Every time an employee walks out the door, your dairy loses thousands of dollars.
Think about it. You have losses in productivity, the cost of advertising, the time needed for interviews, and time spent training. And if the new hire decides the job isn't for him and leaves, then the process starts all over again. All of these things add up. A conservative estimate of turnover cost is one-third of a new hire's annual salary, according to the U.S. Department of Labor. For more skilled or higher paid employees, that cost climbs even higher.
Then, you must consider the non-monetary cost, too.
"The cost of turnover extends far beyond monetary losses," says Sarah Fogleman, Kansas State University extension agricultural economist. Turnover can hurt morale, because the employees who remain at the farm must play catch-up as they struggle to fill the same positions over and over again and train new employees.
Here are eight ideas to help limit turnover at your dairy:
1. Build loyalty and a teamwork mentality.
The first step toward building employee loyalty and growing a teamwork mentality is to do things that make people feel supported by the organization, says Tom Maloney, extension economist and human resource management specialist at Cornell University.
How easy is it for employees in your organization to approach management, whether it is to get information or to bring up a concern? If any hurdles exist, you need to remove them in order to improve communication.
While you may not have time to meet one-on-one with every person every day, staff meetings allow employees regular access to management.
Recognize your employees' successes. It will show employees that you appreciate their work, and also provide them with a greater sense of satisfaction, says Bernie Erven, ag economist and personnel management expert at Ohio State University.
2. Use job descriptions and evaluate performance.
Written job descriptions help both you and your employees understand expectations. "People want to know what their job is and how they're doing," says Maloney.
Also, think about designing jobs with employees in mind. Capitalize on employees' interests in designing their jobs. For example, some people enjoy working with animals, while others prefer working on machinery. Try to include some of these interests in their job description.
Erven concedes that not all tasks are glamorous or fulfilling. But by offering a variety of tasks and skills, you improve your odds of keeping employees satisfied.
3. Establish the ground rules.
Use an employee handbook to lay out the rules for your organization. The handbook should contain statements on the mission, vision and values of the company. Be sure to include compensation elements, such as vacation, personal and sick days, as well as any limitations on those elements. Also, include information on business protocols and safety procedures.
"This is incredibly important, not only from a human resource management standpoint, but also from a legal perspective," says Fogleman. "By outlining how important safety is to your business, and then highlighting the dangers of your operation, you make a statement that you value safety and are committed to maintaining a safe work environment."
4. Explain benefits.
Another thing that can help reduce turnover is helping people understand their wage and benefits package, says Maloney. For example, "many people stay or leave a job because of health insurance. It has become so expensive that people make career choices on that one benefit," he adds.
Maloney recommends that employers make a list of all benefits and assign values to them at least once a year. Show them to employees. The value really adds up and employees need to understand that, stresses Maloney. Including a breakdown of benefits with yearly W-2 statements is one sure way of getting that information out to employees. You also can include a breakdown of benefits in an employee handbook.
5. Provide training.
Few people enjoy doing something if they cannot do it well. Mediocre performance because of a lack of training will frustrate even the most enthusiastic employee.
Remember that proper training goes beyond the first few days on the job. Fogleman points out that it takes 30 days for a new employee to be fully oriented into the business, then it's 365 days before an employee is fully trained within that particular work environment.
6. Challenge employees.
"Employees want to become more than they are today," says Maloney. That means delegating tasks and giving people the opportunity to take on new assignments.
Give your employees a chance to become true professionals. "Professionals have many things in common – not the least of which is the fact that they view their occupations as professions, not just the means to a paycheck. If you want employees who will stick around, take initiative, and weather the ups and downs of the business, you need to try to make every employee within your operation see their occupation as their profession." Fogelman says.
When job openings occur, consider employees within the organization first. Promoting from within sends a signal to employees that they have career advancement opportunities, says Erven.
7. Provide non-monetary benefits.
In order to meet employees' needs, you must design a compensation package that offers more than just cash wages. Provide things that will meet an employee's psychological needs, such as job security, flexible hours, and opportunity for growth, recognition and friendship.
"Successful compensation packages are really total reward systems, containing non-monetary, direct and indirect elements all based on the objectives of the employer and the needs of the employee," says Fogleman.
8. Provide equitable compensation.
Jobs should be valued on the basis of their contribution made to the business, says Erven. If the milker position, pusher position and tractor driver position have different values to the business, those positions should have different wage schedules.
In addition to equity within your operation, you also should evaluate how the compensation package you offer stacks up against your neighbor's or the co-op in town.
You don't have to implement all of these ideas at once. Instead, use them as a blueprint to create a work environment where employees will want to stay and thrive.
Calculate your turnover cost
If you want a better idea of how much money employee turnover takes from your dairy, try this calculator. It was developed by the University of Wisconsin and can be found online at:
Not all turnover is bad
Some turnover is good. For example, "some employees leave because they have outgrown the operation and need new career challenges and the opportunity to be rewarded for their increased capabilities," says Bernie Erven, ag economist and personnel management specialist at Ohio State University.
"Also, some employees should leave because they do not fit in or do not perform at minimum acceptable levels," he adds.
But, employers can inadvertently set up situations where some employees should leave, but don't because:
- They are paid more in their current jobs than they could earn elsewhere. The employees grow accustomed to the high income. At some point, they grow unhappy with their employer, but they are trapped because to change employers would mean a substantial pay cut.
- They are unacceptable to any other employer. They stay where they are for lack of opportunity. "An outstanding employer once told me that his fear was that his below-average workers would stay too long, not that they would leave too soon," says Erven.
- They are family members to the employer and, as such, they don't want to jeopardize their inheritance.