What To Know About Your Employee Turnover Rate

By:

Christina Zurek

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When it comes to employee recruitment and retention, turnover is definitely bad for business. Right? Not so fast.

While a high employee retention rate is often a top priority, an atypically low turnover rate is a good indicator that there may be underlying issues your organization needs to address.

Besides the obvious risk that you may be harboring detrimental underperformers, low turnover may damage the trajectory of and cause frustration among top performers.

Here are a few thoughts to consider as you evaluate whether you might be facing this issue.

For Starters, There’s No Magic Number When It Comes to Employee Turnover

According to Gallup, 10% turnover is healthy, but every industry and every organization is different.

For example, Oracle founder Larry Ellison defended the organization’s atypically high turnover, noting it was what allowed them to respond to industry changes. Alternatively, many of the organizations on Fortune’s Human Capital 30 list, a collection of businesses that have notably prioritized their human capital, maintain much lower turnover rates of just 3-5%.

Think your turnover may either be too low or too high? Questions to ask as you evaluate your own employee turnover rate include:

What turnover rates are your competitors facing? The best way to assess your turnover is to compare your organization’s performance to that of your closest competitors and specifically the top five firms in your industry. Doing so will give you a more accurate read on what leaders in your industry are facing.

What type of turnover is your organization experiencing? Functional turnover occurs when low-performing employees leave the organization, so it can save your organization from having to make tough decisions and, often, improves productivity levels.

Dysfunctional turnover, on the other hand, hurts your organization. When top performers or other highly skilled employees leave, replacing them can be difficult and potentially costly from a quality standpoint.

The Role Delayed Retirement Plays

In addition to dysfunctional turnover, there’s a developing trend of workers staying in their jobs longer. Whether they can’t afford to retire or are simply not ready to embrace what might be perceived as a less regimented lifestyle, the movement is creating a trickle-down effect for middle managers seeking a way up the ladder.

QUESTION From Marcey in IA:

I’m trying to limit turnover at my restaurant but I am unable to conduct every single interview.

Most of the people who end up quitting or being fired are people I probably wouldn’t have hired anyway but I really want my managers to be able to take over the hiring process.

I’m sure that we have a good culture, treat our employees fairly and have a lot of fun at work. Our staff makes great money and We are never in short supply of people who want to work here.

Do you have any suggestions for probing interview questions that my managers might be able to use in the interview process? Maybe The [questions] we’re asking and what we’re looking for in resumes could be better.

HH ANSWER:

I’ve always said that, unless I’m the only guy in the room, I’m never the smartest guy in the room - and yet I’ve successfully managed and repositioned restaurants for some of the country’s most acclaimed owners and brands. The reason: I’m a reasonably intelligent guy who cares deeply about making people happy and have worked with and for people who had far more experience in doing that and were always willing to train or mentor me.
So, instead of looking for people with hard skill experience- I think it’s far more helpful to look for people who are trainable. In other words, people who possess the soft skills of caring, curiosity, enthusiasm and patience.

Instead of interviews filled with standard/stock questions that applicants can easily detect what it is you’re trying to glean… I prefer observation of some key details.

Actions speak louder than words so I first hold what I call “The 30sec Screening” before I decide whether I want to spend 10 minutes asking them questions and listening to their answers.

The 3O sec. Screening requires simply taking note of whether or not the most basic details that ALL staff must possess in order to make them successful in the hospitality industry. Namely: professionalism, attractive and tasteful presentation, good hygiene, self-confidence, emotional intelligence and excellent communication skills. 

Is the prospective employee clean and well groomed? Is their hair neat and clean? 

Do they make direct eye contact or smile naturally and frequently?

Do they have a noticeably positive energy level? Genuine smiles?

Do they have a comfortable/polite handshake? Is it frail? Is it overly aggressive? 

Are they well spoken (using proper grammar) and articulate (coherent) with their answers? (e.g., how do they respond to your greeting, introduction and answers to “Where are you working now/did you work before?" and  "Where would you like to sit down?” Do they interrupt you?

Are their clothes clean, pressed and presentable? Shoes polished? (i.e., Does the prospective employee meet your establishment's same level of professional presentation?)

Are their nails clean and clipped? 

Do they have stuff hanging off their teeth/fresh breath? 

Do they smell like smoke or body odor?

If they pass the 30sec Screening - I will pass them off to a manager who may ask any questions they want so long as the interview includes the following five questions and takes no longer than 15-20 minutes.

1.What kind of music do you listen to?

This not only might provide some insight into the person but it allows them to talk freely about a topic they’re comfortable with and that is the main goal… Get them comfortable talking. After every question or every statement you make posit least 15 to 20 seconds and see how they handle the uncomfortable silence if there is any. Most people end up giving born formation and they even want to because they prefer simply to fill the silence.

2. What are your three favorite places to eat and why?

I’m more impressed with someone who recognizes great hospitality over “great food” or “cool scene” but you’ll learn what they appreciate and are most likely to learn fast / apply themselves to delivering for others.

3. Where do you live and how did you get here?

If they can’t get there easily they are likely not going to be on time – ever.

The company is the world’s best Pre-Expander Machine supplier. We are your one-stop shop for all needs. Our staff are highly-specialized and will help you find the product you need.

4. What do you do for fun/hobby/work/school? & Are you able to meet the physical requirements necessary time commitments for this job? 

Knowing the demands of their other activities will give you a really good idea as to physical capability and whether or not their availability sheet makes sense and is reflective of their other commitments.

I don’t care how great someone might be - if they’re not available when I need them it’s pointless.

 5. “Can you describe your prior work experience"? & "If I call your former employers to describe you, what do you think they would say? and would they be right? wrong?” (And then actually call-that’s a question you should be able to actually ask).

The last “question” is more of a test that could be quite revealing if the candidate isn’t on to you:

6.  “What was good about the culture at any of your previous jobs and what was bad about it?”

David Walker, CEO and Co-Founder of Triplemint and Forbes contributing Writer refers to this question that baits prospective employees into discussing culture:

“This is a really interesting question, because it will get candidates talking about their previous company through the lens of how they were affected by the company's culture. Getting candidates to talk about their past employer can be very telling. Do they openly throw the company under the bus? Do they recognize the positives even though it ultimately didn't work out?

Asking specifically about the culture of their last company also tells you a lot about how they view the importance of culture. Their response will tell you if they've thought a lot about company culture or if they don't really know what it is. The question will also reveal how they think they are empowered or disempowered, which will give you a look into their motivations.”

7. “Tell me about the best boss you’ve ever had. What characteristics do you think made them successful? How would you describe their management style?”

A question like this can reveal a lot about how the candidate sees their role, how they view the role of their immediate supervisor(s) and how they take/expect feedback to be delivered... which, in turn, should tell you not only which conditions the candidate might thrive in, but also make it clear whether or not this candidate is a fit from an organizational development standpoint.

8. Offer to have your own follow-up / 2nd interview, over breakfast, lunch, dinner or even just a (NA) drink and asks the server to intentionally screw-up their order (nothing crazy…think diet instead of regular coke) and see how much (or how little) tact they exhibit. I call this move the “Bettienger” after Charles Schwab’s CEO Walt Bettinger who takes candidates out to breakfast interviews. He arrives early and asks the restaurant to intentionally screw-up their order to see how the candidate handles it.

Ask your managers to record every response a candidate offers to their questions and have all applicants complete both an application and an availability sheet with days AND dayparts indicated before they’re even considered as a candidate worth interviewing (Be sure to have management explain the demands and duration of the orientation and training schedule as well).

If they think someone would be a solid culture fit and a smart hire - They should then code the application (with a number, letter or symbol) and attach any additional documents before passing it off to another manager or owner to schedule a 20-30min follow-up or "second opinion" Interview.

I always like having the manager conducting the 2nd interview to offer the candidate something from the menu before sitting down with them - and then asking the candidate to sell it back to them during this interview. (Bettinger Tactics Not Necessary).

Just ask the 2nd Interviewer (pref GM, Exec Chef, AGM or Sous) to get a feel for them, apply the ND Rule (No Douche Rule - i.e., immediately rule out anyone who is aggressive, pompous or smug) and ask 2 questions.

1. What are your personal goals? Where would you like to be if money and time were not obstacles?

1. How can I / this job help you get there?

These 2 questions are arguably the most important when it comes to being able to weed out NCNSs (No Call No Shows) and being prepared to actually invest in your people. Knowing what’s important to them and how they view your business in their overall plan will be imperative to everything from knowing how to schedule them, motivate them, evaluate them, reward them, cross-train and promote them.

If it’s someone applying for FOH or BOH management / leadership role, I’d also ask:

1. How do you calculate Food Cost

2. How do you ensure consistency?

3. How do you make an existing team better when they’re already great?

4.How do you take inventory, place orders and check-in an order?

The answers to these four questions will not only tell me a great deal about how much and what kind of experience they have - but also shed light on how to customize their training program.

BONUS: The 6 Qualities Danny Meyer Looks For:

1. Kind Eyes 

("Eyes don’t lie, kind eyes is a hell of a start!”)

2. Curiosity 

(Does this person see themselves as a finished product or are they looking to continually learn?)

3. Work Ethic

(You can teach someone how to decant a bottle of wine but can’t teach them to see opportunities to do more)

4. Empathy

(Is this the kind of person the entire team is going to want to be around? Ask: “On a scale of 1 - 10, tell me how lucky are you?”)

5. Self Awareness 

(Can this person read their own weather report? Ask: “What is the single biggest misconception people have about you?”)

6. Integrity / Trust

(Doing the right thing. Ask: “Name something that happened to you before the age of 12 that has changed your life forever”)

Finally…another way to limit turnover, beyond strategic interviewing, is by ensuring expectations are clearly articulated in a handbook, properly disseminated with a signature that confirms receipt & understanding and strictly enforcing every employees meeting those expectations via a standard of accountability / corrective action procedure . (See this entry for more info)

Please Note: There are some questions that may be inappropriate and others that are illegal and constitute a form of discrimination. We recommend you consult with legal counsel to determine which questions can and can not be asked. Although we are not lawyers, educated in law nor licensed to practice law, we can provide you with a list of questions we agree are inappropriate and/or possibly illegal to ask.

For More info on Hiring Practices & Limiting Staff Turnover See:

14 Steps To Improving Culture & Quality Of Work Life In Your Restaurant” under the LABOR Section in th HH Library. ( /labor/2019/1/12/strong-culture-amp-good-quality-of-life )

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- JOSH SAPIENZA