, Farm Journal Intern
It's estimated that businesses lose $2,000 each time an employee is replaced, according to a study by Sarah Smith at Purdue University. With usual farm employee turnover rates close to 25%, employers could face some high costs, says Chris Zoller, Extension Educator at Ohio State University.
The high costs employers face aren't always money. Costs to businesses when replacing employees:
- Separation costs for the former employee
- Recruiting costs for new employees
- Interviewing time
- Administrative work associated with a new hire
- Training and supervisory time
- Overtime pay for employees who have to fill in for the departed employee
- Lost production associated with getting a new employee up to speed with their new job
Finding and keeping productive employees has been the No.1 issue facing businesses, according to a variety of studies.
So how can farmers keep their employees? Developing strategies to reduce turnover rates are important for businesses, Zoller says. Paying the employees more isn't the best fix, either. According to a study by George Mason University, good wages only ranked 5th for employees' top motivators. The top three were interesting work, appreciation and feeling "in” on things.
How can you reduce your turnover rate?
- Take time to hire better qualified employees (you get what you pay for).
- Make sure to check references on prospective employees.
- Establish a training protocol for new employees.
- Develop an employee manual.
- Have job expectations clearly defined for employees.
- Develop goals with each employee.
- Use a probationary period for all new employees.
- Place employees in jobs they like.
- Have flexible employee compensation programs.
- Give employees an opportunity for time off that fits their personal obligations.
- Hold regular staff meetings to discuss farm issues, goals and operational strategies.
- Several farmers could share one or more employees or seasonal labor.
- Conduct periodic worker satisfaction surveys.
- Have clearly defined grievance policies.
- Conduct exit interviews to determine why employees are leaving.
- Invite your Extension Educator or other key farm advisor to complete SWOT (strength, weaknesses, opportunities, & threats) analysis of your farm employee management system.
Sometimes all it takes is to show your employees that you care, Zoller says.
Here are some inexpensive ways to show appreciation:
1. A simple "thank you” for all the work your employees do.
2. The way to a person's heart is through his or her stomach. If that's true, inviting employees in for lunch can go a long way to improving employee morale.
3. Sharing your equipment occasionally. Allow employees to use farm equipment for a few evenings or weekends for their personal use. Maybe they need to plow a garden, use a welder, or borrow a farm truck to haul debris.
4. Because of labor demands it is often difficult to do, but consider allowing employees to have time off and be more flexible in scheduling.
5. Provide the opportunity for employees to use fuel or farm commodities.
6. If there is an employee with a particular skill that could benefit the farm, and they desire additional training, pay their registration fees. Encourage them to receive additional training.
7. A little fun never hurt anyone. Provide theme or amusement park tickets to employees to spend time with their families for a few days.
8. Employee appreciation and company marketing at the same time if you consider providing employees with shirts and or hats with the farm name.
9. Feedback. Ask your staff about ways you can improve the working environment for them. Eliminating unsafe equipment, unreasonable rules and policies, and conflict with co-workers can help employees enjoy their work more.
10. Many employees would appreciate health insurance coverage, but the cost is often high. An alternative might be a Health Savings Account (HSA). Money can be deposited into the account to provide coverage for employees and may be more affordable to the employer.
By reducing turnover rates, a farm could be more successful. By retaining employees, Zoller says, a business saves money, creates a solid knowledge base in its employees, helps employees create relationships with one another and work well together, and it saves the business time in advertising and recruiting for a new employee.