John O’Connor

It’s no secret that finding and keeping talented staff is one of the sector’s major challenges.

The causes are in plain sight. On the one hand, many frontline employees are paid at rates that place them at or below the federal poverty line. Small surprise so many leave at the first whiff of a better opportunity.

On the other hand, labor is already far and away the largest expense for most facilities. The thought of simply making existing payroll demands can fuel insomnia.

Then there are these new wrinkles: Unemployment levels are at a half century low water mark, while a growing number of towns are considering or enacting a $15 an hour minimum wage. There is also a move in Congress to expand that number across the nation.

Some operators have bitten the proverbial bullet and are now meeting/exceeding that higher paycheck threshold. But many more are simply in no financial position to do so.

As if that’s not bad enough, a new Priceonomics report strongly suggests that if keeping the keepers is a priority, it may take closer to $25 an hour to get the job done. Gulp.

This nugget and many more are in a piece called “Pay, Tenure & Responsibility: Quantifying Why Employees Leave Companies.” You can find the full article here. 

One of the report’s most interesting (or should I say depressing?) aspects is how  it connects hourly wages and turnover rates. In a finding that will surprise nobody, investigators found that employers who pay the federal minimum wage ($7.25 an hour), typically experience a 70% annual turnover rate. 

At $10 an hour, the rate drops to 55%. But even at the $15 level, the number is still pretty high, 41%.

To get below the 32% turnover rate (which is cited as an average for small businesses), employers must up the ante to $25 an hour. That comes out to $52,000 a year. Let’s face it: those kind of numbers are simply untenable for many facilities.

So what is an operator to do? Well, the report does offer three turnover-reduction strategies.

The first and most obvious is to revisit your firm’s compensation package. Higher pay, as we’ve seen, drives higher retention. Try to do what you can here.

Second, develop a meaningful onboarding program for new hires. Their first year is the most dangerous, as far as defections go. An onboarding checklist can really help. So can an employee handbook. Longer term, thoughtful promotions, bonuses and competitive compensation packages can only give your employees more incentive to stick around.

Finally, pay attention to career growth. Putting people in charge of others is a great loyalty driver. But don’t overlook regular performance reviews, or warranted promotions.

Will these steps eliminate your turnover problems? Hardly. But they can certainly help. Especially when you tally up the costs of replacing valuable team members who walk out the door.

John O’Connor is McKnight’s Editorial Director.