Employee turnover is very expensive, regardless of whether the employee chooses to leave, or you need to ask them to leave.

Management is so busy controlling direct costs; they miss the indirect costs. Every time even a moderately competent employee walks out the door a whole lot of training effort and learned insight walks out with them.

Often key customer or client data and relationships disappear as well. There is a rule of thumb that it effectively costs a year of salary for every employee who leaves. 

That is double the wages for the first year of the new employee. What is just as expensive, and maybe even more so, is poor hiring practices, and non-existent on boarding processes.

Here are some key principles of great employee retention, performance, and retention:

1) Pay well. Research shows that when an employee earns enough to pay their everyday bills without stress, they begin to work for intrinsic reasons rather than purely extrinsic ones. Stop asking, what is the going rate, or average rate of pay for a certain position. If you pay average, you will get average. Figure out how to make your business profitable so you can afford this. But you are going to find that in many cases you will need to make the investment for it to pay for itself.

2) Hire people that are compatible, people that generally like each other. When you are interviewing a new candidate, always have in the back of your mind, would the other team members like them? Many times, business owners hire who they like, and then find the employees dislike them. If appropriate, have your senior team members be part of the interview process.

3) Provide high levels of autonomy appropriate to the position and responsibilities. This includes providing good onboarding and orientation, ongoing training, and regular feedback and coaching. What I mean by autonomy is the ability to think for myself, make decisions, and not have someone looking over my shoulder and micromanaging me.

4) Encourage high levels of cooperation and demonstrate this behaviour in your own role as a leader and a manager.

5) Provide high levels of accountability. Not just to results and specific outcomes, but to the company values, and overall objectives. Create an environment where everyone is expected to perform and if not, will be asked to leave the company. Employees want to care, they like being part of something where everyone cares, they really dislike it when someone is not pulling their weight, and they detest it when management doesn’t do anything about it.

6) And to ensure that the team works cohesively, have meetings. Have a daily toolbox meeting that is 5 to 7 minutes long (absolutely no longer). It takes place at the same time every day, usually at the beginning of the day, and everyone is required to be there. There may be occasional exceptions to attendance for legitimate logistical reasons but try to keep them to a minimum. Keep having the meeting regardless. Discuss what the day looks like in the bays, highlight any unique circumstances. Discuss what the day look likes for the front counter, highlight any unique circumstances. Ask the team if they have everything they need for the day. Is all equipment working, all computers functioning etc.? Once you get good at these, you can add one training item that you are trying to implement. 

7) After you get in the habit of daily meetings it is time to add a weekly meeting. 15 to 20 minutes at the very most. This is where there can be a more in-depth discussion of topics that arise in daily meetings. That way the team knows there will be a place to table longer discussions or expand on the training topic.

8) After 3 months of weekly meetings it is now time to start monthly meetings. These are an hour long at the most. This is where new company policies, benefits, or other organizational topics. It may have a lunch and learn component. Bring in a guest speaker for half of the time. Financial planner, life coach, nutritionist, or other professionals to help your team develop on a personal basis.

9) Good on boarding procedures. With every new hire have a comprehensive onboarding process. Day one, day two, week one, week two, month one etc. Introductions to the team, all of the health and safety training, facility tour, restrooms, lunchrooms. Employee handbooks, employment contracts, benefits, vacation policies. Equipment use and training, test driving policies, company philosophy, all of part two above. For each position, review best practices, even if the new hire has a lot of experience does not mean they do things that way you want. Especially with technicians, we all do repairs the same way, we all approach the vehicle the same way, we all do inspections the same way, we all recommend maintenance and repairs the same way. We cannot give a service advisor any reason to question the technician’s judgement.

Why this works

People work hard, stay with the company, and together achieve an outstanding reputation in the industry.

People want to be part of something that is bigger than them.

It is my experience that shared values, a highly cooperative work environment, with high levels of autonomy, and high levels of accountability create the conditions of deep employee satisfaction.

These meetings have worked very well in improving shop performance and reduced the need for other meetings.

Dr. Bruce Hiebert PhD and I have collaborated for over 20 years in research on leadership and group dynamics and its application to small business, the automotive aftermarket in particular.

“I think this is a stunningly brilliant application of the social-brain research as follows,” says Dr. Hiebert PhD:

1. It provides clear group identification. Each day every employee gets the opportunity to identify with the team as a whole. They are allowed to gather their presence, put aside their day-to-day lives, and get oriented to the collective identity. 

2. It provides a clear sense of order. Every day the manager sets a context and a framework that is utterly hierarchical, but not authoritarian. The manager sets and runs the meeting. Everyone else attends. Hierarchical structures create meaning, security, and a sense of honour. Just watch anxiety dissipate in consequence.

3. It provides a clear context for gaining a feeling for the status of the shop. The manager provides both cognitive and emotional information about current status, the latter through stance and tone of voice. This gives every team member a sense of how things really are and a standard against which to prepare to allocate their personal resources.

4. It provides core useful indicators for needed action. Priorities are identified and issues clarified so that everyone knows what the problems are that need collective action. This builds a forward focused team (primarily strategically, but also potentially tactically).

5. It provides a fair opportunity for everyone to participate in generating the emotional sense of the shop for the day. While Murray did not specify, I suspect these meetings are opportunities for each member of the team to bring forward specific, brief issues that should be addressed in terms of immediate performance. The result is collective management.

6. I suspect it is also an implicit disciplinary tool. If you are slacking off, attending such a meeting on a regular basis is going to be very guilt or shame inducing. Everyone knows who is not pulling their weight and by gathering every day the lack is felt together with the person who is failing to meet the necessary challenges. I can see people either quitting or doing their best to perform up to the manager’s expectations/needs in response.