The impact of high employee turnover rates
Having a consistently high employee turnover rate at your company can impact your business and your bottom line in several ways. When an employee quits, companies can sometimes spend twice as much as that employee’s salary in recruiting, hiring and training a replacement. If the employee was client facing — such as a salesperson or an account manager — there is the risk that the client may discontinue business with your company or follow the employee to their next employer.
Increased employee turnover can also have a negative impact on those who stay behind. Workplace morale can dip and trust in the company’s management is sometimes questioned when a large number of employees leave the company in a short time frame. A high turnover rate can also make it difficult to hire and keep talent. When it comes to recruiting new talent into your company, those who notice a company has a high turnover rate may be reluctant to work with a company that sees so many employees leave.
Why employees leave
There are numerous reasons an employee can be motivated to leave a company — from feeling burned out in their current role to feeling like the company no longer meets their needs. When an employee grows tired of their role within a company, they often start looking for a better opportunity elsewhere.
If a company isn’t able to offer the resources to establish a sufficient work/life balance, an employee may find it elsewhere with another employer. Something as simple as an improved commute or a different working environment can be very appealing to someone who is burnt out at their job.
Additionally, burnout may cause employees to have a lower opinion of their work and may impact or disrupt future contributions they could make to your company.
Related: How to Address Employee Absenteeism
How to reduce employee turnover
Reducing employee turnover starts with the hiring process. By setting realistic expectations starting with the job description, conducting effective job interviews and providing the right level of support and autonomy once an employee is hired, you can reduce turnover.
Here are six steps to follow to reduce turnover:
1. Hire the right employees and manage expectations
The best way to make sure you have the right employees working for you is to find the right employees during in the hiring process. Taking the time to ensure the candidate is the kind of person who can add to the company culture can go a long way in making sure they are with your company for a long time. A candidate’s tenure with their prior employers in similar roles can be a clue as to how long they may stay at your company.
Additionally, clearly outline all work and salary expectations in the job description before the employee starts work with your company. Creating clear expectations for the role before they’re hired can help an employee be productive from the start. Feeling as though they are hired for their specific talents can help eliminate any anxiety they have about possibly taking on a role that is beyond their area of expertise.
2. Offer competitive salaries and benefits
Not only is it important to offer a competitive starting salary and benefits, but it’s also important to monitor the cost of labor and cost of living in your area to keep offering a competitive salary. Many employees leave companies in search of better pay, so if you adjust compensation to account for inflation, cost of living and a job well done, you’ll likely reduce compensation-related turnover.
3. Maintain frequent communication
Many managers rely on having open communication between themselves and the employees they oversee. An open line of communication is an easy way to know about problems or concerns your employees have long before the issues become unmanageable. It’s also a great way to offer feedback. Frequent contact with your employees will allow you to adjust what the company can offer to help meet their personal needs.
Additionally, employees should have frequent and regular sessions to review both their work performance and salary expectations. Conducting regular performance reviews can motivate candidates to keep up the good work. If your company is growing, the responsibilities of your most trusted employees may grow with it. Employees expect to be compensated fairly for their time and effort, especially if their job description changes.
Employees also like to feel heard. Try sending out employee satisfaction surveys to gauge how your employees are feeling and use that feedback to make changes, if necessary.
4. Outline defined career paths
If there’s not a clear and defined career path for employees, with established goals or changes in the title or salary, it can be difficult for an employee to see themselves with the company for the long term. Taking the time to outline a career path for each employee, including professional development and performance benchmarks, can go a long way toward reducing the turnover rate and keeping your staff motivated.
5. Assign special projects or offer incentives
Often, low morale can be resolved by assigning a unique project to an employee who may be considering leaving the company. Handing over the responsibility for a premium client or organizing an all-office event can go a long way in showing you appreciate and trust an employee. Additionally, a sales team may be motivated by a competitive incentive for a monthly or quarterly sales drive.
6. Adjust company policies and/or workplace benefits
If low morale is contributing to your company’s employee turnover rate, it may be worth reassessing your company’s policies. Offering benefits that allow for work/life balance can go a long way in developing a sense of freedom and independence that can keep employees with your company longer. Allowing for flexible schedules, four-day workweeks, or remote/work from home solutions have been shown to increase productivity and can install a sense of trust with your employees.
Studies have shown that paid paternal leave for new parents goes a long way to increasing morale and increasing employee retention. Offering an open PTO policy to employees has also proven to be a potential solution in reducing turnover due to burnout.