EffortlessHR Blog » Employee Hiring

Understanding Employee Turnover

Lola Kakes — Wed, 28 Jul 2010 16:59:40 +0000

Many employers are facing turnover issues that they may not have had to deal with in the past. Some of the turnover is downsizing due to a tough economy. That type of turnover is not the common turnover that employers deal with consistently. It is usually a one time issue and hopefully will go away as the economy turns around.

The turnover I’m talking about is the “revolving door” of employees being hired, staying for a little while, and then leaving. This type of turnover can be symptomatic of a deeper, organizational problem. Some employers say, “So what. Turnover is inevitable and if the employee doesn’t want to stay, they should leave.” These employers don’t seem to understand how costly turnover is or care about the reasons for the turnover – which can also be costly.

Turnover affects your bottom line, whether you see it or not. Turnover is a silent but effective profit killer.

There are two areas of costs associated with turnover – Hard Costs and Soft Costs. Some of the hard costs that you can fairly easily identify are:

Wages of employee that is leaving
Cost of advertising
Cost of benefits of departing employee

But there are also other hard costs associated with the departing employee:

Employee’s supervisor/manager pay rate (they will most likely be covering for the departing employee)
Administrative staff pay (they are spending time filling out paperwork, answering questions, completing the termination process)
Coworker’s pay rate (they may be called on to work overtime to cover the departing employee or temporary workers may be contracted to cover the work)
Interviewing (takes a lot of time to conduct a series of interviews and you need to pay the interviewer – no matter what staff member(s) are conducting the interview)
Reference checking (either you do your own reference checking and pay your staff a wage or outsource and pay the outsourced company – there are fees involved)
Drug testing (if applicable there are fees for drug testing)
Orientation and on the job training (someone conducts the orientation, prints manuals and forms, answers questions, trains the new employee)

These are examples of hard costs associated with turnover. There are also soft costs, which may be more difficult to quantify but need to be addressed, including:

Loss productivity of employee (usually the exiting employee performs at 50-75% of norm)
Loss productivity of coworkers (time spent gossiping or taking on additional work load which may upset them)
Loss productivity of supervisor/manager (having to spend time dealing with employees and answering questions)
Productivity lost if position remains vacant (may increase overtime, temporary services, time spent filling in, supervisor/manager time spent on scheduling issues)
Lost productivity during training (new employee requires support and direction, existing employees may be distracted, supervisor/manager spends time with new employee)

If you look at the true cost of turnover, you may be surprised at just how costly it is to your bottom line. If you haven’t hired smart and there is not a good match between the company and the employee, you will eventually be a statistic – a company with high turnover. The old adage really is true – employees don’t leave companies, they leave managers. Look at why the turnover is happening and hopefully you will be able to put a stop to the Hard and Soft costs of turnover.

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Understanding Employee Turnover

Is Outsourcing Right for My Small Business?

Aaron Queen — Tue, 30 Jun 2009 19:41:10 +0000

There are so many options available during this difficult economic time to reduce costs. Trying to make the right decision regarding which way to go can be daunting. So many companies are making decisions that while thought to be short term, have long term effects. So every decision has to count!

With the internet, however, there are lots of ways a company can outsource functions without giving up control. In the past, if you were outsourced, you were transferring oversight to a third party. There are now effective ways to stay in control while reducing company costs.

It may be more effective to to automate a process that was previously handled manually than to give control to a third party in order to reduce administrative staff. A great example of this is payroll services such as CompuPay. You handle all the data entry and have full access to all the information and reports without having to maintain knowledge of all the laws governing payroll, a never ending series of updates.

Another example is using Quick Books. Your company information can be stored centrally with templates for entering data in a way in which you can then retrieve valuable financial data. This allows data entry to be handled by an administrative individual and then reviewed by management/owner. Another example is an HR service such as EffortlessHR.com where company and employee information can be stored, managed and the company can remain compliant, all while managing the information themselves. Along this line, when hiring, Jobing.com is also an excellent resource in the recruiting process.

The intent of using these automated systems is to free up the owner and company administrators so that they can spend more time on revenue producing activities such as sales, customer service and employee retention. There just aren’t enough hours in the day to keep up on all the changes happening in these three areas and run a business unless you have a large enough staff, and those are at a premium right now. A perfect example of this was the recent changes in COBRA because of the economic stimulus package enacted this year.

For the small business owner with 20 or more employees, this was a major interruption in business that had to be attended to immediately and has created a need for meticulous actions and record keeping. Have expert systems in place certainly helps alleviate some of the stress of this one change that occurred.

Another avenue to consider is hiring experts for specific needs. This way you do not incur additional employee expense or increase the workload of current employees to handle certain functions and needs. These experts could include trusted financial advisors, (such as financial consultants, a bookkeeper), marketing specialist, benefits coordinator, etc. You don’t have to figure all these things out by yourself and still try and run a business! If you needed a product expert, you would hire one. Think about the other aspects of your business too. This is surrounding yourself with the best to ensure that your company is operating profitably and you will be geared up for the future as the economy changes for the better.

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Top Ten Tips for Resume Writing

Cathy Baniewicz — Tue, 09 Jun 2009 18:01:07 +0000

We are all well aware that the job market is very tight and there are many people who are competing for the same positions. The first step in the process is for employers to review the resumes of people applying for a position. What are they looking for and what can you do to increase your chance of landing an interview?

1. Start with a clearly stated job objective or background summary. An objective works best when you can be specific as to the type of position you are looking for. If you are flexible and can consider several types of positions, the background summary may be the best way to highlight your skills and abilities.

Examples:

Objective:

Position as a Controller utilizing successful accounting and managerial experience.

Background Summary:

Experienced manager with excellent team abilities and strong leadershipskills. Enthusiastic, highly motivated and can be counted on to get the job done.Excellent communication skills with the ability to relate to all levels within an organization.

(Note: If you have your resume on your computer, you can change the objectiveand/or background summary to fit a particular position.)

2. A good resume sets forth your accomplishments. It should not be a list of jobduties. Employers want to know what can do for them and how you havecontributed in your previous positions. Begin each statement with an action verb and provided quantifiable information whenever possible:

Examples:

Increased sales by ___% each quarter for the past two years.

Developed a ___________program resulting in savings of $__________.

Served as team leader on a project which resulted in cost savings of $________.

Designed and implemented a performance appraisal program for six locations.

3. It is not necessary to list every job you have ever had. Employers are most concerned about what you’ve done recently and not what you did fifteen years ago. Listing many years of work experience could be a liability in competing with younger workers.

4. Do not list hobbies or outside interests unless they have a direct correlation to the skills and abilities an employer is seeking.

Examples:

The following could raise a red flag with an employer:

Hobbies; skydiving, racing – employer may consider you an insurance risk

However, if you a volunteer for a hospice program and you are applying toa social service agency, this could be a plus.

5. There is nothing magic about a one-page resume. In fact, if you have been inthe workforce for any length of time, it would be impossible to communicateeverything you have to offer in one page. Try not to go beyond two pages or your resume might not get read.

6. DO NOT FALSIFY your work history or education. More employers than ever are doing background checks and you will not get hired if you are found to be dishonest. The employer can terminate you at anytime if they find out your application and/or resume was false.

7. Use a quality bond paper, white, cream or grey. Don’t get cute or fancy withbold colors or graphics unless you are applying for a position in the arts. Do not include a picture!

8. Do not overuse bolding, underlining or mix fonts. Make sure your resume is easy to read and has lots of white space. Check and double check for spelling and typos. Using spell check is not full proof. For example, if you use the word their when you really meant there, spell check would not pick this up as the word is not misspelled. Have two or three people proof your resume. After you’ve been working on it awhile, you can easily miss something.

9. Make sure your contact information at the top of your resume is current. If you are using your cell phone, be sure your voice mail message is professional! You will definitely turn a recruiter off if your voice mail is offensive. When job hunting, do not have little children on your voice mail.

10. Seek professional help if you do not have good writing skills. It is well worth the cost as you only have one chance to make a good first impression.

One final piece of advice! When sending out your resume, you increase your chances of getting an interview if your cover letter specifically addresses how your background and skills match what the company is looking for. Do not use a one-size-fits-all cover letter. It will be obvious to the recruiter. Do your research and find out something about the company. You will truly stand out if you do this as most people don’t take the time to go that extra step.

Good luck and happy job hunting!

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Employee Turnover — Any Idea What It’s Costing?

Cathy Baniewicz — Wed, 22 Apr 2009 22:47:59 +0000

In today’s economy it is more important than ever to avoid turnover. Turnover is extremely costly. These are the factors you need to consider when estimating what the bottom line is when it comes to calculating turnover.

First, there are separation costs. Staff time, including the departing employee, in conducting the exit interview and preparing COBRA paperwork where required. Consider payout of paid time off (vacation) due to the employee as well as possible unemployment costs.

Don’t forget interim costs until the employee is replaced such as temporary or contract workers as well as overtime for current employees who take up the workload. Morale often suffers if current employees are expected to pick up the slack for an extended period of time.

Recruitment costs really add up! Staff time to prepare advertisements or website postings. Costs of advertising. Employment agencies fees – can be up to 3% of employee’s slalary. Executive search firms are much more costly.

Your calculations should also include staff time in:

Screening resumes and conducting telephone interviews
Contacting candidates and scheduling interviews. The more people involved the more time consuming this becomes
Interview costs – don’t forget to calculate the number of people involved in the process times their hourly rate.
Making the final decision – may inlcude a second or even third round of interviews
Conducting pre-employment testing
Background checks and preparation of pre-employment paperwork.

Post employemnt costs include:

Physicals and drug screening
Orientation costs
External seminars/training to bring the employee on board successfully
Time new employee spends getting to know the basics of his/her new job. These costs are no small matter for managerial level employees or other jobs requiring highly skilled or technical employees
Time managers and supervisors spend in training and coaching

Some costs are difficult to calculate. For example, how does one put a dollar figure on what it costs the company when a long-time employee who has great rapport with the company’s best customers leaves the organization? Not so easy, is it?

Here are some tips to avoid turnover

Take the time to hire the right person.

Make sure employees are properly oriented and welcomed into your company.

Train your supervisors in all areas of employee relations:

All policies and procedures enforced fairly

Employees treated with respect without intimidation or bullying

Select supervisors for their leadership and interpersonal skills

Salaries and benefits should be competitive.

Employees should be properly trained and offered opportunities for advancement whenever possible.

You can get more information on employee selection and retention by visiting our website.

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Source: Effortless HR Software's HR Blog | Employee Turnover — Any Idea What It’s Costing?

New Justice Department Guidelines – Discrimination during Employment Verification

Cathy Baniewicz — Wed, 13 Aug 2008 18:11:55 +0000

All employers are required to make certain that their workers are authorized to work in the United States. The Justice Department has recently issued guidelines to make certain that employers are not using the verification process to discriminate against employees because of their national origin.

If the Department receives a complaint, the agency will first determine whether the complainant is an authorized worker. If the employee is authorized, the agency will conduct an investigation into whether or not an employer has engaged in unlawful discrimination. When an employer receives a no-match letter from the Social Security Administration or a “tentative non-confirmation” as a result of using the E-Veriffy System, the company must resolve those situations in accordance with the procedures outlined in the Department of Homeland Security’s no-match rule.

Terminating an employee without attempting to resolve the mismatch could result in a charge of national origin discrimination. Employers should also be consistent and treat all employees with name-number mismatches the same. For additional information, go to the Office of Special Counsel website at http://www.usdoj.gov/crt/osc/

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Source: Effortless HR Software's HR Blog | New Justice Department Guidelines – Discrimination during Employment Verification

I-9 Violations Bring Stiff Penalties

Cathy Baniewicz — Tue, 12 Aug 2008 14:00:55 +0000

Employers can face stiff penalties for I-9 violations which include substantial fines and also debarment from government contracts. Penalties can be imposed for hiring unauthorized workers as well as simply for committing paperwork violations even if all workers are authorized to work. So how does an employer sort through the information and fully protect itself from fines?

Knowledge is the key to understanding the severity of these penalties. Penalties can include $250 to $3,000 for improper completion of the I-9 form. Improper completion, retention or making it available for inspection fines range from $100 to $1,100 for each I-9. Knowingly hiring or continuing to employ unauthorized workers fines range from $250 up to $11,000 per violation. Firms who show a pattern of hiring unauthorized workers are liable for criminal penalties of as much as $3,000 per employee and may be subject to six months in prison. Investigators have considerable discretion in assessing fines and will look at factors like the size of the company, the seriousness of the violations, whether the employer was trying to comply in good faith and the pattern of past violations.

Depending on the state in which the company operates, this penalty can also include the suspension of license to practice within the state. So how can a business operate properly to protect itself?

All employers are required to complete an I-9 form of each new employee. This must be done within three business days of hire. The law stipulates that U.S. employers cannot hire or continue to employ persons who are unauthorized to work in the U.S. In addition, Arizona, Colorado, Georgia, Minnesota, Mississippi, Oklahoma and Rhode Island require employers to utilize the on-line E-Verify system. On 6/9/08, President Bush issued Executive Order No. 12989 instructing federal agencies to require contractors to participate in the E-Verify Program.

Information regarding I-9 compliance and the E-Verify system can be found on the Department of Homeland Security’s website: http://www.formi9.com/index.aspx?s=g-3

Employers should ensure that all personnel involved in the hiring process know and comply with the proper procedures for completing the I-9 Form. I-9 Forms should be kept separate from all other personnel documents.

- Revised Form I-9 Goes into Effect April 3: Questions & Answers …
- Employment Law Reminder: Hawaii Employers Required to Use Revised …

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Source: Effortless HR Software's HR Blog | I-9 Violations Bring Stiff Penalties

Employee Orientation Process

Lola Kakes — Tue, 29 Jul 2008 14:00:56 +0000

One of the most critical aspects of the recruiting process is Orientation. Orientation is a function that allows a new employee to learn about the organization, what the expectations are in the position, who is responsible and accountable, and in general what they need to know to become an integral part of the company.

It is sad, however, that many companies not only don’t provide an orientation, but expect the new employee to be able to figure it out themselves. The problem is, if you don’t provide a formal orientation process, the employee will still receive an orientation and it may not be the one that will benefit the employee, their co-workers or the company.

As part of the hiring smart philosophy, orientations can be simple to prepare and conduct. All it really takes is planning. It actually begins at the point of hire when the offer is first presented. The offer letter can include a welcome and a brief overview of benefits, time to report, who to report to and what to expect the first day, week and follow-up months. By merely making sure the new employee is listed on the company roster and in the phone system can make the first impression very favorable.

On the first day, the employee should be given a tour of the facility, no matter the size, and especially those areas the employee will be most involved with during their work day. Introduce the staff and prepare a list of their names and job functions. Time should be made to go over the basic operations of the company and department, such as work hours, timeliness/punctuality, explaining the time tracking process, pay day schedules (including direct deposit information or banks used in the area), overtime policy, lunch time or break time policies, parking, telephone and Internet policies, security regulations and how the telephone system works. In addition, a review of the new employee job description, the filling our of necessary forms, and a schedule for any additional needed information – such as training.

This is an opportunity to explain to the new employee the importance of their position and how it works to the support of the goals of the company. Orient the employee to their work area and make sure they have all needed supplies, materials, documents and manuals that may be necessary for them to do their job.

Just as important as the work schedule and pay schedule is the listing of Holidays and time-off provided by the organization, or how to report a sickness or necessary absence. Explain that a 90-day review will be conducted to ascertain any difficulties or answer any questions about the job.

A good orientation may take a day to actually complete. A great orientation will continue throughout the next 3-months as the new employee learns more about the company and the job. This is accomplished by following up with the employee and asking for their feedback or evaluation of the orientation program.

A carefully planned and executed orientation program will go a long way toward helping to retain good employees because it shows the care and time given to the program. A poor orientation may tell the employee that nobody really cares. PodTech has a great article on the On-Boarding process.

Just asking the employee, “How are you doing?” will go a long way toward making your orientation a great one.

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Source: Effortless HR Software's HR Blog | Employee Orientation Process

Recruiting Resources for New Business Owners

Cathy Baniewicz — Tue, 22 Jul 2008 14:00:21 +0000

As a new business owner, you might not be aware of the many options available to help you find your employees. The following is a list of resources to consider when you are looking to add employee(s) to your company.

Your Own Website

Here candidates will learn about your company as well as the details regarding the open position.

TIP: An excellent opportunity for Employment Branding – sell your organization as an excellent place to work!

Employee Referrals

A great source — often overlooked. Your employees know your company, your standards and work policies. Employees rarely recommend people that they cannot vouch for as they are putting their own reputation on the line.

TIP: Consider a reward system for a referral. It doesn’t necessarily have to be in the form of a check. Why not an extra day off with pay

Print Media

Newspapers and other print media have traditionally been the most utilized resource to advertise for employees. While many other options exist, this is still a viable resource to consider.

Newspapers charge by the size of the ad, so be economical with your use of words and use abbreviations as long as they can be clearly understood.

Tip: Job seekers who are computer literate and comfortable with technology will probably not consider the reading the classifieds, at least not in the initial phase of their job search.

The Internet

There are many providers of job listing services, e.g., Monster, Career Builder, Jobing.com, and other internet sources. The costs vary and they can be an excellent source of candidates. Unlike newspaper ads, you can be as descriptive as you want about the job requirements and qualifications, word limitations are very generous. There are new job boards popping up every day. Some niche job boards also exist and some smaller job boards are here. Some college newspapers even have their own boards.

Tip: Take advantage of any tools available to qualify the applicants. Some sites allow you to ask screening questions and then score the applicant so you can focus on those candidates who meet your criteria. You will get a lot of “hits” using the internet, but many of the candidates will not meet your criteria. It is too easy for someone to hit the “Send” button to forward their resume.

Professional Organizations

Many professional organizations have job posting boards. Some are free to members and others charge to list a position. If your job requires a certain professional background, this may be an excellent way to source good candidates.

TIP: Inform the organization if you hire one of their referrals. They appreciate the feedback and it is an excellent networking opportunity.

Educational Institutions

Community Colleges, Universities, etc. can be excellent sources for candidates, especially for part-time and internship opportunities. You can post your positions for little or no cost in most instances.

TIP: If you want to advertise in the college paper, be aware that often they have tight deadlines.

Job Fairs

If you have several openings to fill, a Job Fair may be the way to approach your search. It is normally not cost effective to participate in a job fair for one or two positions.

TIP: Plan for enough staff to manage your booth at the job fair, particularly if it’s an all day event. It is recommended that you collect resumes and then schedule the interviews at a later date.

Networking

One of the best ways to recruit, but often misunderstood. Networking is not limited to your professional contacts. When it comes to recruiting, networking means letting everyone you come in contact with know about your job opening.

TIP: Beauticians, dentists, doctors, etc. come in contact with people of all different backgrounds during the course of a day. Get the word out there!

Recruitment/Temporary Agencies

Recruiting Firms can also be a resource for employees. The can work in several ways:

Flat out fee to find you someone, usually around 3% of the employee’s salary, and often with a 90-day guarantee. Recruiting firm does all pre-screening and reference checking and many will also do drug screening.

Temp to hire: Employee remains on the temporary agency payroll, usually for

90 days or a certain number of hours. The agency pays all employment taxes, etc. This is a good way to see if someone is a “fit” for your organization before you put them on full time. Utilizing temps is also a good way to handle seasonal employment

needs.

TIP: Let the agency know immediately if someone isn’t working out. You do not

have to keep them for 90 days. They are more than happy to find someone

who will be a better fit to keep you happy as a client.

Government/Social Services Agencies

Department of Employment Security (unemployment) and other government and social services agencies often provide job search assistance to their clients.

TIP: Many of these candidates have not been successful in getting employment on their own. Some are disadvantaged in terms of their background, e.g., criminal record, etc., and may not meet your hiring criteria.It’s best to be up front regarding your hiring criteria so they can refer appropriate candidates.

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Source: Effortless HR Software's HR Blog | Recruiting Resources for New Business Owners

Payroll Expense Management

Ellen Kirton — Fri, 04 Jul 2008 20:36:49 +0000

An important element of a company’s profitability is their payroll expense. It is vital that a business owner realize the full cost of an employee, especially when considering adding to staff. Some examples of these costs, in addition to regular pay and any any potential overtime, are: benefits such as health and/or life insurance, holiday and/or vacation pay, training, hiring costs, etc. These are just a few of the additional costs that should be factored in when budgeting, whether it be with current staff or for the addition of new staff. Each employee should be calculated and matched to their value to the company.

The best way to ensure this is in the budget process. List all costs associated with an employee so that these costs can be accumulated. Often, on a Profit & Loss Statement, costs can be designated in different areas such as Labor is seen in Cost of Goods Sold, Payroll Taxes and Training in Sales & Adminsitration Costs. This does not allow an owner to see a complete picture of employee costs. Understanding the true cost of an employee should be a critical component of the decision to retain or hire employees. This review of employee costs will really will open the eyes of a business owner. And just as importantly, employee retention will lower the cost of employees because it can cost between 1to 5 times the annual pay of an employee to replace them. Wow, that is significant!

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Source: Effortless HR Software's HR Blog | Payroll Expense Management

Smart Hiring Practices

Ellen Kirton — Fri, 04 Jul 2008 01:34:28 +0000

As a business owner hiring a new employee, do you consider what additional revenue this addition to the company will create. The increased revenue can come from actual sales from the new employee or it could be that this employee @ $12.00/hour (plus any potential benefits paid), frees up an owner or sales representative to go out and generate additional sales at a much higher hourly rate. Another example is where this $12.00/hour employee allows a manager, making a much higher wage and who is bogged down performing clerical tasks, to focus on tasks that will instead generate revenue or reduce costs for the company.

Here is an example: An owner spends 2 hours on sales netting an average of $200 per sale or $400. They then spend 3 hours on data input and scheduling. If that same owner paid a clerk $36 for those 3 hours plus employer taxes for a total of $48, this would have netted the company an additional $252 for that 3 hour period. Continue that through the week and month and you can see there is an opportunity to significantly raise revenues and/or reduce costs. Alternatively, a portion of the saved time could be used on customer retention which is critical to a company’s longevity and controlling costs. The cost to bring on a new customer versus retaining one is about 3:1.

These are important considerations when hiring a new employee. In all cases, the bottom line should be positively affected by this action.

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Source: Effortless HR Software's HR Blog | Smart Hiring Practices

Hiring Smart Process – Resume Reviews

Lola Kakes — Tue, 24 Jun 2008 21:00:36 +0000

Most companies request that applicants send their résumés to either an email address or a business address because it is a quick and simple way to check skills and qualifications. This information will help you to determine if you wish to continue to the interview stage. Regardless of how many you receive, it is important to review all of the résumés consistently.

ABC’s of Résumé Reviews

As you begin the process of reviewing the résumés, it might be helpful to have three separate piles;

A – those résumés you know don’t fit your criteria,

B – those résumés that may need a second look, and

C – those résumés that are definitely interesting.

Establishing which résumés fall into which category can be done by going through these steps:

1. Is there a cover letter? For the most part, unqualified applicants fail to write a cover letter or a cover email message (depending upon the position).

2. Scan the résumé to obtain an overall impression of the applicant.

3. Identify the easy-to-find qualifications. For example, if your position requires a college degree, does the applicant have one? If not, reject the résumé or place it in your “maybe meets qualifications” pile or electronic folder.

4. Read the description of what the candidate says they are looking for in their next job This could tell you how seriously the candidate is taking the job search and how carefully they are reading the ads.

5. Look for a summary statement of qualifications and experience. If the candidate has taken the time to customize their summary, it will enable you to quickly find the characteristics you seek from your job description. Make a note to check on the accurate, actual dates of employment. These résumés quickly fall into the “further review” or “B” pile.

One rule of résumé review that will never change is to look at proper spelling and grammar. Your quick, first skim of the résumé should yield an overall impression of your candidate’s grammatical style and attention to detail. A résumé can be a simple way to assess a candidates worth. Assuming the candidate’s résumé passes an initial inspection, the Hiring Smart process can move forward.

At this point, you should have found enough similarities between the applicants’ résumé and your job description or requirements for the position. Place the résumé in your A, B, or C piles. Red flags are items that are not clearly explained on the résumé or in the cover letter, and may include:

¨ employment gaps,

¨ evidence of decreasing responsibility

¨ short-term employment at several jobs

¨ multiple shifts in career path

Next, you can conduct a telephone screen interview or set up a face-to-face initial interview with the prospective qualified candidates.

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Source: Effortless HR Software's HR Blog | Hiring Smart Process – Resume Reviews

EffortlessHR Blog » Employee Hiring

Understanding Employee Turnover

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