Reducing Your New Hire Turnover


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In this White Paper, we will provide two examples illustrating the link between poor employee performance and high attrition. We will then suggest some strategies and tactics to improve your ability to select candidates that will be high performing employees with longer retention.

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Reducing Your New Hire Turnover

  1. 1. WHITE PAPER Reducing Your New Hire Turnover Understand the Link Between Poor Performance and Higher Attrition888 626 3412 Toll Free © 2011 FurstPerson. All Rights Reserved.
  2. 2.  IntroductionMany high-performing organizations have established key objectives for their frontlineemployee hiring processes. With the growth of “big data,” application of technology, andclosed-loop analytical models, the tools and methods are in place to consistently achievethese objectives.In many cases, these objectives can be summarized in three categories:1. Contribute towards improving Quality of Hire. Quality of hire is defined as selecting an employee who has a greater probability of meeting or exceeding the organization’s production goals. For contact centers, examples include: a. Call control measured via Average Handle Time (AHT) b. Customer experience measured via issue resolution or customer satisfaction (CSAT) c. Sales measured via revenue per call d. Retention measured via save rate2. Reduce attrition and maintain retention improvements3. Create a financially advantageous partnership between recruiting/human resources and business units a. Meet recruiting needs to avoid lost opportunities with open production positions b. Drive towards a lower cost per hire while improving quality of hire c. Focus on improving the ROI to the business year over yearIn this discussion, we will focus on the intersection of quality of hire and attrition. Attritionis a major operating cost for hourly employers. For example, in the contact center industry,FurstPerson’s research shows that the average per agent cost of attrition is $4,285. Amajor focus of human resource, recruiting, and operational leaders is to reduce attritioncosts. Often, the link between employee performance and attrition is overlooked. However,poor employee performance is a significant contributor to high attrition.In this discussion, we will provide two examples illustrating the link between poor employeeperformance and high attrition. We will then suggest some strategies and tactics toimprove your ability to select candidates that will be high performing employees with longerretention.Performance and Attrition – What is the story?Typically when attrition is analyzed, a significant focus is placed on behavioral based turnoverthat results in voluntary attrition. For example, the classic “no call, no show” or “jobabandonment” are common reason codes on turnover reports. Based on our research andexperience, poor performance is often a significant contributor to attrition – both voluntaryand involuntary. In some cases, poor performers, expecting to be disciplined for their poorperformance, abandon their jobs. In other cases, poor performers are released from theirjobs due to their performance. Hiring organizations have an opportunity to focus onselecting candidates who have a better probability of higher performance on the job. Theresult will be overall lower attrition.     2
  3. 3.  Before creating a hiring model, hiring organizations should consider investing time tounderstand the relationship between performance and attrition in order to embed thosefindings in the hiring model. The analysis below provides a framework for influencing futureselection models because we can identify the relationship between performance and attrition.Going forward, the goal is to create a hiring and selection model that eliminates potentialpoor performers from consideration, which will impact the business in two critical ways: (1)by enhancing the overall performance of retained employees and (2) by reducing the attritionthat can be attributed to poor performance. Two case examples will help illustrate this point.Example 1 - Technical Support Job FamilyIn this first example, we consider an inbound technical support role. Over 1,000 agents arein the sample. The two metrics for review are Average Handle Time (AHT) and Salesperformance. AHT represents a common call control metric used by many contact centerleaders to evaluate production capabilities. Sales revenue represents the growing use ofcontact centers as a revenue driver for the business.In graph 1 below, we examine Average Handle Time (AHT) and Attrition. We see severaltrends which need to be addressed in the hiring process. The bottom line – poor performershave higher attrition. Poor performers (AHT > 850 seconds) have a 71% higher term rate at 90 days Average AHT for those who leave = 909 seconds Average AHT for those who stay = 841 secondsGraph 1 – Inbound Technical Support: AHT compared to Attrition     3
  4. 4.  In graph 2, we compare Sales Revenue and Attrition and see a repeat of the AHT issue. Poorperformers in sales revenue have higher attrition rates. Poor performers (Sales revenue < $100) have a 233% higher term rate at 90 days Average Sales Revenue for those who leave = $87 Average Sales Revenue for those who stay = $143Graph 2 – Inbound Technical Support: Sales Revenue compared to AttritionKey Findings – Technical Support Employees with AHT greater than 850 seconds and average sales revenue less than $100 are 277% more likely to term in their first 90 days. This analysis demonstrates an opportunity to create a financial gain by: o Identifying job candidates who can manage their calls better (AHT) while generating more sales revenue. o Understanding the behavioral aspects that underlie both attrition and performance to create a greater opportunity to reduce early stage turnover.     4
  5. 5.  Example 2 – Customer Care Job FamilyIn the second example, we consider an inbound customer care role. Over 1,500 agents are inthe sample. As with the Technical Support job family, the two metrics for review are AverageHandle Time and Sales Revenue.In graph 3, we compare Average Handle Time (AHT) and attrition. Again, we see severaltrends which need to be addressed in the hiring process. Poor performers (AHT > 600 seconds) have a 108% higher term rate at 90 days Average AHT for those who leave = 656 seconds Average AHT for those who stay = 591 secondsGraph 3 – Inbound Customer Care: AHT compared to Attrition     5
  6. 6.   In graph 4, we compare sales performance and attrition. Again the same trend - poor performers are more like to leave.  Poor performers (average sales revenue < $350) have a 245% higher term rate at 90 days  Average sales revenue for those who leave = $234  Average sales revenue for those who stay = $450 Graph 4 – Inbound Customer Care: Sales Revenue compared to AttritionKey Findings – Customer Care  Employees with AHT greater than 600 seconds and average sales revenue less than $350 are 100% more likely to term in their first 90 days.  This analysis shows a similar financial gain opportunity as the inbound technical support.     6
  7. 7.  What can you do to reduce attrition?The above reviews of performance and attrition highlight a key opportunity: to develop a hiringmodel that focuses not only on direct attrition improvements, but also on improvements toemployee performance that will subsequently have an impact on attrition as well.To get started, we suggest several action steps that will position you and your hiring team forsuccess.1. Build the right foundation by understanding the job and details associated with the job. A job analysis process will help you define the jobs in terms of competencies which can be measured during the hiring process. We commonly use a four quadrant model to group competencies: When the job analysis is complete, you will have a list of important competencies related to successful job performance: The job analysis helps us understand that the selection process (i.e. – assessment tools) should measure:     7
  8. 8.    Problem-solving/learning ability  Communication related skills (including written communication)  Computer skills  Customer service orientation and skills  Personal characteristics related to conscientiousness, composure, and interpersonal style2. Spend time understanding your relationship between performance and attrition much like the two examples discussed earlier.3. Start small – focus on one metric and its relationship to attrition. By isolating one metric, you can control other factors that may create “noise” in your execution. You can then examine how you hire new employees into this role. If possible, you should determine what the relationship is between your existing process and production performance for the selected metric. For example, if you use an interview, do better scores on the interview translate to better production performance? If not, you will need to rethink how you evaluate job candidates during the hiring process. Without being able to predict new hire performance, your hiring organization will be ineffective at reducing attrition and identifying candidates that will perform better.4. Understand how to measure potential job performance by using the right selection tools. The chart below provides some examples:     8
  9. 9.  What type of results can you expect?Earlier we highlighted two examples from an organization. In both the inbound care and inboundtechnical support call types, new employees who struggled with AHT and Sales Revenueperformance also had higher 90 day attrition.The organization used the information from their study of performance and attrition, as well asjob analysis details to implement a different approach to hiring. The organization focused on atwo primary areas to change its hiring model: 1. Revised the selection process to move beyond just interviews and skills testing, like typing, to include other assessments that measure abilities and behavioral characteristics for a better job fit. 2. Shifted recruiting efforts away from traditional sources like job fairs to more employee referrals and internet tactics.The net results included significant financial gain:Applying these results to any organization will yield impressive financial gains all associated withfocusing on hiring improvement.In summary, high new hire attrition can be associated with poor performance. Spending time toresearch the link between poor performance and attrition may present opportunities to reduceoverall turnover. Following some basic steps and using the right assessment tools can createsignificant financial gain.     9
  10. 10.  About FurstPersonFurstPerson provides talent assessment solutions for customer contactorganizations. We enable companies to hire superior talent for service, sales,and support roles. These roles may be in-person, over the phone, or viachat/email. Our talent assessment solutions are customized by client, designedby our expert selection consulting team, and delivered via our web-based talentassessment platform. Each solution is designed to improve businessperformance.FurstPerson has provided contact center hiring solutions since 1997. Oursolutions are active in over 1,500 locations across North America, Europe, LatinAmerica, and Asia. Our industry leading solutions cover both brick and mortarand home agent needs. Our innovative technology includes call centersimulations as well as other industry leading assessment tools.Our contact center clients have realized results that have improved new hireretention, job performance, workflow efficiency, and overall profitability.FurstPerson clients typically realize up to a 70% reduction in 0 to 90 day attritionand up to a 45% improvement in performance.Learn more about FurstPerson:                 10