Employee turnover is a real, major and expensive concern for doing business. Even the healthiest organizations can often face challenges in cracking the ideal retention strategy.
According to Gallup's study, 51% of workers actively search for a new job at any given time. When such employees leave, the impact is huge, and the cost of hiring a replacement isn't small. Such a frequent occurrence can hit small businesses hard.
Gallup's research further suggests that employee turnover costs businesses 150% of their salary. And depending on the position, it could be as high as 200% by the time you account for hiring, onboarding, and training.
You can’t always change the specific duties that some roles require, but there are ways in which employers can make the work environment more pleasant and satisfying. We outline the actual costs for high turnover, and strategies to retain and save costs.
Costs for hiring replacements
These include costs such as fees for advertising and recruiters, interview expenses (time spent interviewing candidates, traveling and pre-employment tests), and relocation expenses. Not to mention the onboarding and training cost.
Training a replacement for a specific role is even higher than you think. Think of the training materials you need, the valuable time and energy you will dedicate to train, and accommodation costs if not training them in-house.
All these costs may seem insignificant but wait until the frequency of turnover is high. Slowly and quietly, they will kill your business.
Anytime an employee resigns, a gap is left. Oftentimes, you have to ask your best workers— who are already working at full capacity, to take additional tasks. That can have serious damage to the morale of your best employees.
For example, some may begin questioning if also they need to jump ship. Others will feel unhappy with their work, and that will surely hurt their productivity. If you have several unhappy and unproductive employees, you are slowly killing your business growth and profitability.
Businesses with a high employee turnover rate suffer from low work satisfaction, decreased productivity, and often report a high rate of burnout. If that happens to your business, expect to always struggle with a state of imbalance, which will negatively affect your bottom line.
What drives high turnover rates?
Turnover affects employers and employees in different but equally negative ways. Often these issues can be addressed if understood. Common reasons for high turnover include:
- Too much work with too few employees
- Lack of recognition
- No work/life balance
- Lack of job satisfaction or connection with mission
- The general feeling of burnout
Most of us know that workplaces with more cohesion and clarity around priorities are better places to spend 40+ hours a week. Who wants to work for a company where the left hand never knows what the right hand is doing, and every project is urgent or needs to be completed at the 11th hour? That type of work environment doesn’t create happy employees or healthy work environments.
These are employee pain points that can increase the rate of employee turnover in your business. If they are prevalent in your business, and you're doing nothing, you better act now. Otherwise, don't get surprised when you see a huge decline in your growth and profitability.
The best thing is that most of the employee pain points are easier to address. For example, by spending more time with your team, you can find solutions to low salaries, lack of recognition, burnouts, and working extra hours. Alternatively, consider working with an expert— thankfully, many of them are out there to count on.
Tackling employee turnover: how to foster a culture for retention
As we noted above, the employee experience is a large driver of why employees choose to leave. Conversely, it is also a reason they decide to stay. Finding a larger purpose is the key to building employee loyalty, which drives productivity, client happiness and innovation. Companies that generate loyal employees reap the rewards.
They easily link the work to the larger company vision and goals, and continuously reinforce and foster it.
How can do they do it?
- Clear and effective employee communication. When an organization lets employees know what's happening, employees feel more included and trusted.
- Continuous training, investment and professional development. When you invest in workers, they are more apt to invest in your company.
- Expect greatness. When you raise the bar, employees will meet your expectations.
Loyalty to your business mission is difficult to attain. But mastering the employee experience, engagement and retention also ATTRACTS new employees and clients.
Providing a stimulating workplace environment, fostering happy, motivated, and empowered team members, lowers employee turnover and improves performance.
Effectively recognizing and fostering a vision-based and employee-based cultural will increase engagement, reduce turnover, and significantly impact your company’s bottom line.
Focused Energy is prepared to help your business thrive, and have a proven process toward success. Whether you need help to address internal obstacles, change management, or determine your business's future, our experts are available for a free consultation to help unearth anything holding your business back.