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The retail sector has long been associated with high turnover rates. It hovers around 60%, meaning that more than half of the staff is likely to change within a year, according to McKinsey. It is imperative for companies operating in this sector to refine their HR practices to optimize employee retention because high turnover rates have significant impacts on their commercial performance. They can rely on psychometric assessments for this purpose.

Turnover Rate: A Key Performance Indicator

The turnover rate (or employee turnover) is a key performance indicator (KPI) that quantifies the rate of voluntary or involuntary departure and replacement of personnel within an organization during a specific period. It assesses the stability of its workforce and its overall health.

A high turnover rate often reflects employee dissatisfaction, inefficient recruitment or onboarding processes, and any potential organizational issues within the company.

Conversely, a low turnover rate reveals employee satisfaction, effective talent retention strategies, and a pleasant work environment.

The Proven and Hidden Costs of High Turnover Rates

 Understanding and analyzing the turnover rate is a strategic imperative. It directly impacts the company's finances and indirectly affects its operational effectiveness.

• Costs of Departure/Recruitment: On average, turnover costs in the retail sector represent 1.5 to 2 times an employee's annual salary, according to Built In. Each time an employee leaves the company, the recruitment, onboarding, and training process must be restarted, and human and financial resources must be allocated to ensure their replacement. The departure of an employee can also entail severance payments. Furthermore, the time it takes for vacant positions to be filled and new employees to become operational, the workload for existing employees may lead to overtime payments, directly impacting the company's financial costs.
• Loss of Production: Turnover affects operational continuity, team cohesion and productivity, and company performance. Constant staff turnover can lead to dissatisfaction among existing employees, even encouraging new departures. Turnover, in this sense, can lead to decreased employee engagement, especially if it is high, and impact on the customer experience and sales due to a loss of service quality.
  
•  Negative Impact on the Company's Brand Image: Employees who work in a company with high turnover are unlikely to recommend it to others as a place to work or even to use its services or buy its products. The company loses attractiveness.

The Role of Psychometric Assessments in Employee Retention

Psychometric tests explore personality, assess abilities, identify motivations, interests, and values of an individual.

• Personality Inventories: They assess personality traits, which are behavioral tendencies and interpersonal characteristics related to relationships with others (leadership, sociability, cooperation, empathy, etc.), emotional management (stress resistance, flexibility/adaptability, etc.), work approach (reliability, attention to detail, regulatory compliance aspect, success/effort, perseverance, initiative, etc.), and mode of thinking (innovation, analytical reasoning, independence, etc.).
• Intellectual Aptitude Tests: They provide information on numerical, verbal, spatial, and mechanical skills as well as the ability to solve complex problems and the ease of learning. They also assess critical thinking (ability to quickly grasp key aspects that will impact any decision, distinguish assumptions from facts, evaluate arguments in favor of possible actions, and draw conclusions that will lead to objective decision-making).
• Motivation and Professional Interest Questionnaires: They provide information on an individual's motivational state, sources of motivation/demotivation, professional interests, needs, and values to better support them in developing their career plan and make them feel fulfilled professionally within the company.

In recruitment, psychometric tests allow retail companies to:

• Gain in-depth knowledge of a candidate's potential, beyond their resume.
  
• Secure recruitment through concrete and reliable information provided.
  
• Ensure the candidate's profile matches the job requirements and reduce turnover.
  
• Enhance the candidate's experience by identifying their strengths and areas for improvement.

In development, psychometric tests allow them to:

• Identify and develop the potential of their employees.
• Identify their skills for better development.
• Support internal mobility.
• Better understand each staff member to improve their employee experience.

To reduce their turnover rates, retail companies must rethink their talent acquisition and retention strategies. The use of psychometric tests allows them to recruit individuals whose profile aligns with the company's culture and the position to be filled, ensure they have the necessary skills, and evaluate those that are useful to develop to encourage them to stay and evolve within the company for as long as possible.

Recruit talented employees & eliminate the cost of hiring the wrong candidates.

According to research conducted by CareerBuilder in 2016, the average cost of hiring the wrong employee amounts to $17,000. However, based on a study from the U.S. Department of Labor in 2021, this figure can escalate to as high as $240,000, depending on the company and role.

On average, the total costs to lay-off an unsuccessful hire and recruit a new hire is 30% of the annual salary. Consequently, making the correct hiring decision becomes imperative. But how can HR and hiring managers ensure they select the right candidates? Below are strategies to avoid making poor recruitment choices and avoid the financial ramifications of an unsuccessful hire.

Preventing Unsuccessful Hires

Traditional recruitment processes often involve a straight forward formula where people apply on a vague or generic job description. Afterwards, several applicants are chosen for interviews, and one candidate is selected soon after. However, what may have initially appeared to be a suitable fit can swiftly turn into a hiring mistake. It can turn out that the new employee doesn’t possess critical skills that he or she claimed to possess. Or their personality, values and behaviour turned out not to match with that of their colleagues.

The primary challenge in a recruitment process is subjectivity. Quite often, HR and hiring managers ask questions like 'What are your main weak points?' and receive responses such as 'I work too much’ or ‘I’m a perfectionist’. This reveals nothing about the actual skills required for the job." If you realise that nearly 60% of unsuccessful hires fail due to an employee's inability to meet the expected level of performance, it becomes crucial to have a clear understanding of the required skills right from the start to avoid hiring disasters. To tackle this, you can consider the following:

1. Clearly define prerequisite and trainable skills 

Prerequisite skills are essential for the role which candidates should demonstrate during the interview as they won't be trained after hiring. They can range from general qualifications like prior experience in a specific field to specific expertise in a particular software program. On the other hand, trainable skills are those that employees will learn on the job, requiring some level of proficiency but not necessarily prior experience.

2. Avoid open-ended interview questions that provide little insight

Ask questions that will make candidates showcase their prerequisite skills instead of open-ended questions that provide little insight. For example, a question like “What experience do you have with working with this CRM software?” will provide you more valuable insights than “What do you do when you have a conflict with a colleague?”. Once the skills have been demonstrated, you can delve into other questions if necessary. However, there is no point in asking them with candidates who cannot prove their ability to perform the required work.

3. Transform subjective 'soft skills' into objective criteria.

When it comes to qualities like "cultural fit" and being a "team player," the interpretation typically vary across companies. To make these soft skills more objective, you can break them down into specific components. So clearly define the qualities you seek in a team player or cultural fit and assess whether your candidates possess these concrete traits. Structure interview questions that allow you to evaluate these components in your candidates as well.

4. Make use of psychometric tests

Psychometric tests for recruitment can be used to objectively measure a range of crucial skills, such as:

• Numerical skills: the ability to carry out arithmetic computation and reason with numerical data.
• Verbal skills: the ability to reason with concepts framed in written and spoken words.
• Abstract skills: the ability to solve unfamiliar problems and learn new things quickly.
  
• Critical thinking: the ability to separate facts from assumptions, to evaluate these and to draw the right conclusions.
• Personality traits and values: measures whether personality traits (such as dominance, responsibility and recognition) and values (such as achievement, orderliness and goal orientation) of a candidate will likely match with the values and culture of the company. Personality tests that are very useful for recruiting. 

Psychometric testing enables the HR and hiring manager to see if ability and personality are closely aligned with the environment, company, and role. Insights into aptitude, skills, personality, and motivation are essential to select the very best candidates and to develop and guide your workforce throughout their career at your organisation.

5. Review candidate’s digital credentials

Digital credentials – often in the shape of a digital badge – provide proof of someone’s learning achievement. These are issued by an educational organisation following a learning experience, such as the completion of a (digital) course or the successful passing of an exam. Such credentials are valuable as they can support or question the skills a candidate claims to possess.

6. Don’t rush!

Approach the hiring process gradually instead of hastily filling an open position. Although your team may be stretched thin with one or more employees short, remember that an unsuccessful hire won't solve the problem. Opting for a quick hire might provide temporary relief but will ultimately bring you back to square one. It's crucial to prioritize quality over speed, so take the necessary time to find the right candidate and sidestep the expenses associated with a poor hiring decision.

7. Withhold subjectivity until the end

Despite the various ways to make an objective hiring decision, you may have two candidates possessing pretty much the same skills, values, and personality traits. In such situations it can be inevitable to make a final decision that is based on subjective grounds like representation or shared personal interests. It is important that such decisions are made only at the end of a recruitment process, so it is certain that the selected candidate possess the required skills and has the desired personality and values.

It's never too late to improve your recruiting process. Follow these 8 tips and best practices to improve your recruitment and hiring decisions. 

The methods and means used for recruitment differ from one company to another. However, most HR professionals agree that mistakes in the recruitment and hiring process can have serious negative effects on the organization. Recruitment issues should therefore not be underestimated in terms of work climate, motivation, productivity and financial impact. To help you limit the risks and find the right candidate, let's define bad recruiting practices and explore our top tips for successful recruitment.

What is bad recruiting?

For various reasons, recruiters sometimes make recruitment errors: incomplete job description, imprecise missions in the job offer, etc. Sometimes it's the candidate's profile that does not correspond to expectations: lack of skills, or conversely, too qualified. Another scenario is recruiting an employee without having formally assessed their soft skills: here, the recruiter relies on their intuition and somehow skips the different stages.

What are the consequences for the company?

The consequences of bad recruiting are sometimes not felt until a couple months after a hire has been made. An employee who does not share the values ​​of the company can become a disruptive element in a team and be a source of demotivation over time. Moreover, their lack of involvement can negatively impact the productivity of the team and organizaiton.

The direct consequences of poor recruitment are also an increase in turnover, or even an increase in work stoppages. In the long term, the cost for the company is significant: cost of another recruitment process for the same role, cost of possible replacement and training of the new employee, drop in productivity, consequences on the rest of the team if certain tasks are to be distributed, etc.

8 Tips for an Effective Recruitment Process

It's never too late to improve your talent acquisition and recruitment processes. Here are a few tips:

1. Create an Accurate Job Description

One of the reasons for poor recruitment is the lack of clarity about the responsibilties and the skills required for a position. As you write the job description for an open role, be sure it includes the precise responsibilities, the environment and the working relations within the team and organization, the candidate profile sought (level of training, experience, background, skills, etc.), and the relevant success metrics for the role. An accurate job description defines the ideal candidate profile for both hiring managers and recruiters, simplifying sourcing and improving communication between the entire hiring team.

2. Write a Transparent Job Post

Now that you've written an accurate job description, it's time to post and promote the open position. In addition to the responsibilities, skills, and experience required, it's best practice to also include work location (in-person, hybrid, fully remote), type of employment contract (part-time, full-time, contractor), and the expected salary range for the position. To further improve the candidates experience, you can also include detailed information about the stages of the recruitment and hiring process at your organization. Once you have all that information, promote the job internally on your company's intranet, as well as externally on popular job boards such as LinkedIn, Indeed, and Glassdoor.

3. Don't Overlook the Importance of Your Employer Brand

Now more than ever, emplyees want to work at organization that share similar values as them. To help attrach the right profile of candidates, companies should promote their values and culture across the various channels that make up the candidate lifecycle, including the careers website and social media. Portraying corporate/social values, business projects, team outings, employee testimonials showcases the attractiveness of your employer brand and contributes to a positive candidate experience.

4. Prepare for Job Interviews

Besides the interviewer not showing up, nothing is more frustrating for a candidate than facing redundant questions from different interviewers. Interview preparation ensures a shared understanding of the ideal candidate profile. A well-prepared interview team builds trust and encourages candidates to share their experiences and motivations. To implement this best practice, develop interview guides that specify the attributes or skills each interviewer should assess, include useful questions, and incorporate a standardized scoring rubric.

5. Assess All Skills

Before making a hiring decision, it's essential to assess all their skills. This includes soft skills, hard skills, as well as attributes like personality and learning style preferences that impact individual and team culture and productivity. To do this, use tools like psychometric assessments to measure cognitive, behavioral, and interpersonal skills. You can use separate assessments to measure each area.

6. Make Objective Hiring Decisions

Your recruitment process and the tools you employ throughout the candidate journey should improve decision-making for hiring managers by gathering objective data. By using precise job descriptions, pre-employment and psychometric tests, well-informed interviews, and standardized candidate scoring criteria, you can identify the candidate who aligns best with the role and the organization. Additionally, this approach helps reduce biases that may emerge when making judgments based on intuition or interview interactions.

7. Reply to All Applicants

HR should promptly inform all candidates of their application status. Failing to respond, even to candidates who were not selected for interviews, can damage the company's image and employer reputation. Encourage interested applicants to consider future roles within the company and wish them luck in their job search. For candidates who were interviewed but not selected, consider providing constructive feedback that could benefit them in their future interviews.

8. Refine Your Onboarding Process

The initial days and weeks within the organization can significantly impact the employee's overall experience. Effective onboarding should encompass various activities and topics to ensure a seamless transition into the new role. These elements include orientation, introduction to the company history and culture, access to essential resources, familiarity with policies and procedures, clear role definition, mentorship and buddy systems, open feedback and communication, performance expectations, and focused training. A well-structured onboarding process not only helps new hires feel appreciated and engaged but also equips them for success in their roles, benefiting both the individual and the organization. It lays the groundwork for a positive and productive working relationship.

Optimize Your Recruitment Process with Pearson TalentLens

Learn how Pearson TalentLens pre-employment and psychometric assessments can help empower your recruiting and hiring teams with the right talent insights.   

In 2020, the World Economic Forum estimated that one out of every two workers in the world would need re-skilling (training to acquire new skills needed to change jobs) over the following five years. According to projections from the Future of Jobs Report, companies will need to incorporate new job roles into their organizations in the same time frame: e.g., data analysts and data scientists, AI (artificial intelligence) and machine learning specialists, business development professionals, etc. In all, ten mostly new professions will represent a workplace demand estimated at nearly one hundred million people.

New technical skills, backed up by essential soft skills 

These staggering figures illustrate the scale of the challenge that is now facing all business sectors and companies of all sizes. In order to keep a competitive advantage, and to survive the emergence of new players, they have no choice but to adapt and transform in order to remain agile. 

The pandemic has added to this, accelerating the transformations already taking place, particularly in the digital space. More than ever, the question arises as to the need to adapt technical (hard) skills and improve behavioral (soft) skills to maintain employees’ employability. 

Such an approach is even more important given that employees are also voicing that expectation. According to the Great Insights 2022 study conducted by the Great Place To Work Institute, employability is one of their primary concerns.

Nearly one in two employees state that they will need to upgrade their skills and/or pivot job role in the next five years, but almost a third of them do not feel that they have benefited from specific career development support over the past year. 

Five ways hiring manages can help to create a culture of employability

The study also reveals that training and development programs are becoming one of the defining criteria when choosing to work for a potential employer. With this in mind, here are five ways you can create a culture of employability at your organization:

1. Future Proof your Talent Pools

The best talent pipelines are those that are nurtured. Building a talent pool takes time and requires a well-orchestrated strategy which focuses on the long-term aims of the business, as well as the immediate needs. Cultivating conversations with potential candidates for roles that may not yet be fully formed enables hiring managers to be future focused. This coupled with insight from team managers across the business as to what values, skills and personality will be the best fit for the team, can help hiring managers to make informed decisions to attract top talent.

2. Move to Skills-Based Hiring

Avoid restricting your candidate pool by only focusing on qualifications. Adopting a skills-based approach to hiring opens your talent pool, giving you a wider reach and the ability to attract candidates outside of your usual recruitment network. In the US, “LinkedIn has seen a 21% increase in job postings advertising skills and responsibilities instead of qualifications”. This strategic approach can result in a more varied and multi-skilled workforce, and even help to improve retention rates.

3. Use Psychometric Insight

Psychometric assessments supply detailed, data-driven insight into the values, personality, skills and potential of candidates. There are two forms of psychometric tools - personality and aptitude tests - which together can provide a comprehensive overview of a candidate. With tools such as Role Assessment, a custom employment assessment can be created to meet your roles’ requirements, and its results generate a fit-to-role score that aids in your decision making.

4. Evaluate Talent Retention Strategies

From quiet quitting to quiet thriving, today’s employees are making their feelings on employability known. Gen Z’s priorities are focused on a work-life balance where active steps in creating a culture of wellbeing and inclusion are sought after. Today’s candidates want organizations who echo their values and aren’t afraid to speak up or move on if they don’t align. Take time to review your company brand and values. How do you present yourself? Are you actively living your values? How are you working to upskill and retrain your teams?

5. A shared culture of upskilling and reskilling

The future-of-work challenge cannot be met solely by improvisation. The whole organization, from employees through to top management, needs to subscribe to a culture of “employability” so that each person takes ownership. Executive management sets the course and shares a strategic direction and its implications for the development of job roles. Line management then implements that strategy by identifying development areas for its teams and by working with employees to determine their own employability.

Employability must be embraced across business units to future-proof organizations. Priorities have evolved, technology has marched forward, and organizations can no longer afford to wait and see what skills gaps will develop in the future. Taking steps to reflect on your organization’s employability approach can help future-proof your talent pipeline and address the growing skills gap. For more information on employability, download our whitepaper - “How to Put Employability at the Heart of Corporate Strategy.”