Have you ever fired an employee? Have you had an employee quit? And have you replaced an employee who left with someone who was less qualified or motivated?
If you answered “Yes” to any of these questions, then this article is meant for you.
Employee turnover can make or break your growing HVAC sales business, depending on how you handle key parts of your hiring, training and incentives. We’ll first explore the common problems that surround employee turnover. You’ll soon see why engaged employees become loyal individuals that champion your brand, products and services.
Lastly, a core part of minimizing employee turnover actually starts with your hiring and training processes. Collectively, the tools discussed will help implement easy ways to improve your company’s processes and strengthen bottom line profitability.
6 tips on hiring the right employee
To start, employee turnover is defined as the number or percentage of workers who leave an organization and are replaced with new employees. Having an understanding of your employee turnover rate provides insight into why staffers leave, what the cost is to recruit and hire and how to maximize the value of each employee. The goal is to have a low employee turnover rate, which results in higher employee morale.
Two types of employee turnover exist. Involuntary turnover is termination due to poor performance, absenteeism, or workplace policy violations. Voluntary turnover is when employees leave on their own terms.
You can calculate employee turnover with a basic formula. Just divide the number of employee separations in one month — or year — by the average number of active employees during the same period.
Example: Cliff’s HVAC Service Co. has 20 active employees this month and three employee separations during that same month. Three divided by 20 = 0.15, or a 15 percent employee turnover rate.
In 2014, U.S. companies had an average employee turnover rate of 7.4 percent. During the same year, the turnover rate for service companies was 12.5 percent, and 70 percent of those were voluntary.
Employee turnover is a hidden, costly expense comprised of recruiting, hiring, training and implementing new tasks for employees. Studies have shown that it costs $5,500 to replace an employee earning just $8 an hour. You can also view this cost as a percentage of the employee’s salary.
Entry-level staffers cost 30 percent to 50 percent of their annual salary and this can escalate quickly when replacing a high-level executive, which could be up to 400 percent of their annual earnings.
Many people would leave a job for higher pay. A lack of employee engagement can be detrimental as staffers must seek challenges, resolve problems, offer support and seek opportunities. Workers must feel challenged and boredom can be fatal to success. Lastly, a bad boss can make an employee miserable.
Now that we know the main problems, let’s address each one starting with the threat of leaving for higher pay. What can you do to mitigate this threat? Keep tabs on competitive compensation and offer compelling benefits. Conduct annual earning surveys for insight. Consider additional perks like flexible schedules, remote working privileges, employee assistance and/or company discounts. Lastly, provide an annual statement for total employee compensation including contributions, paid time off, stocks, etc., which shows employees their actual pay scale above and beyond the net cash earned.
Keeping employees engaged is paramount to your short- and long-term success. In fact, 69 percent of disengaged employees would leave their job for a 5 percent pay increase. Engaged employees require at least a 20 percent increase before leaving their job.
You can improve engagement a variety of ways. Keep your staff excited with team-building activities. Let your employees highlight their impact on the company. Communicate and keep an open-door policy. Share mistakes for all to learn. Finally, get in the field and work alongside them.
Boredom and pain are the two enemies of human happiness. To mitigate workplace boredom, offer growth and development opportunities. In many large businesses, opportunities are presented from day No. 1 and you can see the path toward growing within an organization. In small businesses, it’s imperative to have a culture that lets employees create opportunities for themselves. Special projects and cross-training can also help ensure boredom is not an issue.
A poor manager is detrimental to keeping employees from quitting. Try to provide ways for the staff to communicate feedback about their managers. Create a positive atmosphere with routine, structure and consistency. Really make an effort to build relationships as they are an intangible component of employee retention. You must stop protecting bad managers. Try to learn ways you can be a better leader as well.
Overall, HVAC construction businesses — like all other industries — experience employee turnover. Knowing common employee turnover problems allows you to mitigate risks by being proactive. If a new employee is hired for the right reasons, trained well and engaged throughout their day-to-day tasks, your company will grow profitably and your staff will appreciate you and the company along the way. That’s the ultimate win-win.
Cliff Budnick, who holds a master’s in business, is vice president of new-business development at In-O-Vate Dryer Technologies. This article is based on a presentation Budnick gave at the National Air Duct Cleaners Association’s 2016 annual convention.
For reprints of this article, contact Jill DeVries at (248) 244-1726 or email firstname.lastname@example.org.