How to Prevent New Hire Turnover

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Is there anything you can do to prevent new hire turnover? You’ve struggled for months to find qualified candidates to fill your open position. You thought you hired a great person. And, after three months, they’ve walked out the door.

The Cost of New Hire Turnover

It’s painful, but important, to understand the cost of new hire turnover. Analyzing these costs will make it glaringly obvious that you’ll want to avoid the situation in the future. And this kind of analysis will allow you to compare the cost of investing in human resources tools that may help you retain your new employees.

Of course, the direct hiring cost is one detail to consider and to avoid incurring again. But it’s also important to consider the indirect costs. An analysis conducted a few years ago, and reported in SHRM​.org, estimated the total cost of onboarding and losing a new employee to be over $200,000. That price tag is associated with a higher-​level employee. Other research puts the number at about “30% of the employee’s first-​year earnings.

How did the researchers come up with that number? They looked at direct and indirect costs. Direct costs include advertising, possible paying a recruiter fee, reimbursing for relocation costs, and investing in training for the new employee. And if your new hire turnover scenario ends with a legal issue, you may also have paid attorney fees.

While you were searching for an employee and then dealing with their less-​than-​optimal performance, your organization experienced hidden costs. For example, team productivity likely decreased. Your employees had to cover more projects because you were short-​handed. If that caused a delay in releasing a new product, you may have lost first-​mover advantage in the marketplace. If the departing employee was in a highly visible position, customers may wonder what’s going on at your company, and they may worry about stability and take their business elsewhere. That's another hit to your financial health.

Why Turnover Happens

These scenarios are enough to keep any business owner up at night. If you’re sleepless because of new hire turnover, have you considered that some of the problems may be your fault? In one survey, about 30% of managers said they’d been in a hurry to hire and onboarded the wrong person. Sound familiar? Yes, the hiring market is brutal right now and you're likely worried about filling positions. Potential new hires are picky about which jobs they apply for and will quickly ghost you if they hear something in the interview process that turns them off.

That behavior increases the pressure you feel to make an offer. But consider alternative strategies while you look for the right person. You could hire a contractor to help you meet deadlines. You could also ask previous employees if they’re interested in a side hustle for a few weeks or months. The benefit of this strategy is they already know your systems and won’t require much training time.

Improve Hiring Outcomes

Next, check out an online platform that delivers psychometric assessment results about candidates you really like. These assessments will let you know whether that candidate you’re super interested in is as nice as they seem. Remember, 30% of hiring managers have admitted ending up in a new hire turnover situation because “they took a chance on a nice person.”

Being nice is one element to consider when hiring, but you should focus on other traits and skills such as those that match the job requirements. It’s also important to determine how well the candidate will fit with you as a manager and other members of the team they’ll be working with.

A good assessment system will allow you to understand a candidate’s motivation for applying for your open position. Are they desperate to leave a bad employment situation and anxious to get hired anywhere else? That mindset might not be the best match for you. 

Find a strategy to keep your department running until you find the candidate who really wants to work with you and your company. Doing so will reduce your new hire turnover rates.

Photo by Andrea Piacquadio from Pexels

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Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.