High employee turnover rates aren’t just detrimental to company culture. They’re also extremely costly, yet it’s a cost many organizations don’t entirely understand.
According to Employee Benefit News, it costs employers 33% of the yearly salary of an employee to hire a replacement. That means if someone is working for $45,000, it’s going to cost $15,000 to replace them.
Turnover also has indirect costs not even factored into that staggering estimate. For example, there are costs known as productivity costs. For example, when you hire a new employee after someone leaves, there’s going to be a learning curve and a significant amount of time before they’re operating at a peak productivity level.
What employers also need to realize aside from the costs of turnover is that most of the reasons they face high rates are preventable. Employers need to take more time to understand employee motivations at an individual level and also their own shortcomings as managers and leaders.
Employers also need to know how to have a baseline to measure against as they take steps to reduce turnover.
The turnover rate is the number of employees who leave or are fired/total number of employees times 100. Beyond the general number, it’s also valuable to divide that more specifically—for example, measure both voluntary and involuntary turnover.
There will inevitably be some turnover, so you’ll have to figure out in your organization what that number might reasonably be.
The following are ways that are applicable in real-world situations to reduce turnover and likely improve employee productivity simultaneously.
Discover the Reasons
One of the most effective things you can do to reduce employee turnover in your organization is to work on understanding the root causes. Without this initial legwork, a lot of what you might do to reduce turnover is going to end up being superficial or potentially misdirected.
There are different ways you can work on discovering the reasons for turnover. For example, exit interviews are an excellent way to figure out what’s going wrong, and the importance of these interviews is often overlooked.
You can also ask for feedback from current employees, but ensure that they have a convenient and confidential way to submit that feedback.
As a general rule of thumb, the more open and transparent your workplace communication can be, the better.
Along with getting overall feedback, it can help you identify potential problems earlier on and work to find solutions before you lose an employee.
Spend More Time on the Hiring Process
Hiring new employees is time-consuming and expensive, as was highlighted above with the costs of hiring someone new. However, if you can put more into hiring initially to make sure you’re hiring for the right overall fit, it can reduce turnover.
Along with looking only at hard skills and experience, think outside the box. How trainable might an employee be if they’re hired, what soft skills do they have, and would they be a good cultural fit?
You may want a longer hiring process where you have potential candidates work on real-world projects or spend some time in the office to see how that goes as well. Yes, it’s initially more time-consuming, but it can save time and money in the long-term.
Set and Manage Expectations
Without clear expectations, employees are going to be disengaged and unhappy, making them more likely to leave voluntarily. You might also be assessing their performance and seeing they aren’t meeting expectations without the realization that they don’t know what those are.
You should set clear and realistic expectations that employees know how to meet. They can’t be unrealistic, because that’s also going to lead to problems with turnover.
Start setting and managing expectations during the recruiting process so that you don’t bring an employee on board who doesn’t know what’s expected.
The onboarding process itself can be a good time for setting expectations.
During onboarding, look beyond the basics of the employee manual. Think about how to help employees understand culture during onboarding and show them what your organization views as success.
Encourage Learning and Growth
Finally, you can reduce your turnover by nurturing your employees, focusing on long-term relationships with them, and fostering their career growth and development. Offer learning and development opportunities, mentorship and coaching so that your employees know you believe in their future at your company.
Learning and development should be seen as a benefit you offer to your employees and something that can serve as a reason for them to stick around.