Reducing employee turnover is one area that all successful businesses focus on. This is especially true if you own and manage a pharmacy operation. The goal is obviously to attract great employees, but how does a business owner retain them and decrease employee turnover? Losing an employee can hamper a pharmacy business – not only in regards to the costs of replacing and training the new employee – but in the knowledge, history and relationships that are lost when an individual chooses to leave and change jobs.
What Is the Actual Cost of Employee Turnover?
Numerous studies have been performed in the past to help identify what losing an employee actually costs a business. Getting to an accurate assessment of the costs is a complicated process, involving various factors that may not accurately depict the “true” economic impact that losing a valued employee can cost a pharmacy owner. Additionally, many of the factors that one needs to take into account to determine the cost are subjective and sometimes cannot be accurately measured. What makes it so hard are the numerous intangible (and often undocumented) costs associated with replacing a good employee. Yet a frequently quoted study released by the Center for American Progress determined that employee turnover costs can be estimated to be at a minimum 100% of the employee’s base salary. In the profession of pharmacy, depending on the individual’s salary and responsibilities, the study concluded that it can actually be as high as 300% in certain situations. The study also noted that for replacing “highly educated” employees such as a pharmacist, using the median of 200% is a pretty safe “bet”.
The study also took a good look at what costs a business owner needs to take into account and consider when faced with a high employee turnover rate. These include (but are not limited to):
1. The cost of advertising and attracting good possible workers to replace the individual (attracting candidates, interviewing them and hiring all take time).
2. The costs of on-boarding a new employee (not only the training time, but also the “hidden” management and human resources time that are required when someone new is hired).
3. The costs of off-boarding the employee leaving (again, the “hidden” management and human resources time required to take care of things like payroll, ongoing benefits such as Cobra insurance plans and record keeping).
4. Lost productivity (a new employee may take a year or more to reach the productivity of an existing worker).
5. The “Domino Effect” of losing other employees (this may be the hardest off all to determine, keeping in mind that whenever an employee leaves, others are often times affected. Most times the other employees who see a high turnover rate in a company tend to disengage and the result is a business wide decrease in productivity).
Employee Retention Versus Employee Turnover
From the studies of what losing a valued employee actually costs a pharmacy owner, perhaps employee retention is a better way to solve the problem. Turnover is a “reactive” situation – the employee needs to be replaced as quickly as possible with the best candidate available. Retention is an “active” situation – it’s an ongoing and never ending process. Perhaps every business owner should focus on a “retention strategy” to ensure that all of the key people are satisfied and happy. After all, happy employees not only remain loyal to a business, but are more productive and have a positive impact on a pharmacy’s bottom line and profitability.
Tips for Employee Retention for Pharmacy Owners
Here are some tips and things that every business owner needs to consider to improve employee retention and decrease turnover:
– Determine first off exactly what your employee retention and turnover rates actually are. How can you fix a problem that may not even exist – “If it isn’t broke, don’t fix it”. This also means that a business owner should always conduct an exit interview when a worker leaves, to help determine exactly why the person left and evaluate and document the retention problems that the company is currently facing and the possible solutions.
– Offer a health benefits program, like a qualified small employer health reimbursement arrangement (QSEHRA), sometimes referred to as a Small Business HRA. Studies showed that, although wages are obviously an important factor, health benefits are becoming perhaps one of the most common reasons that employees leave a job to go to work at another company.
– Communicate with your employees. One of the biggest concerns that employees have is that they are treated as a “cost of doing business and not as an asset” by the owners and management. Many owners simply assume that everyone working at the pharmacy is happy. Initiate open communication by making the company’s vision and mission clear. Discuss the company’s goals and expectations so that each individual is clear. Also, consider regularly surveying all of your employees, but you must be willing to listen to open and constructive criticism and feedback.
– Empower your employees to make decisions on their own. This means that at times they may not make the right decision, but empowering employees allows them to feel management’s confidence in them and discourages the feeling of being micro-managed. This obviously assumes that you have a written job description for every employee that clearly lays out their duties, roles, responsibilities and tasks. Yet a great job description doesn’t limit the employee from being flexible, empowered and able to add to the business’s profitability.
– Recognize and reward their good work. Money as a bonus is always appreciated, but recognition of doing their job well actually means a lot more. Numerous studies have repeatedly shown that the number one reason that workers actively look for another job is that they feel unappreciated and undervalued. Just be sure that the praise is specific and that it is sincere. Additionally, keep in mind that you may have some employees that prefer to be recognized privately. Some people (such as technical or IT personnel) tend to dislike recognition in a public manner.
About HCC Pharmacy Staffing & Consulting
With over 29 years of pharmacy staffing and pharmacy consulting experience, HCC has helped hundreds of pharmacies with employees turnover and retention problems. As one of the nation’s premiere pharmacy recruitment and placement agencies, HCC can help you find you the best candidates available to fill your job openings. HCC has been a national leader since 1989 in regards to staffing, recruitment, permanent placement and direct hire. We also offer a six month pro-rated satisfaction guarantee!
Contact us on line or call us today at 800-642-1652 for a Free Consultation to find out how we can help you too.