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How do you deal with employee turnover?

Should you hire employees or get contractual workers?
By Entrepreneur Staff |

High employee turnover can be disruptive—take care of your business by taking care of your employees.

While there is enormous risk and competition, doing business these days could be made much easier by relevant technology and efficient manpower.

Investing in manpower can be costly, but it is imperative and could be a little tricky too. For entrepreneurs who are still figuring out the ways of the industry, some of the very important questions to ask are: how many employees can I afford to keep and what does it take to make them stay?

Technically speaking, employee turnover involves only the permanent or regularized employees. The term also rests on “natural” turnover like resignation and termination alone and does not include retrenchment.

According to Jhoanna Gan-So, president of Businessmaker Academy, a center which specializes on human resource management and corporate skills development, employee turnover in layman’s terms refers to the number of employees leaving a company.

Most industries like call centers and business process outsourcing tend to have a high level of employee turnover.  Gan-So attributes this trend to several factors including work schedule and competition. On the other hand, there are industries that hire contractual workers primarily to save them from awarding work benefits.

“Generally, a high level of employee turnover is bad for business, especially for SMEs,” says Gan-So. “Companies are essentially run by employees on a day-to-day basis.  When a key high-performing employee leaves your company, it leads to a chain of events that require attention like disruptions at work.”

Losing employees could be very costly. Aside from exit compensation and benefits, expertise is also lost. The company then needs to hire a replacement, which also means additional costs in training and orientation. “If a company is able to recruit and train high-performing employees and retain them, it will be beneficial for the company in the long run,” says Gan-So.

Gan-So however explains that employee turnover could be tolerated on some levels.  Depending on the size and industry, your business can keep and let go of as many employees as needed. For example, for businesses whose operations are not year-round, it may be better to have on-call workers instead of regular employees. Whimsical Wagon, a Quezon City-based exporter of paper crafts, employs on-call workers who are worth every piece of product they finish. This works for the company because production season starts and ends on certain months only.

Whimsical Wagon, however, tries to tap the same people whenever production resumes. But for businesses that run day-to-day operations, the lower the employee turnover, the better. Gan-So explains that low or zero turnover ensures that a company can run smoothly without much distraction

This article was originally published in the March 2010 issue of Entrepreneur Philippines.

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High employee turnover can be disruptive—take care of your business by taking care of your employees.

 

While there is enormous risk and competition, doing business these days could be made much easier by relevant technology and efficient manpower.

 

Investing in manpower can be costly, but it is imperative and could be a little tricky too. For entrepreneurs who are still figuring out the ways of the industry, some of the very important questions to ask are: how many employees can I afford to keep and what does it take to make them stay?

 

Technically speaking, employee turnover involves only the permanent or regularized employees. The term also rests on “natural” turnover like resignation and termination alone and does not include retrenchment.

 

According to Jhoanna Gan-So, president of Businessmaker Academy (www.businessmaker-academy.com), a center which specializes on human resource management and corporate skills development, employee turnover in layman’s terms refers to the number of employees leaving a company.

 

Most industries like call centers and business process outsourcing tend to have a high level of employee turnover.  Gan-So attributes this trend to several factors including work schedule and competition. On the other hand, there are industries that hire contractual workers primarily to save them from awarding work benefits.

 

“Generally, a high level of employee turnover is bad for business, especially for SMEs,” says Gan-So. “Companies are essentially run by employees on a day-to-day basis.  When a key high-performing employee leaves your company, it leads to a chain of events that require attention like disruptions at work.”

 

Losing employees could be very costly. Aside from exit compensation and benefits, expertise is also lost. The company then needs to hire a replacement, which also means additional costs in training and orientation. “If a company is able to recruit and train high-performing employees and retain them, it will be beneficial for the company in the long run,” says Gan-So.

ADVERTISEMENT - CONTINUE READING BELOW

 

Gan-So however explains that employee turnover could be tolerated on some levels.  Depending on the size and industry, your business can keep and let go of as many employees as needed. For example, for businesses whose operations are not year-round, it may be better to have on-call workers instead of regular employees. Whimsical Wagon, a Quezon City-based exporter of paper crafts, employs on-call workers who are worth every piece of product they finish. This works for the company because production season starts and ends on certain months only.

 

Whimsical Wagon, however, tries to tap the same people whenever production resumes. But for businesses that run day-to-day operations, the lower the employee turnover, the better. Gan-So explains that low or zero turnover ensures that a company can run smoothly without much distraction

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