The Value of Retention, and How To Achieve
As it relates to local hire and Section 3 programs, a common issue is retention. Retention should be a top concern of all stakeholders, because retention results in overall program success, confidence on the part of the supervisor (field foremen) and worker, a return on the training investment made by the contractors, subcontractors, developers and public agencies and an ability for new employees to support their families and provide a general greater contribution to society overall.
The current statistics as it relates to retention are stark. A common retention ratio for local hire programs is about 12%. In other words, 12% of new hires are retained permanently and the rest are laid off when the project completes, or before, because they are not ultimately found to be "viable employees". This low success rate takes its toll on the project in many ways.
First, the human capital cost for the new employee. How would it feel for someone to invest months in training, qualifying for work, changing life habits to adjust to a new lifestyle and to manage newfound expectations of their loved ones (parents, partners and children)? Just to be laid off in a short period. Often times, there is a lack of communication about expectations and potential outcomes if expectations are met, which results in a failure to for that new hire to project success, and work hard to achieve it.
Second, the failure on the foreman's part affects their confidence. This could affect the foreman’s own production, their sense of success, in addition to the employer's time spent on termination paperwork and employer's potential liability for workers comp claims.
Third, the training investment. If fifty employees are trained at $2,000 each, and only seven ultimately succeed, that is a lost investment of approximately $86,000 in training. These employees are now out of work and back to square one.
Good news is, with a little more effort and organization, retention rates can be improved significantly. Attached is a New Hire Commitment Form and Orientation. This should be used as an onboarding tool for each new hire, to acclimate them to the new position, and organize the foreman as it relates to training and teaching. This should be a living document, managed by the employer or a third party local hire support firm, and followed up on at the stated intervals: three (3) months, six (6) months, and one (1) year.
Hopefully with a little support and organization, retention rates will increase and everyone will feel more accomplished in their roles.
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