Up a full percentage point, employee turnover in the U.S. hit 19.3% in 2018 according to a report by Compdata.
Factor in a tight labor market that gives employees more options, and employers are left scrambling to reduce turnover. Worse yet, when employees leave costs go beyond slower production and knowledge loss; recruitment, hiring and replacement costs can skyrocket. According to the Work Institute’s 2017 Retention Report, replacing a departing worker costs employers $15,000 for someone earning a median salary of $45,000 a year.
Lets dive deep into employee turnover and review six steps that you can implement to reduce it in your organization.
First, Why is Reducing Employee Turnover Necessary?
As mentioned above, research has shown that replacing a departing worker who makes a median salary of $45,000 a year costs the employer $15,000. But besides the turnover cost of replacing an employee, why else should employers care about reducing employee turnover? The answer is that a high turnover can result in low employee morale.
If a company experiences a high number of employees leaving, the remaining employees take on additional workloads, roles, and training- making their lives more difficult. This can result in a reduction in the quality of work and morale.
If an employer experiences this, they should take action by building up employee engagement. They can do this by creating a positive work environment, providing recognition for the work they provide, and giving encouragement.
Six Steps to Reducing Labor Turnover
1. Hire The Right People.
This strategy may seem obvious and unworthy of mention, but nothing could be further from the truth. In fact, many business owners make the mistake of hiring individuals who are simply wrong for the company. This includes incredibly talented, hard-working, friendly people. The business owner who truly wants to reduce employee turnover must be dedicated and diligent in the process of ensuring new hires fit their culture and have the highest likelihood to succeed.
Luckily, there are many steps you can take to increase your likelihood of hiring the right people. One is defining the role clearly. This step is imperative because it ensures that you and the job candidate retain a clear understanding of their roles and responsibilities. This step should help you weed out individuals who either don’t possess the necessary qualifications or simply don’t want to complete specific work-related tasks and assignments.
Another strategy you can implement to ensure that you’re hiring the right people is utilizing hiring assessments. These assessments can help you determine whether a job candidate possesses the characteristics necessary to excel within your company. These days, some companies will have your existing employees complete the assessment first. In so doing, the companies can identify which shared characteristics their most successful employees have. They can subsequently determine whether a job candidate has those characteristics. The end result is an enhanced ability to predict whether a specific candidate can thrive with your company. Because these assessments can help a business owner identify the bad fits and good fits for the company, utilizing these assessments can reduce the number of candidates that the employer needs to screen.
2. Make Your Company Culture Known.
In many cases, employees leave a company or are fired because their personal value system does not parallel the company culture. This is why continually making your company’s culture known to employees is imperative. Doing so ensures that everyone is on the same page regarding expectations in terms of anything from what they wear to work, how often they’re expected to do overtime, whether they’re required to engage in volunteer activities, and if attendance at office parties is imperative. Every company has a culture, but the visions and values that give life and substance to the culture are not always stated clearly. When this is the case, employees can become confused regarding how they are to think and act while in the work setting. The end result is oftentimes unnecessary office tensions and internal conflicts which lead an employee to quit or get fired.
3. Offer Employee Development Resources.
Here’s an old business joke you may have heard…
CFO asks CEO: What happens if we invest in developing people & they leave us?
CEO: What happens if we don’t & they stay?
Offering employee development resources is more likely to reduce employee turnover than make employees want to leave. These resources are important for many reasons. First, they show your staff members that you are genuinely interested in their personal and professional progress. Once this happens, your levels of employee satisfaction will increase. When employee levels of satisfaction are substantive, staff members are typically willing to stick around in tough times because they are thoroughly persuaded that employers are on their side and are making decisions that benefit them. Another reason that you should offer employee development resources pertains to job efficacy. Specifically, those who attain ongoing training and evaluations typically learn how to complete their work-related tasks with greater efficacy and expedience. Once this happens, you can witness a wide range of wonderful business-boosting outcomes. Some of them might include more substantive conversion rates, less office hostility, and enhanced productivity.
4. Encourage Gratitude And Generosity.
Another strategy you should implement to reduce employee turnover is encouraging gratitude and generosity. This strategy is ultimately a pro-social effort. A pro-social effort means that it encourages your staff members to connect with other employees in a manner that involves elevating everyone’s sense of humanity and community. The end result of ongoing expressions of generosity is a happier, healthier staff. Note that when staff members are healthy and happy, they’re much less likely to quit.
5. Reward Hard Work.
One of the best ways to ensure employee retention is by rewarding hard work. Doing so shows staff members that their efforts are recognized and respected. Note that there’s more than one way to reward hard-working people. Also, note that customizing the reward to suit the employee’s personal preferences or professional aspirations is always a good idea. For example, if you know that a specific employee wants to move forward with your company, the reward for ongoing excellence in project completion can be a new title that involves more responsibilities coupled with greater freedom in things like their work schedule.
Another big benefit of rewarding hard work is that it encourages a culture of excellence. This is true not only for the individual who is being rewarded, but for every staff member that becomes aware that the reward was disseminated. With these realities in mind, think critically about what the reward method will be and what level of performance is required to warrant recognition and awards. In addition to offering bonuses and paid time off, consider the value of rewards that involve prizes given to an individual who becomes goes above and beyond without being asked.
6. Emphasize Work/Life Balance.
Even employees who willingly work hard need to maintain a balance between their personal and professional life. Without a balance, stress levels skyrocket and can lead to multiple unwanted outcomes. Some of them can include burnout, resentment, and recurring illnesses. When these negative realities surface and become normative, employees may blame their line of work and then quit. Luckily, there are many ways that you can make work/life balance a real thing at your company. One of the simplest and most effective strategies is by offering a flexible work schedule. This increases the employee’s likelihood of being able to maintain a healthy social life and engage in self-care activities while simultaneously operating effectively and optimally while in the work setting.
Don’t Delay: Start Reducing Employee Turnover Today!
Once you realize that it’s time for your organization to step into a deeper dimension of efficacy and excellence, you need to start making institutional changes. One change that can be particularly beneficial is utilizing strategies that will reduce employee turnover. Use some or all of the information outlined above to ensure that you can retain more and more staff members this year!