To understand why you should prioritize employee retention, you only need to look at the numbers. The United States has lost six million workers since before the pandemic. We asked Dick Finnegan, speaker, author and CEO of C-Suite Analytics, to explain what this means for employers.

“Today there are 10.5 million open jobs,” Finnegan says. “Before the pandemic, there were 6.7 million jobs. That’s a 57% increase in open jobs and six million fewer workers to fill them.”

For years, the construction industry has struggled to fill positions, and that situation won’t be changing anytime soon. In addition, a younger workforce (Millennials and Gen Z now make up 51% of the workforce) has implications for retention. According to Finnegan, baby boomers stay with their employers an average of eight years and three months, while millennials stay just two years and nine months, and Gen Zs stays average two years and three months.

How much does turnover cost?

Most companies understand that it costs money and time to find replacement workers. “What they fail to understand is how much productivity you lose when someone leaves,” Finnegan says. This includes the period when nothing is getting done or other people have to pick up the slack. “Because it’s not in anyone’s budget or found on the balance sheet, this cost is often ignored.”

Finnegan insists clients calculate their turnover cost to bring meaning to their turnover statistics. C-Suite Analytics offers a free turnover cost calculator that can provide insight into what your company spends to acquire and keep employees.

The stay interview strategy

Finnegan is an expert in reducing employee turnover and he created an idea called “the stay interview.” He’s used the stay interview to boost retention by 20-50% among a wide range of clients. The purpose of the interview is to improve trust between employees and supervisors because the number one reason employees leave or stay is their relationship with their boss.  

“What people care about is day-to-day work,” Finnegan says. “It’s what they talk about at the dinner table. I tell clients, supervisors are on the menu every night.”

He argues that unlike health insurance or other benefits, trust is the only thing employees can’t get somewhere else.

Stay interviews should be conducted among all employees upon the start of the retention effort and then at least once a year. Finnegan recommends new hires be interviewed twice during the new hire goal period. In training for stay interviews, managers are taught how to listen, build trust and take notes. Then they practice asking the five key questions along with probing questions, so employees disclose why they stay and might leave. Stay plans address changes in work processes or other things that need to change for employees to stay.

Five questions you need to ask

1. When you travel to work each day, what things do you look forward to? 
2. What are you learning here? 
3. Why do you stay here? 
4. When was the last time you thought about leaving our team? What prompted it? 
5. What can I do to make the experience better for you?

Each question, along with appropriate probes, is designed to encourage exchanges that build trust, improve employee output and engagement, and ultimately improve employee retention.

Accountability is a key ingredient in the retention program’s success. “It’s important that managers at all levels be held accountable for employee retention,” Finnegan says. They also need to forecast whether employees will stay or leave.

Aim to increase referrals

According to Finnegan, research shows that employee referrals stay longer and work harder. He suggests increasing incentives for referrals and focusing on new hires. “New hires are a goldmine for referrals since they are more likely to know people who can be brought into the organization.”  

Conduct realistic job interviews

If you are losing a large percentage of new hires in the first 90 days, Finnegan suggests changing your interview process to increase your understanding of all aspects of the job. “The solution is to be up front about the worst parts of the job so that employees who aren’t a good fit won’t accept the position,” Finnegan says.

Ask for a commitment

According to Finnegan, job offers that imply a commitment can boost retention by weeding out candidates unlike to stay. “Hiring managers can say, ‘I really hope you take the job but I only want you to take the job if you see yourself here in a year. If not, please say no, because I am going to put all my energy into training you.’” While not a binding contract, it asks for a commitment on the part of the job applicant.

Prioritizing employee retention will be critical to companies that are challenged to compete against jobs that don’t require employees to get their hands dirty or battle the elements. The more you can do to ensure the employees you hire are a good fit for the job and your company, the more you will see turnover decrease and productivity rise.

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About the author
AEM is the North America-based international trade group representing off-road equipment manufacturers and suppliers with more than 1,000 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide. The equipment manufacturing industry in the United States supports 2.8 million jobs and contributes roughly $288 billion to the economy every year.