The Hard Truth About Employee Turnover
It is a basic fact of business, employees will come and go. Employee turnover is one of the hard truths in running any company, and high turnover can be a disruptive force for any organization. High turnover can lower productivity and create customer service snafus. It is how one manages these fluctuations in staffing that can make the difference between a good company and a great one. Understanding employee turnover as it relates to your company can help mitigate the costs and actually help to retain your top people.
Understanding Employee Turnover
The Cost of Turnover
The true cost of employee turnover ranges based on industry and job position, with long terms and/or salaried positions costing a company more to replace than their lower earning counterparts. An article published by Zane Benefits averages the cost to replace a retail employee, earning about $10 per hour at $3,328. That’s an estimated 16% of an annual salary to replace every employee at that pay level, which in a high turnover industry like retail, can really eat into profit margins.
As the experience and pay scale increases the cost to replace an employee also ratchets up. In the same article, it is estimated that it can cost up to 213% of an executive level position. For a 100,000 per year job, replacing a C-level employee can cost $213,000. These numbers are staggering. But what do they mean really? What is the actual cost of losing an employee?
Company’s must consider the real costs associated with losing an employee. This can include:
- The cost associated with hiring someone, including advertising costs for the job postings and the manpower to screen potential employees.
- The cost associated with on-boarding someone new, including the time and personnel required to train someone new.
- The cost associated with lost productivity including customer service lags, errors and questions.
- The cost associated with a downturn in employee morale, which can lead to further employee turnover.
These costs vary from industry to industry, but can be daunting no matter where you work. The best defense, as they say, is a good offense. So how can a company fight high turnover? What are the smartest way to keep your top talent? Read on.
How To Retain Employees
- The first step in retaining employees is to hire the right employees in the first place. While it may be attractive to simply throw bodies at a problem when you are understaffed, taking the time to hire the right person for the position and the company culture will pay off in the long run.
- It may sound counter-intuitive in blog that talks about employee retention, but at times it is better to cut the bad apples from the bunch. From time to time there may be employees that just don’t fit, either with the culture of the company or in the position itself. Those that don’t fit within the culture can be especially toxic to the work place. Despite the cost of losing that particular employee, a business may find their overall retention is better off in the long run.
- Despite what is often portrayed in pop culture, success and a cut-throat attitude don’t often work well together. Businesses that encourage teamwork, generosity and gratitude often find they have happier employees; and happy employees are happy to work hard for their company. A culture of respect from the top down will keep their employees longer.
- Be flexible, when you can. Employees have busy lives outside of work, and a good work/life balance can go far in terms of employee morale. Studies have shown that 80% of employees value flexible work arrangements, which has a positive affect on retention. Not every company has the ability to allow employees to work from home or set their own hours. But even those that have more rigid hourly requirements, like retail businesses, can still offer some flexibility at times. Even offering to help cover a shift or scheduling work around hectic school schedules can go a long way to building positive morale.
- Companies that allow their employees to buy into the vision of the business also see greater employee retention rates. What does this mean? These are the businesses that have clearly defined goals for the company overall, as well as opportunity for growth within the company. Organizations that are on an upward track, business that are headed for success, companies that encourage employees to grow within the organization… those are companies that retain the top employees.
- Competitive salary and benefits will also go a long way in retaining talent, but note that this is last on the list. People like to be rewarded for their hard work, both monetarily and socially within the company. But money alone is not enough to make up for a toxic work environment. Many employees will value a fulfilling and happy workplace over a slight bump in pay in a miserable situation.
So, is your company suffering from high employee turnover? Do any of these thoughts hit home? We would love to hear what you have to say about employee retention in your industry. Join us in the comments below.