Employee retention is a common policy that every organization implements to help retain a talented workforce while avoiding the costs associated with employees leaving the labor force. It should be noted that the customer service role, which involves outsourcing services, requires significant training to ensure that employees handle data appropriately (Patil, 2022). In light of this, losing employees involved in customer service roles not only incurs training costs but also costs linked to productivity when the role remains vacant. Therefore, human resource departments should always consider using six-sigma projects to quantify the cost of employee turnover and design solutions that can increase retention rates.
Hewitt Associates, which is a human resource outsourcing and consulting company, experienced an annual turnover rate close to 100% in the customer service role. The company was determined to save millions of dollars that it was losing to customer service employees leaving. The company’s human resources management decided to implement a Six Sigma project to establish techniques for enhancing retention levels. The first step was to identify the cost of turnover, which includes both hard and soft costs. The management realized that it could save 24,000 dollars for each employee in separation costs and about 14.5 million in training costs. The company used regression analysis to identify factors that increased retention among customer service representatives. The management aligned its solutions to retention drivers like career development opportunities, quality of life, policies, practices, and compensation packages. For example, the team reviewed market data to correct the compensation packages of customer service representatives. In this respect, the Six Sigma method can help human resource managers increase employee retention by designing solutions related to retention drivers.
Six Sigma as a data-driven framework eliminates variations in processes and improves the quality of human resource processes. Six Sigma is used by human resource management to ensure that HR functions lie within acceptable standards or levels of performance (Evans & Lindsay, 2020). For instance, in the case of Hewitt, regression analysis indicated that customer service representatives were compensated below market standards, thus increasing turnover rates. As a result, six-sigma enabled HR management to eliminate the variation. Six Sigma reduces variation by establishing the root cause analysis of a human resource issue and aligning solutions to deal with the problem (Evans & Lindsay, 2020). The method involves statistical hypothesis testing, which issues evidence before users can make claims. Thus, the process is reliable for identifying gaps, making recommendations, and issuing optimal budgets for human resource management (Evans & Lindsay, 2020). For this reason, the six-sigma method is applicable to solving any human resource problem. It can establish root cause analysis and solutions for employee engagement, motivation, satisfaction, and burnout, among others (Evans & Lindsay, 2020). The method also facilitates the efficiency of the labor force while reducing operational costs associated with recruitment and selection and legal court battles.
The first solution that the team designed was job matching for employees at the time of application. The strategy has a positive relationship with employee engagement since it ensures that people are assigned to specific roles that are likely to be successful (Taamneh et al., 2022). The management will also get an opportunity to employ candidates who have identified a career path for the customer representative position. As a result, Hewitt Associates will improve retention levels through increased engagement and employing people who are willing to stay long in the company. The second solution that the Six Sigma method generated was training and development. Learning and development increase engagement levels since employees can get mentors to help them succeed in their roles and establish a career path (Patil, 2022). It also provides workers with an opportunity to adopt professional competencies. Thus, employees are unlikely to leave for reasons related to career development. The third solution was increasing compensation above the market average. The strategy increases engagement by making employees feel valued, which reduces their desire to leave (Șerban & Herciu, 2019).
In summary, employee retention is a critical factor in the organization due to the hard and soft costs associated with turnover rates. Human resource departments should always consider using six-sigma projects to quantify the cost of employee turnover and design solutions that can increase retention rates (Patil, 2022). The method also facilitates the efficiency of the labor force while reducing operational costs associated with recruitment and selection and legal court battles.
References
- Evans, J. R., & Lindsay, W. M. (2020). Managing for quality and performance excellence. Cengage Learning.
- Patil, T. S. (2022). A Study on Employee Retention Strategies at Spareage Sealing Solutions, Thane. ANWESH: International Journal of Management & Information Technology, 7(2).
- Șerban, R. A., & Herciu, M. (2019). Performance management systems–proposing and testing a conceptual model. Studies in Business and Economics, 14(1), 231-244.
- Taamneh, M. M., Aljawarneh, N. M., Taamneh, A., Alrousan, A., & Athamneh, S. N. (2022). Job Analysis and HRM Strategic Decisions: Administrators’ Ethics as Moderating Variable.