July 27th, 2020

New Hire Retention Rate

Even when everything seems perfect, some employees choose to leave your company. It usually happens within the first year of their employment, but sometimes much sooner. Luckily, there’s a way to calculate the new hire retention rate and lower it.

Forbes says that 20% of new hires leave within the first forty-five days. There’s no unique definition for the turnover rate, but in most cases it’s referred to people who quit their job in less than a year.

Twenty percent doesn’t seem like much, although it depends on how often and how many applicants you hire. Some of them seemed like a perfect fit for the position. Or, at least you thought that they were. It’s like an ideal relationship that goes wrong. Something along the way made the person leave.

As a recruiter, you are probably curious about this metric. First, you should calculate it. Choose a time period: one year for example. Then, include everyone you’ve hired during that timespan. Finally, divide that number by the number of employees who quit their job in the same interval, for whatever reason. Is the final result too high? Let’s see what might be the possible reasons for it.

The Job Did Not Live Up to the Employee’s Expectations

Did your job description offer more than you were willing to give? That includes the salary, additional benefits, working hours, office space, colleagues even.

If it sounds too good to be true, the potential candidates will expect nothing less than promised. When the position doesn’t meet those expectations, they won’t be happy about it. Then, the employee will either choose to resign or perform poorly.

You should be realistic while making a list of what the company is prepared to give to the future employee. It’s okay if it’s modest compared to your competition. By being honest you will build good company culture and one day you’ll be able to offer more to your workers.

Sometimes even an awesome job description that lives up to the expectations isn’t enough. Everything is as you’ve described it, but the new hire still leaves the company. They imagined it differently or realized that they don’t fit in well. This is not an impossible scenario, so try not to overthink it. It’s not you, it’s them.

Inadequate Communication With the Manager

It’s refreshing to have someone at your job who will mentor you and keep your spirits up. Help you get through hardships and provide expertise, support.

But, it’s not always like that. There are managers and team leaders out there who are professionals, but lack empathy towards their subordinates.

Some people learn how to deal with those superiors, but others can’t handle it. They might try to do it for a while but eventually, it will become too much and they’ll choose to change their job.

Newcomers need encouragement. Among them, some people had to completely change their lives to come and work for your company. If they get proper treatment and guidance, there’s less chance that they will leave in the first year.

Lack of Training

This problem is somewhat associated with the previous one. Large companies with a few hundred employees usually work at a fast pace. In some cases, the new hire can’t catch up to that rhythm with their current skills.

Their supervisors should give them enough time to blend in, and adequate training. Imagine if someone brought you to a famous football club. They don’t introduce you to the team, their tactics, strategies, etc. The next big match is in two weeks. You’ll probably think “What in the world is going on” during that match.

New employees who get thrown into everything without preparation will feel the same. Then, their reason for leaving the job might be a combination of the following:

  • The company’s culture is not as you have described it in the job ad.
  • Their mentor did not bother to help them pick up the pace.
  • They felt like they didn't belong in the company.

Keep in mind that your new hires can influence your company’s reputation. If they choose to quit their job early, it will discourage others from applying for your future openings.

When you treat them right, the chances are high that they will stay and promote your business's reputation.

If your new hire retention rate is high, you should focus on making it lower. It’s okay if you let one or two perfect candidates slip away. What’s important is to learn why they chose to do so, and change your approach towards the next ones.

About iglooHR
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