Today’s talent shortage is a real thing, but the number of headlines dedicated to it are drawing attention away from another pressing issue. Even when companies do find and train the talent they need, they struggle to hang on to their employees.
This is especially true for the tech and retail sectors. Recent research from LinkedIn indicates that the tech industry has the highest turnover rate at 13.2 percent, with the retail industry just below that at 13 percent.
If startups are looking to big players for guidance, they won’t find any retention role models. Apple leads the tech corporations with a median tenure of just two years, while Google and Amazon are more apt to get only one year out of each employee. Considering that replacing an employee can cost between 50 and 125 percent of that person’s salary, you can see how expensive the problem of turnover is.
Part of the difficulty with retention stems from the fact that it’s a job hunter’s market, with the unemployment rate sitting right under 4 percent. Another issue is leaders panicking and hiring too quickly.
Assembling the right team of employees is an essential first step in turning an entrepreneur’s idea into a well-oiled, revenue-creating machine. To find new hires that will stick, follow these three steps.
1. Wait until the opportune moment.
Hiring full-time employees is great because you can exercise greater control over their schedule, training, and the number of projects they take on. The flip side is that they’re costly, and you’ll need to come up with a competitive salary and benefits package to attract the most talented candidates. Hiring freelancers or independent contractors can be a more cost-effective way to get work done, but either way, it’s hard to know when to hire.
According to Lena Requist, president of small business marketing and automation platform Ontraport, “There is mission-critical work in every organization that only founders can do. When key players at your startup begin noticing time is being taken away from these mission-critical tasks for less important work, it is time to hire.”
If you hire too fast, there’s a big chance that you won’t end up with enough work for every new employee–and why would they stick around without a clear purpose? Bad hiring decisions cause up to 80 percent of turnover, so it’s crucial to wait until the time is right.
2. Look for the missing puzzle piece.
Not every candidate is going to be a good fit at every company — there’s no way around it. To maximize your retention rate, ensure that you’re looking at candidates who will thrive in your company culture.
Tiffany Delmore, founder of SchoolSafe, a two-way radio solution that connects schools and public safety professionals in emergency situations, maintains a strong focus on wellness in the workplace. “I’m really big on having an awesome workspace,” she says. “I love companies like Varidesk or anything else that makes the office a better place to work. If people love coming to work, they will tell everyone else, and that advocacy gets me the best talent.”
If it’s the right fit, it’s not hard to convince a potential hire to work for you. Beyond referrals, Delmore believes candidate sourcing should happen in the most obvious and natural ways: “I’m still a big fan of Monster.com.”
3. Celebrate on day one.
The onboarding experience is critical. According to employee recognition company O.C. Tanner, after a superlative onboarding experience, 69 percent of employees expect to stay at a company for three or more years. The first day is perhaps the most important aspect of onboarding, as new hires will be anxious to convince themselves that they made the right decision. Erase all doubt by guiding them through an exciting and engaging onboarding process that doesn’t force them to fend for themselves.
Brian Baumgart is the CEO and co-founder of Conversion Logic, a software-as-a-service provider of cross-channel attribution, measurement, and analytics. He explains, “Startups are dynamic and attract individuals who thrive in fast-paced environments, where they are expected to contribute many capacities. We don’t rush into hiring decisions, so we want the first day to feel like part of that larger vision.” Introducing the new hire to the founder is a great way to set the tone and illustrate a close-knit work environment in which accessible leadership is valued.
The talent shortage is only half of the battle. A thorough hiring process and a great onboarding experience will both work wonders in improving employee retention rates, and they can ultimately be some of the most cost-effective initiatives a company undertakes.
Originally posted on Forbes.
Rhett Power is Best-Selling Author, Executive Coach, Columnist at Forbes, Inc. & Success. Rhett Power co-founded Wild Creations in 2007 and quickly built the startup toy company into the 2010 Fastest Growing Business in South Carolina. Wild Creations was named a Blue Ribbon Top 75 US Company by the US Chamber of Commerce and named as one of Inc. Magazine’s 500 Fastest Growing US Companies two years in a row. He and his team have won over 40 national awards for their innovative toys. He served in the US Peace Corps and is a graduate of the University of South Carolina. He now has a rapidly growing coaching and consulting practice based in Washington DC