Turnover is a serious problem for business today.
While it may seem easy on the surface to hire a new employee, it isn’t just about finding someone with adequate qualifications and experience. It would help if you also had someone you believe will be effective in their role and with your company’s culture. If you hire someone who doesn’t fit your workplace, they are likely to be a bad fit and eventually leave.
Reducing employee turnover and improving job satisfaction is no easy task and requires a well-thought-out plan. That’s why it is essential to hire the right people from the start, support them with ongoing training and development, and clear expectations for their performance. Here are some tips to help reduce employee turnover.
What causes high employee turnover?
Hire right and hire often is an excellent motto for any business. While hiring, it might be helpful to hire smarter than retaining employees who were initially hired but are not working out well in their jobs or who do not fit into the work environment.
Businesses hire team members with certain expectations; however, it is not always clear why an employee leaves after being hired. To reduce employee turnover and hire better employees, businesses should focus on a few areas:
- Hire the right person for the job. Don’t rush to hire to fill empty seats
- Lack of an onboarding process, leaving employees to figure their job out
- Develop employee’s skills once they are at work
- Create clear career paths for employees and support their decision to grow within the company.
- Not listening to employee feedback or doing exit interviews to understand better any workplace frustrations that could have been easily resolved.
Most employees leave because of poor leadership, negative co-workers, no opportunity for advancement, and/or a terrible boss.
What are the costs of high employee turnover?
Costs of employee turnover can be broken down into hard costs and people costs. Hard costs are quantifiable expenses – recruiter fees, advertising, reference checks, training, and loss of productivity before a hire is made while the new hire is being trained. People costs refer to the financial impact on employee morale, performance levels, and effort, which cannot necessarily be quantified. These costs are often the most significant cost to an organization.
People are often surprised when they find out how much it actually costs to replace an employee. Some employers might feel inclined to think that “well, I’ll just put the person through training again,” or “I can hire someone with more skills.” While this may seem true in the short term, the long-term effects of high turnover can be as damaging as the cost of replacing that employee. The whole process of interviewing and hiring a new hire can take up to 100 hours—or more! Again, it’s important to remember this does not include any benefits packages or other costs associated with finding a replacement hire for a position.
What can you do to hire the right people?
Hiring the right employees is no easy task, but many businesses hire wrong because they hire too quickly or hire people who don’t fit into their culture. To hire well, look at job descriptions carefully, hire for culture fit and skill-set, hire only when the position is vital and hire someone who can advance with your company. Many organizations are finding that they are saving money by hiring less frequently but more wisely.
The best way to hire is to ensure that you have a well-defined job position for each person in your organization. Be clear on what skills are required
Common effects of high turnover rate include:
– Loss in productivity
– Lack of quality in work
– Increase in mistakes and accidents
– Wasted spending on replacing people
– Loss in profit and growth potential. For example, if a company has 100 employees with a turnover rate of 30%, that equals to losing 30 employees each year—that’s potentially an entire team of people.
What are ways to reduce employee turnover?
What initial steps can be taken to reduce turnover?
- Having clear expectations about the job role. Create a job description that lists the responsibilities of the role, a list of qualifications and skills necessary for the position, and how much time is required to complete the tasks.
Once a hire has been made, the rules should be clearly defined and opportunities for growth within the company. If there are conflicting job descriptions, hire only the person who has most of what you need or hire both employees to keep everyone happy.
- Hire the right people and continue to develop their careers. Does your company have ongoing career development, tuition reimbursement, or skills training programs? An investment in upgrading the workforce is one of the best investments you will ever make when looking at long-term growth. Hiring people who are a good fit with your culture— meaning their behaviors, values, principles, and goals clearly match behaviors, values, principles, and goals clearly match those of your company — and then training as necessary will go a long way toward ensuring employee retention and loyalty.
- Develop an employee-oriented culture. Most companies with low turnover rates are employee-oriented. They solicit input and involvement from all employees and maintain a true open-door policy, avoiding closed-door meetings as much as possible. Employees are given the opportunity for advancement and not micro-managed. And adding ways to reward employees are critical. Employees must believe they have a voice and are recognized and shown appreciation for their contributions. Remember that trust and loyalty are a two-way street. Does your company’s culture encourage open communication and employee engagement?
- Develop an overall strategic compensation package. This should include not only a competitive base competitivecompetitive salary and variable pay scales, but long-term incentive compensation, bonuses, and gain-sharing plans, benefit plans to address health and welfare issues, non-cash rewards and perks, too. To be competitive in today’s labor market, most companies find it necessary to offer a standard benefits package, including health, dental, life insurance, vacation and leave policies, investment and retirement plans. Many small companies cannot afford such a complete package. But what more could be done cost-effectively toward creating an employee-oriented work environment?
- Explore creative options. Creativity in compensation and benefits can make quite a difference to the welfare of the employee. For instance, if employee welfare is a genuine concern, what about child care? How much employee absenteeism is attributable to not having a dependable babysitter? Although the costs and liabilities involved in providing onsite daycare can be prohibitive, perhaps you could subsidize child care in some manner. Sometimes just negotiating rates for your employees with area child care providers could be helpful. Maybe some kind of a company match would be possible. Household chore assistance is another possibility being used by some companies.
Just make sure the creative options don’t create a burden and remove the focus from what your core business is all about: operating a profitable enterprise.
- Consider other options such as work schedule flexibility, preventative health care, and wellness programs such as fitness center memberships as possible cost-effective benefits. Perks or non-cash rewards to recognize exceptional employee performance can be critical. Service recognition, event tickets, trips, and public recognition can send strong messages regarding company culture and values. Try to examine the issues and needs of your employees to reduce burnout and develop creative programs to address work-life balance needs.
Although costs associated with some of these suggestions may seem prohibitive, as well they may be, you must evaluate the costs of current turnover, analyze the reasons for your organization and develop strategies that in the long term are less costly than continued turnover. Some of these suggestions may not be so costly in comparison.