Let us walk you through a scenario: you just soft-opened a new cafe. You’re handling its operation, HR and recruitment, and pretty much all other management tasks. Based on your calculations, your place will require 2 employees during the morning shift and 3 during the afternoon/night shift.
You posted your “we’re hiring” ad, you went through multiple CVs, interviewed a dozen people, hired a couple, trained them… aaand within 2 months one quits, one leaves, and one simply decides not to show up anymore.
Suddenly you’re back in the recruitment cycle, a task you certainly do not have the time for given all the other things you are taking care of around the place. Thereafter, the cycle continues: recruit > hire > train > lose, and there goes your money, time, and resources!
What we just described is the “employee turnover” process that many businesses (small and big) go through, especially in retail and F&B.
What is “Employee Turnover Rate”?
It’s the percentage of employees who leave a certain position during a specific period of time (usually calculated annually or bi-annually).
Why Should You Worry About Employees’ Turnover Rate?
- Financial Costs
We’re just gonna say it: hiring people is costly. Can you imagine how more costly it is to be doing that process multiple times a year for the same position! The Society for Human Resource Management in the US said that the cost of an employee quitting equals ⅓ of their annual salary. On top of that, if you are conducting any specialized training, you will have a repetitive cost/employee, and will be training talents that others benefit from!
- HR costs
Whether you have an established HR team or are doing it yourself, the recruitment process is a process that can exhaust your resources and time if done repeatedly. On top of that, you might fall into hiring the wrong person to fill up an urgent need that came from an employee quitting on you suddenly.
- Distracts you from the important stuff (growth)
Needless to say, being trapped in a cycle of finding and training employees leaves you with barely any time to focus on your business’ growth. This is especially true for SMEs.
- Impacts your reputation (negatively)
Having a high turnover rate could negatively impact your business and discourage talents from applying for your positions.
Why Does It Happen?
The short diplomatic answer is: it varies. But we’re here for the gretty truth. There are multiple reasons as to why employees quit. Some are within a business’ control, and some are not. A good place to start is reading one of our previous articles: Why Do Employees Resign from Cafes and Shops? Hint: It’s not the salary!. Furthermore, we will get into 3 main reasons as to why it happens:
- Blue-collar jobs are usually ladder jobs
Here is something that is completely outside of your control, but that you have to accept and work with: most people do not want to be cashiers forever. Most people (especially young workers) use it as a means to an end. More specifically, most blue collar workers in Saudi are students who use these jobs for additional income or to gain experience (Read: Report: Get to know Saudi’s Job Seekers!). Now, this is not something you can necessarily change, but you can definitely work with (we will tell you how!).
- Lack of development
This point builds on the first one, one of the reasons people do not stick around in blue-collar positions is because of Its lack of career development. Realistically speaking: if you have a branch with 6 employees, can you promote them all to branch manager?… Nope.
Okay now how can they develop professionally? We are talking strictly about roles here. Promotions are tied to bonuses and salary increases. If they are not getting promoted, they’re not making more money. This one is partially within your control.
- Work environment/culture
This one is a subject we’ve discussed many times before in our blogs. Work environment and culture heavily influence employee retention! The Work Institute listed the environment as one of the top 3 reasons employees quit. A good environment/culture positively influences employees’ relations, their work ethic and commitment, and the likelihood of them staying around! This one is 100% within your control.
How Can You Effectively Tackle Employee Turnover?
- Find the root cause (objectively)
Is the problem in your recruitment process? Do you have a clear “employee identity”? Do you (or your HR) take the time with each new hire to get to know them and train them properly? Is your work environment/culture healthy and positive? Do you have a clear “career development” program? (Read: How did Al Faisaliah Group succeed in creating an encouraging culture?).
Some of these questions can be answered by you (business owner/HR) directly and immediately, while others require you to go to other resources (your data, your employees’ feedback…etc). Keep the conversation going with your employees, you’ll get some great insights.
- Accept what you can not change, and work with it!
Let’s say you hired a new employee who left after he completed a certain period of time (number of salaries) he needed for the new iphone… This is an example of many of today’s workers, that is a fact you can not change. However, you can definitely work with this problem to your advantage. How? Flexible staffing!
Flexible Staffing and Employee Turnover Rate
What is “flexible staffing”?
Hiring per need. Get an employee for a certain period of time without worrying about social insurance, health insurance, or leaves.
How Can Flexible Staffing Help Your Turnover Rates?
Flexible staffing companies (like Sabbar) link job seekers with your business, per your need. Whether it be a seasonal need, a “peak” hour or day need, or an annual need. Moreover, you do not have to “look” for an employee and vet them. All you need to do is request them, and flexible staffing companies (like Sabbar) will take care of the rest (Read: How flexible Staffing Can Transform your Business | Become A Sabbar Partner!).
Consequently:
- Costs are reduced (financial and others).
- You and your team can focus on business growth.
- A replacement is guaranteed when needed (remember the “wrong hire” mistake!).
- Employee turnover rate is reduced because you are hiring per need, and that includes the duration! (Read: Chunk | 1% Turnover Rate VS 70% in the F&B Industry).
Why not rely solely on flexible staffing?
Good question! (thank you).
The truth is, you will likely always need full-time staff (depending on your business). However, flexible staffing is an important supplement that you need to utilize in addition to your full-timers. Those full-timers are the ones you have to focus on creating a career development plan for. The good news is: instead of creating a career plan for six employees, with flexible staffing, you will likely only need the plan for one or two employees only. Which is a much more realistic expectations.
Learn more about flexible staffing, Sabbar, and how we can help you with your employee turnover rates: Hire per need now.
