Employee turnover can have a positive or negative impact on your business. Businesses with low turnover rates tend to have more favorable reputations, which helps attract top talent. Conversely, excessive turnover rates can be financially damaging to an organization as the cost to replace an employee is about one-third of that employee’s salary. And it’s not just financials that are affected by high turnover, but also culture, knowledge loss, product/service quality, and lost time needed to recruit replacements.
So, what do we mean by “favorable” and “excessive”? Although it varies by industry, a desirable turnover rate is somewhere around 10%, while a turnover rate above 18% is high. Now, some instances of employee turnover are inevitable, like retirement or relocation. However, in most instances, turnover is caused by unfavorable workplace conditions that can be managed. Here’s 6 tips we’ve put together on how you can reduce turnover within your organization.
1.) Hire the Right People
It’s imperative to be clear about your organization’s culture upfront, telling the candidate not what you think they want to hear, but how the company actually operates. This helps to ensure a mutual fit.
In addition, a big part of hiring the right person is making sure that recruiting is looking for the right person from the beginning. According to a Jobvite report, less than half of workers believe that job descriptions reflect actual responsibilities, and nearly a third of employees have left a job in the first 90 days because it wasn’t what they expected. You should also invest time into getting to know the candidate, whether that’s an in-person visit to the office or seeing how the person interacts with potential co-workers through a video chat. This increases the chances of finding an ideal fit.
2.) Invest in Onboarding
After you’ve hired the right people, they need to be trained and set up for success in their role. It’s pivotal to invest time and resources in making sure new employees are supported in their early days. If they feel needed and valued from day one, they are more likely to develop loyalty towards your organization and will want to stay with you even during more challenging times.
3.) Offer Competitive Salaries
Pay and benefits play a big role in why people take jobs and show up for work every day. It’s also a key reason why professionals change jobs and why it’s no surprise that higher pay tops the list of what would convince employees to stay. This is why it’s important to offer an appropriate starting salary that will attract and retain qualified candidates. Then throughout an employee's tenure, regular raises and monitoring what other companies are paying for similar roles is imperative.
4.) Prioritize Work-Life Balance
Work-life balance is a struggle for many employees and can lead to burnout that pushes them to start looking for another role. Flexible scheduling and remote work are two ways in which you can help workers achieve a better work-life balance, thus increasing retention. Giving employees time off, and respecting that time off, is also crucial. Making an employee feel guilty or inadequate for taking time off is unacceptable, and to avoid this issue, your organization's leaders should stress that work-life balance is a company-wide priority.
5.) Standardize Performance Reviews
Employees consistently want to know how they are performing in their role. This isn’t just an annual event consisting of reviewing an Excel spreadsheet. In fact, this could do more harm than good as about 80% of employees who feel unmotivated after a performance review start to look for a new job (according to Gallup). It’s important to make sure the performance review is a collaborative and continuous process that works to improve the relationship between an employee and a manager.
6.) Develop Opportunities to Grow
Another major reason that people leave companies is lack of career progression. According to LinkedIn, employees stay 41% longer at companies focused on hiring internally, and more and more companies are making role changes via promotion or transfer versus external recruiting. Organizations that encourage cross-functional projects and that identify skills of existing employees have an easier job when needing to convince workers to stick around.