staffing solutions

Is Staff Turnover A Problem?

If so, employee referral programs (ERPs) may be the solution.

BOB LEVOY, O.D.

Have you used want ads, employment agencies and Web pages to find new employees — who for one reason or another didn't work out? Numerous studies have shown that hiring people referred by employees tends to yield better results.

Such referrals have the longest tenure and highest satisfaction of all newly hired employees, says Dr. John Sullivan, head of the Human Resource Management Program at San Francisco University. Why? Current employees understand the needs and culture of your practice so they tend to refer people for whom it will be a good fit.

Action steps: Involve your staff in the recruitment process. They may know skilled people who are unhappy in their current jobs, or are thinking about resuming their careers — passive candidates who are not actively looking for a job.

Offer them a substantial recruiting bonus if they recommend an individual who is hired following a 90-day probationary period. To determine the bonus amount, consider the level of the position and the fees you would otherwise pay an employment agency. The typical range of bonus payments is 2% to 4% of the job's salary.

Hard learned lessons:

► Make it clear that you will evaluate referred candidates using the same high standards and selection process your office would typically use for any candidate. Stating this up front helps avoid any obligation to hire someone you don't consider the best choice.
► To avoid underqualified candidates, requests for employee referrals should be specific, including mandatory qualifications and qualifications that an above-average candidate should have.
► A new employee's performance may not be measurable in only 90 days. In such cases, offer a series of installment payments for referral bonuses, based upon retention of the referred employee through several milestones.
► Employee-referral programs are especially effective for specialized positions, such as a coder, that might be difficult to fill through conventional channels. People tend to associate with others in their professions, which gives them access to specialized talent.
► A recent survey by Referral Networks, a New York City-based company, offers some insights into what motivates employees to make referrals. The news is good: Monetary incentives are not what drives the process. Forty-two percent of the 2,300 employees surveyed, said they referred because they wanted to help a friend find a good job. Twenty-four percent said they wanted to help the company. Only 24% said they were motivated by a reward.
►A word of caution: A backlash may result if new employees are “pirated” from colleagues, physicians, or other referral sources.

Reality check: Estimates of employee turnover costs range greatly — depending on the costs of separation, recruitment, interviewing and training — plus the time a new employee takes to reach his or her maximum efficiency level. In addition to these costs, turnover also results in a toll on staff morale and patient satisfaction. So focusing on improving staff retention rates as ERPs will do, can accomplish more than just improving your bottom line.

Is your practice ready for an ERP? To paraphrase Prof. Frederick Reichheld, author of The Ultimate Question (Harvard Business, 2006), what really matters is whether your current employees would recommend your practice to their friends. OM