Sorting the Wheat from the Chaff:
Hiring for Retention
by Paul Catiang

This article is based on a presentation by Haidee Enriquez of Advanced Contact Solutions, Inc., delivered on July 11, 2007, at the Contact Center Expo of the Contact Center Association of the Philippines.

According to Haidee Enriquez Vice President for Human Resources of Advanced Contact Solutions, Inc., employee turnover involves a lot of costs: recruitment and replacement of the departed employees, training for the replacements, overtime for the remaining employees, as well as separation processing costs and possibly temporary manpower costs. Turnover causes lost productivity and lost revenue. The departed employees disrupt customer service by ceasing their dealings with the clients with whom they are familiar. Organizational knowledge privy and familiar to these employers is likewise lost. The remaining employees then have to deal with a lowering of morale, and the company’s reputation suffers with each resignation.

According to the Society for Human Resource Management (SHRM), each employee who resigns generates a cost determined by the following factors:

• Cost to terminate plus
• Cost per replacement hire plus
• Vacancy cost plus
• Learning curve loss

Conservative estimates from SHRM place the cost of turnover at 50 percent of an employee’s annual salary.

Ms. Enriquez described what she calls a Self-perpetuating Turnover Cycle, beginning with recruiting, where sourcing, screening, and setting clear job expectations are sacrificed in order to fill seats. The next stage is orientation and training, which are kept to a minimum to get people on the floor as soon as possible, where they can generate revenue for the company. The ongoing job experience comes next, with systems, supervisory, pay and support issues further contribute to the turnover, resulting in the last stage: high turnover. This cycle causes many employees to quit, creating the continuous need to hire more people. This all begins with the Number One retention mistake: hiring in a hurry.

To prevent this, Ms. Enriquez recommended an analysis of job tasks. By profiling the star performers in these positions, employers will get a clear idea of the kind of professionals they need for the job. Input from subject-matter experts is also invaluable in this regard, as is benchmarking with similar companies. Lastly, global standards can be referenced for companies who want to be globally competitive.

Employers should also identify success factors to create a success profile. They should ask themselves, “What does good performance look like?” This will help them develop a job description aimed at high performance, with priority on desired and required skills and attributes and a realistic description of the work environment. The scope and breadth of the job can then be marked out, and an appropriate pay structure can be designed.

Ms. Enriquez then went into a discussion of a refined selection cycle, which included the expected résumé screening, phone and personal interviews, background checks, and even panel interviews and role plays involving the prospective superior or peer.

In selecting and developing for success, Ms. Enriquez said that employers should look for prospective employees’ can-do qualities: technical skills, abilities, knowledge and experience, and their will-do qualities: attitude, emotional intelligence, and work style. Combined with their personal values and beliefs, an employer will get a clear picture of how these prospects will fare within any given organization.

The employee life cycle, according to Ms. Enriquez, consists of four E’s: Enter, Engage, Evaluate, and Exit. By keeping close watch on people throughout this life cycle, an organization can improve its human resources processes and reduce attrition in its ranks.
 
Enter
At the on-boarding stage, the goal is to reduce the overall learning curve by restructuring training content to make it consistent with the competencies defined for the recruiting process; enhancing the overall training experience (from theoretical to practical learning environment); fostering a learning environment by making learning aids readily available; and creating a mentoring and coaching program.

By making the transition into the company smoother, an organization shows their new hires how important its employees are, and by doing this through training, the new hires are shown that learning plays a crucial part in the organization.

Engage
Constant communication with employees is very important. An organization can gather feedback through opinion surveys and focus groups, as well as taking the initial impressions of their new hires. Recruits who weren’t hired are also an excellent source of feedback regarding the company’s image and reputation, and the same is true with poached or transferred employees. Lastly, Ms. Enriquez suggests “asking your stars,” meaning the organization’s star performers. Employees know what will best motivate them and what will best meet their needs.

The key ingredients for engagement program success involves multiple feedback events that keep employee input and action plans relevant; and action planning and management that address the issues which employees really care about and which will drive the business.

Evaluate
The evaluation stage, as expected, involves both quantitative and qualitative evaluation. In a contact center, quantitative evaluation takes the form of scorecards (intra-day, daily, weekly, and monthly); customer satisfaction and quality scores; schedule adherence and attendance; and AHT, TT, SPH.

Qualitative evaluation gauges individual and collective initiative, teamwork, leadership skills and the manifestation of personal and professional values.

By keeping tabs on these indicators, a company has the chance to adjust to its employees’ needs, to motivate its less-than-stellar performers, to offer incentives, and many other measures that can prevent turnover.

Exit
The final stage, the exit, is just as important as the preceding three. While there are a good number of amicable resignations brought about by personal circumstances, travel, and other factors not directly influenced by an organization’s internal processes, exit interviews are still necessary to clarify the exact reasons for resignation.

To illustrate, Ms. Enriquez said that 89 percent of managers believe employees leave for money reasons, while 11 percent of managers believe employees leave for other reasons. In reality, only 12 percent of employees leave for more money, while the remaining 88 percent leave for non-monetary reasons.

Exit interviews should be conducted with the utmost care. Most haphazardly-done interviews, for example, focus only on the pull factors—those that attract employees away from the company—and not the push factors—circumstances within the company that make the employees leave. Sometimes, findings from exit interviews are not reported to management, thus delaying much-needed change in the processes. Other times, there is no follow-through on the results, thus continuing the self-perpetuating turnover cycle.

What’s in It for the Company?
“Making changes to your recruitment and retention programs can generate positive fiscal returns for your organization,” said Ms. Enriquez. To calculate the return on investment, she suggested taking the following steps:

Step 1: Identify direct replacement and opportunity costs. Direct replacement costs include the following: overtime cost of peers to cover open positions; temporary agency fees; extra overtime of new employees; percentage of time spent by supervisors addressing the churn; recruiting costs associated with turnover; training costs; and separation processing cost.

Opportunity costs, on the other hand, include: productivity costs; revenue from lost accounts; and the cost of operating under capacity.

To determine the Potential Cost Savings, add the direct replacement and opportunity costs, and multiply by the feasible reduction estimate.
   
Step 2: Estimate the return on investment of reducing turnover. The Turnover Reduction Investment is done by adding training and recruiting costs; re-engineering costs; and recruiting fees.

To calculate the return on investment, divide the Potential Cost Savings by the Turnover Reduction Investment, and multiply by 100.

By determining the ROI, an organization ensures maximum employee strategic impact and organizational contribution. By working to improve the employment relationship, the organization would also reap the recruiting benefits of a reputation as an employer of choice.

Ms. Enriquez concluded with a scoreboard with the indicators for being an Employer of Choice. Such an employer would have a decrease in regrettable turnover, absenteeism, and quit rates, and an increase in employee referrals, internally-filled jobs, new hire retention, acceptances of offers and engaged employees. Finally, she ended with a question: “Is your organization a magnet for talent?”