Employee turnover rates are higher in healthcare than in virtually any other industry, including financial services, manufacturing, or education. There are numerous reasons why this might be the case. For example, the work healthcare employees do is very different from work in other sectors. Although caring for residents and patients is rewarding, it can also be stressful. The stakes are high if mistakes are made and the 24/7 nature of healthcare services can result in unpredictable schedules. In addition, there are few barriers to switching organizations in healthcare. Nurses, for example, have a standardized skill set, coupled with chronic labor shortages, which make it relatively easy to find employment at many different organizations.
In the first part of this article, I will discuss successful recruiting and selection strategy, and will discuss closing the deal in part two.
Although specific estimates vary, there is no doubt that turnover can have a negative impact on customer care and the bottom line. For instance, it has been estimated that nurse turnover costs between $42,000 and $64,000 per departure. For a large healthcare organization that employs 600 nurses and experiences a 20% turnover rate, the yearly estimated cost would be between $5 million and $7 million a year. If they’re experiencing a 40% turnover rate, that cost doubles. In addition, it has also been estimated that the average healthcare organization loses $300,000 per year for each percentage increase in annual nurse turnover. These are significant costs, suggesting considerable effort should be made to address turnover and retention issues.
In a comprehensive study of certified nursing assistants who work in long-term care conducted by Rice University, the University of Pittsburgh, and Baylor College of Medicine, researchers found that attitudinal factors such employment satisfaction and emotional well-being are better predictors of turnover in those communities than pay. This research is particularly important because many long-term care organizations are unable to increase monetary compensation for nursing staff but can work to improve their hiring process in order to increase employee satisfaction.
The first step toward decreasing turnover is recognizing that not all employee turnover is the same. Having a clear understanding of the different forms of turnover can help organizations better target their retention strategies and practices. Overall turnover can be divided into involuntary (the organization decides to dismiss the employee) and voluntary (the employee decides to leave) forms of turnover. Voluntary turnover, in turn, can be divided into “functional” and “dysfunctional” forms of turnover.
- From the organization’s perspective, functional turnover is desirable. It occurs when poor performers decide to leave the organization.
- Dysfunctional turnover, on the other hand, should be avoided. It occurs when strong performers quit their jobs.
Organizations must take steps as early as possible in the employee lifecycle to address dysfunctional turnover. That means re-examining different aspects of the hiring process, such as recruiting, selection, and onboarding. Focusing on these three areas can result in new hires who are a good match for their position and more likely to stay with the organization.
Traditionally, the primary goal of recruitment has been to identify promising candidates and to fill open positions. Yet, it is possible that the recruiting process can fulfill another strategic objective: to reduce turnover. Consider the following three approaches to lowering dysfunctional turnover through recruiting:
- Recognize that some recruiting sources deliver employees with higher retention rates than others. Online job boards, employment agencies, and organizations’ web sites all attract different types of candidates with different retention profiles. As a general rule, however, employee referrals usually generate new hires with low turnover rates.
- Analyze different recruiting sources for retention. It’s a good idea to quantify the retention rates associated with different recruiting sources. As new employees are hired, the HR team should record from where they were recruited. If a staff member elects to leave, data should be gathered about how long they stayed with the organization. This can be linked back to the recruiting source. Tracking data over time provides valuable insights into which recruiting sources are most likely to yield candidates who will stay with the organization.
- Use realistic job previews during recruitment. One driver of turnover is when new hires begin work, but don’t have accurate expectations about what is required on-the-job. When candidates don’t feel that a job is a good fit, they are more likely to self-select out and leave the organization. An effective way to combat this problem is to incorporate realistic job previews into the interview process. This gives applicants a clearer view into the position, what it will take to succeed, and whether the job is for them.
Just as the recruitment process can be tailored to reduce turnover, the new employee selection process can also be designed to identify candidates who will be less likely to leave the organization after they are hired. Past job performance is an important consideration during the selection process, but it’s also a good idea to evaluate characteristics that are predictive of turnover.
Although hiring managers are typically the experts when it comes to assessing candidates’ technical competencies, recruiters can play an important role in ensuring that candidates who are the best cultural fit for the organization make it further along in the hiring process. Two proven ways of improving the selection process are behavioral assessments and structured interviews.
- Behavioral assessments. These tools are used to evaluate personality traits and “biodata” (background information) that are known to influence employees’ likelihood to leave a job. For example, people who are self-confident and decisive tend to exhibit lower levels of turnover. Biodata relevant to turnover includes past work experience and the presence of friends or supportive peers in the workplace. Behavioral assessment software enables candidates to answer a series of questions online. Their responses are analyzed and a report is generated for HR and hiring managers. The report highlights the candidate’s strengths, as well as areas where further discussion during the interview process is advisable. Behavioral assessments are useful for recruiters because the results enable them to immediately identify the best fitting candidates for hiring managers. Before inviting promising candidates in for face-to-face interviews, recruiters can also use assessment results to guide phone screening questions.
- Structured interviews. This is a standardized process to evaluate how well candidates fit with job requirements and the organizational culture. Structured interviews can determine whether an applicant is a good fit on three important dimensions:
o Does the candidate’s needs match what the job provides?
o Do the candidate’s abilities match what the position demands?
o Are the candidate’s values in alignment with those of the organization?
It is possible for the HR team, including recruiters, to develop structured interview questions for different positions. Alternatively, behavioral assessment software will often create custom structured interview guides that are tailored to each candidate’s assessment results.
Frederick Morgeson, Ph.D., is a professor at Michigan State University and scientific advisor for HealthcareSource. He is the author of Job and Work Analysis: Methods, Research, and Applications for Human Resource Management.