Costs associated with high employee turnover
It is estimated that employee turnover cost employers about 33% of an employee’s annual salary to find and hire a replacement. This cost comes from factors such as:
- Hiring costs including advertising, screening and interviewing
- Onboarding costs
- Costs of lost productivity
- Cost of errors made by new inexperienced employees
- Training costs
- Cost of wages for employees or supervisors to work extra shifts
- Cost to conduct a background check
- Number of days the position stays open
How to begin combating employee turnover
There are multiple factors involved in reducing the amount of employee turnover your company has. Some of the steps you should take to combat employee turnover are:
- Start with the hiring process
- Offer flexibility
- Make sure your compensation and benefits remain competitive
- Demonstrate respect
- Encourage feedback
1. Start with the hiring process
One of the main ways to ensure employees don’t leave is to hire the right people and ask your interviewees the right questions. Make sure you define the role clearly and honestly to others and to yourself. If you do this, you are more likely to find the right candidates who fit the position and your company culture. It’s not always about whether a candidate can do the job, it’s about if they are right for the position and the company as a whole.
Related: How to Hire Good Employees
2. Offer flexibility
Most employees today are interested in flexibility and a decent work/life balance. They want to make sure they have enough time for all of the important things in their life, not just work. Many managers and employees agree that flexible schedules have a positive impact on retention. Small and large companies alike are beginning to adopt flexible schedules and work locations. If your company doesn’t offer flexible schedules, then it is likely that employees may leave and go to a company that does offer this perk.
3. Make sure your compensation and benefits remain competitive
Pay your employees a fair wage and include raises when applicable to an employee’s development or performance and provide employees with benefits including health insurance, sick and vacation time as well as retirement plans. Even good employees that enjoy working at your company may leave if they find an opportunity that pays them more money to do the same job. If you aren’t able to keep pay competitive, then offer other incentives to employees that may entice them to want to stay.
4. Demonstrate respect
Employees are more likely to leave if they experience consistent disrespect or are belittled often. Treat employees well and they are likely to make your business better by remaining productive and engaged in their work. Demonstrating respect should be a part of your company culture and all levels of employees should be aware that respect is important to your business. Respecting your employees creates a happier work environment overall.
5. Encourage feedback
Ask your employees for regular feedback about how they feel about the company, their job duties and their supervisors. This way, you know what areas your business can improve in and you can gauge the satisfaction levels of your employees. If employees feel heard and they notice how your company cares then they are more likely to stay employed with your organization.
Next steps for reducing the cost of turnover
Here are some steps to strategize and reduce the cost of high employee turnover:
- Calculate the cost for your business
- Rethink performance reviews
- Conduct exit interviews
- Make more opportunities for development and growth
- Recognize and reward employees
1. Calculate the cost for your business
First, you need to calculate how much it costs your business to lose employees. Every business is different and it is important to know how much you can save by reducing your employee turnover. It can greatly benefit your operating expenditures, employee productivity and engagement when you know the general amount you save by keeping employees or the money you lose by employees quitting.
2. Rethink performance reviews
Next, identify what works and what doesn’t about your performance review system. Many employees believe that performance reviews are inaccurate or unhelpful. It is important to revise performance reviews to maximize the benefit they give to employees. Performance reviews, when done right can increase trust in the relationship with employees. Improving performance management can increase employee satisfaction.
3. Conduct exit interviews
Lastly, when employees do decide to leave your company, conduct exit interviews to get a better idea of why they are leaving. You can do this by conducting in-person exit interviews and asking the employee targeted questions or you can provide them with a survey that they can fill out that requires detailed answers
4. Make more opportunities for development and growth
There may be employees who feel stuck in their positions and they may seek employment elsewhere if they know they cannot move up to a higher position at your company. If you can’t move them to a different position, try offering them classes and training that helps them grow in the position they already have. Or perhaps consider cross-training employees in other departments. This may help them to be more excited to make goals and thrive within your organization.
5. Recognize and reward employees
Employees who are consistently meeting or exceeding goals should be rewarded in some way. Recognize them with small gifts or awards ceremonies. This gives them a sense of achievement and they may begin to feel like the work they put in is worth it.
Employee turnover FAQ
Here is an answer to a frequently asked question that may provide you with more information:
Why do good employees leave?
The most common reasons why good employees quit their jobs are:
- Lack of autonomy or trust
- Lack of respect
- No advancement or growth opportunities
- Poor management
- Lack of adequate staffing
- An unhealthy work environment or culture