In today’s rapidly changing market, personnel turnover is demanding increased attention. The Leader takes a look at how the wisest employers are hiring specialists and putting together benefits packages in a bid to keep the best employees in place, happily boosting company profits.

The words "personnel turnover" can strike fear into the hearts of many company chiefs, but those in the know realize there is little to fear if employees are managed properly. The approach these bosses take varies from business to business, and to properly understand the main problems associated with personnel turnover, we need to look at various kinds of business and their strategic goals and personnel policies.

While it is difficult to estimate an optimal figure for personnel turnover in a company, textbooks on economics usually give figures in the range of 2-5 percent per year.

In reality, with a personnel turnover of 5 percent or more, business can be done no less effectively. The extent to which the company is affected depends upon numerous factors, including business strategy, size, sphere of activity and personnel qualification level.

Personnel turnover is traditionally sky-high in such spheres as multi-level marketing. A similar situation is observed in businesses operating agency networks aimed at massive client attraction. This is characteristic of such sectors as insurance, real estate and pharmaceutics. At the same time, personnel turnover is much lower in goods-producing industries.

Some of the most important factors in personnel turnover are qualification levels, positions in the office and responsibilities of the departing employees. While employees at all levels can quit, their reasons for doing so are often quite different.

As a rule, personnel turnover tends to be lower among medium-level and low-level employees, who value primarily salary and stability.

The higher the position of an employee in a company, the more complicated his or her motivations may be. A high-placed manager, in addition to salary, looks for such incentives as high responsibility, broad powers and the opportunity to launch new projects or directions of business. Without these factors, a valuable specialist will start considering offers from other companies and his departure may cause a whole team of highly skilled employees to follow. That’s not to mention the losses the company will incur looking for replacements.

Personnel turnover is often directly related to radical changes in the business. For example, in order to adapt to a new market situation, a business may need to be restructured. Sometimes market strategy may change in the course of a business’ evolution, causing massive personnel drain. High personnel turnover is also the case with newly created companies lacking clearly formulated corporate goals. Those who start working for such companies feel uneasy because of uncertainty over their employment prospects.

All kinds of problems can crop up for companies that do not pay attention to key factors, according to Andrei Goliney, commercial director at Abercade Business Consulting. He said, for example, that his firm provides consulting services to a large telecom company that offers a broad range of services including Internet solutions and mobile-phone and paging services, but is experiencing a large personnel turnover.

"Incorrectly formulated strategic goals, and an authoritarian style of management and the CEO monopolizing all corporate information flows are characteristic of the company — hence the high personnel turnover," Goliney said.

Modern market situations dictate the need for each company to have strategic goals that all employees are familiar with. Corporate plans should be clear and transparent. Employees will feel more confident if they are informed about what their company plans to do over the next few months, what resources will be engaged and who will be responsible for what.

"It is the job of an HR [human-resources] manager in a company to monitor personnel turnover," Tatiana Terenteva, also from Abercade Business Consulting, said. "An experienced HR manager permanently monitors the socio-psychological climate in the company and the employees’ primary motivations.

"A good HR manager should be able to sense the moment when a specialist has reached a certain level of competence and should be given an interesting offer before he receives it from headhunters."

The departure of top-level employees is much more costly for a company than the departure of low-level workers, Terenteva added, and to safeguard against problems, the sphere of competence of an HR manager should be broader than it commonly is in many Russian companies, where it is basically limited to personnel selection.

"To resolve the problem of personnel drain, a comprehensive personnel policy is required, including a flexible system of wages and incentives," she said. "A big company should offer an open-ended career opportunity, i.e., every employee should understand that he or she can climb the career ladder. And a small company should have an individual career plan for each of its employees."

Those companies, both Russian and Western, that value their human resources seek to elaborate a system of measures to stabilize their staff. Their employees are put through a specially prepared adaptation program, provided with a permanent workplace, given clear instructions on their duties and are paid extra for extra hours or work on weekends. Some companies allow employees to do part of their work at home.

One of the most widely used schemes of stimulating employees is providing them with various social packages. Such packages may include free cell phones, lunches, medical insurance, access to corporate cars and paid vacations for the employee and family members.

For many employees, the opportunity to combine work with taking advanced studies may be a valuable incentive. For example, the company may pay for their second higher education or an MBA course.

Meanwhile, with the speed of modern market development, many companies find it hard to keep pace with permanently increasing market requirements. The scope of the professional qualifications and skills that a company’s employees should possess is increasing with every passing day. If you permanently upgrade your business together with the personnel involved in it, your company will be saved the dangers of personnel drain.