with their manager (19%). (Achievers Workforce Institute, 2021)

The bottom line is that neglecting to properly train managers, hold them accountable, address dysfunction, and plan for succession planning sets organizations up for turnover. It’s essential to track reasons for attrition and proactively build the culture and leadership capabilities that will enhance retention.

Stay tuned for more insights on crafting an effective employee retention strategy!

Cited Resources & References:

Gallup. (2017). The Fixable Problem That Costs U.S. Businesses $1 Trillion. Retrieved from https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx

Finances Online. (2022). Employee Turnover Statistics: 2022 Retention Data & Rates. Retrieved from https://financesonline.com/employee-turnover-statistics/

O’Connell, M., Kung, M. (2007). The Cost of Employee Turnover. Industrial Management, 49(1), 14-19. Retrieved from https://www.researchgate.net/publication/211392097_The_Cost_of_Employee_Turnover

Bersin, J. (2020). Employee Retention Now a Big Issue: Why the Tide has Turned. Retrieved from https://joshbersin.com/tag/retention/

Employee Turnover Definition (n.d.). In Investopedia online. Retrieved from https://www.investopedia.com/terms/e/employeeturnover.asp

Catalyst. (2020). Turnover and Retention: Quick Take. Retrieved from Catalyst website: https://www.catalyst.org/research/turnover-and-retention/

Emplify. (2020). Employee Engagement Trends: 2020 Report. Retrieved from Emplify website: https://emplify.com/blog/employee-engagement-trends-2020-report/

Deloitte. (2020). Talent 2020: Surveying the Talent Paradox from the Employee Perspective. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-cons-hc-trends-2020-talent.pdf

Limeade. (2020). Limeade Employee Care Report 2020: The Hidden Causes of Turnover. Retrieved from https://www.limeade.com/resources/white-papers/limeade-employee-care-report-2020/

SHRM. (n.d.). SHRM Customized Human Capital Benchmarking Report. Retrieved from https://www.shrm.org/ResourcesAndTools/business-solutions/Pages/human-capital-benchmarking-report.aspx

Work Institute. (2020). 2020 Retention Report: Trends, Reasons, & Recommendations. Retrieved from https://info.workinstitute.com/retentionreport2020

Cain, A. (2019). Alarming Employee Turnover Statistics You Need To Know in 2022. Retrieved from https://www.forbes.com/sites/alancain/2019/07/19/alarming-employee-turnover-statistics-you-need-to-know-in-2020/?sh=19c1cc7e76b1

Center for American Progress. (2012). There Are Significant Business Costs to Replacing Employees. Retrieved from https://www.americanprogress.org/issues/economy/reports/2012/11/16/44464/there-are-significant-business-costs-to-replacing-employees/

Gallup. (2016). Millennials: The Job-Hopping Generation. Retrieved from https://www.gallup.com/workplace/238073/millennials-job-hopping-generation.aspx

Work Institute. (2018). 2018 Retention Report. Retrieved from https://workinstitute.com/retention-report

National Healthcare Retention & RN Staffing Report. (2019). 2019 NSI National Health Care Retention & RN Staffing Report. Retrieved from https://www.nsinursingsolutions.com/Documents/Library/NSI_National_Health_Care_Retention_Report.pdf

BusyBusy. (2021). How To Reduce Employee Turnover Cost? Retrieved from https://busybusy.com/blog/reduce-employee-turnover-cost/

Monster. (2022). Why People Leave Their Jobs. Retrieved from https://hiring.monster.ca/resources/workforce-management/employee-retention-strategies/why-people-leave-their-jobs-ca/

G&A Partners. (2019). How Much Does Employee Turnover Really Cost Your Business? Retrieved from https://www.gnapartners.com/resources/articles/how-much-does-employee-turnover-really-cost-your-business

Gomada. (2022). The Real Cost of Employee Turnover in 2022. Retrieved from https://www.gomada.co/blog/cost-of-employee-turnover-statistics

The Conference Board. (2019). Poll: Job Satisfaction Climbs to Highest Level in Over Two Decades. Retrieved from Statista website: https://www.statista.com/chart/17824/job-satisfaction-in-the-united-states/

MetLife. (2020). MetLife’s 18th Annual US Employee Benefit Trends Study 2020. Retrieved from https://www.metlife.com/content/dam/metlifecom/us/ebts/2020/Resources/Reports/2020-EBTS-Main-Report.pdf

Express Employment Professionals. (2020). Even in a Pandemic, Companies Still Struggle with Employee Turnover. Retrieved from https://www.globenewswire.com/news-release/2020/12/17/2146923/0/en/Even-in-a-Pandemic-Companies-Still-Struggle-with-Employee-Turnover.html

Achievers Workforce Institute. (2021). Achievers Engagement and Retention Report 2021. Retrieved from https://discover.achievers.com/engagement-retention-2021

Lahey, Z. (2018). The Cost Of Turnover Can Kill Your Business. Retrieved from https://www.forbes.com/sites/forbescoachescouncil/2018/02/13/the-cost-of-turnover-can-kill-your-business/?sh=2ba9dbc14618

Midlands Technical College. (n.d.). Measuring the Real Cost of Employee Turnover. Retrieved from https://www.midlandstech.edu/sites/default/files/MtC%20Files/hrc-measuringemployeeturnovercosts_cc.pdf

Zippia. (2022). How to Calculate Employee Turnover Rate + Turnover Costs. Retrieved from https://www.zippia.com/answers/how-to-calculate-turnover-costs/