Uh-oh. Nicole in Accounting just gave her two weeks’ notice. Not Nicole! How can your company get along without her?
If you’ve ever wondered why so many of your firm’s employees unexpectedly leave for another job, you’re not alone. It’s a common problem in just about every type of business. How can you reduce employee turnover and improve employee retention? First, we’ll briefly explain why employee-retention issues happen and the surprising scope of the problem. Then you’ll learn three proven strategies for successfully managing turnover.
Why Employees Leave
According to the Bureau of Labor Statistics, about three out of five people who leave their job don’t get fired or laid off—they quit. Too often, people walk away from their job not because a great new opportunity has appeared, but because they are unhappy where they are. If they aren’t consistently given the attention and resources they need to thrive in their role, they’ll struggle to be successful, productive workers who take pride in their jobs. Instead, they may become frustrated, give up, and leave. That failure is not what you want, and it’s certainly not what they want.
Managing High Turnover Has Many Expenses
The costs of employee turnover are high.
Some costs can be measured in dollars, such as the hard costs of recruiting and onboarding a replacement. Estimates of those expenses vary widely. One study by the Society for Human Resource Management (SHRM) finds that replacing a salaried employee typically costs 60 to 90 percent of that person’s annual salary. Other research suggests those numbers could be even higher, especially for high-wage positions.
Other cash costs of turnover may include lost clients and revenue, as well as overtime expenses for other employees who do extra work until a replacement can be found.
As you can see, successfully managing turnover and improving employee retention can save you lots of money. But when you tally the expenses of turnover, it’s not only about cold, hard cash. Whenever someone leaves, there are many other indirect costs that could be painful for you and your organization. Among them:
- Lower employee morale
- Reduced engagement
- Increased workload
- The permanent loss of institutional knowledge when a key person leaves
- Increased absenteeism and burnout
- Months or years of decreased productivity while the replacement learns to do the job as well as the person who left
That’s quite a list. But now that you have a better idea of what you’re up against, let’s focus on solutions. Fortunately, managing turnover effectively and reducing employee retention problems can be simpler than you may think.
Strategies to Reduce Employee Turnover
Great news: the same strategies that will benefit you and your business are also good for your employees. Everybody wins!
A well-rounded game plan for successfully managing turnover can help everyone in your firm from new hires to seasoned pros. As engagement and job satisfaction grow, productivity and employee retention improve—and issues like absenteeism and burnout diminish.
Here are three of the key steps to help set your company and your people up for greater success. If you’re already doing some of them, that’s terrific—but don’t dismiss them. Think carefully about whether they are working as well as you’d like and what you can do to improve them.
Find the Right Fit
If your company makes widgets, don’t rush to hire the first applicant who walks in the door with widget-making experience. Having the needed job skills is essential, of course—but it’s only part of what makes someone a good fit for your firm.
Finding the right fit means matching a candidate’s values, desires, and goals with your company’s goals, needs, and culture. For example, you may want someone who will speak up with helpful suggestions. An alert, outgoing person will be an excellent candidate. Or if you need someone who’s able to take on more responsibilities, a candidate who wants training and career development could be just right.
Mutual success and satisfaction follow naturally when an individual’s abilities and interests align with their position and the company’s overall needs. Chances are such people will be more engaged, more productive, and less likely to look for another job.
It may take a little longer to find a candidate who’s a good fit, but it’s one of the most important things you can do for both their long-term satisfaction and your own. As best-selling business author Jim Collins says, “You absolutely must have the discipline not to hire until you find the right people.”
Here’s another point that is often overlooked: don’t forget how important fit is for employees who have been with you for years. Just as your company continues to evolve, your people do too. Sometimes a position that used to be a great fit for an employee no longer is. Watch for this situation and do something about it before you lose a valued worker. Could their responsibilities be changed? Is there a better place for them to be within your company?
Practice Smart Onboarding
Getting your new employees off to a good start helps them go the distance. According to The Wynhurst Group, “new employees who went through a structured onboarding program were 58 percent more likely to be with the organization after three years.”
Thoughtfully planned onboarding helps a new person have a great experience with your company from day one. But helping them succeed requires more than just making a good first impression. It calls for a personalized onboarding process that is tailored to the individual’s needs, role, and performance goals. In a nutshell, during their first weeks and months in your company you help them grow and show them how.
In their book, onboarding experts George Bradt and Mary Vonnegut identify three essential steps for doing this:
- Accommodate. Give new employees everything they need to do their job well. For example, during their first days make sure they have the right tools, meet the people they’ll collaborate with, and learn the basics about workplace procedures.
- Assimilate. Make sure new hires are told clearly and completely what their responsibilities are. Strange as it seems, this doesn’t always happen. Also, help them learn about your culture and how to fit in. It may help to ask another employee to be a buddy that the new person can turn to with questions.
- Accelerate. New employees need a little help getting up to speed. Put yourself in their shoes and think about what you would need to improve the quantity and quality of your work. Extra training? A chance to watch how others do similar tasks? Rewards for hitting performance goals? The answers depend on the person and the job—but helping each individual to quickly achieve success will help your entire company increase its momentum.
Use Employee Recognition Strategies
It’s human nature: we like to do things that we are rewarded for. And who doesn’t enjoy being appreciated? Rewards and recognition show your people exactly what your company values about their behavior and help guide them to success—fostering job satisfaction and loyalty.
Here are a few pointers for recognizing and rewarding your people in meaningful ways:
Keep your eyes open. Constantly look for people who always do a great job as well as those who go above and beyond when an exceptional challenge appears.
Be consistent and frequent. Some companies have a narrow view of where and how to use employee recognition strategies, perhaps giving annual bonuses to the sales department’s top performers. But wise companies know regularly rewarding and recognizing employee achievements throughout the organization can ignite engagement, motivation, satisfaction, and performance. Once a year isn’t often enough to recognize all the different people in your firm who are doing great things. Monthly or quarterly company meetings might be more like it. And don’t wait for a meeting when someone deserves immediate recognition.
Be sincere. Don’t diminish the value of employee recognition by giving praise and rewards that aren’t fully deserved. For example, you don’t have to name an “outstanding employee of the week” every week. Employees will soon realize that this kind of recognition doesn’t mean much.
Think outside the cash box. Money may be a favorite reward of employees, but it’s not the only worthwhile reward. Simply being recognized and praised can boost an employee’s self-esteem and enthusiasm, especially when it happens in front of their colleagues. Other ideas that cost little or nothing include an award certificate, recognition in your company newsletter, time off from work, and a personal note of appreciation from a supervisor. Use your imagination, and use more than one reward whenever you can.
Happy, appreciated employees are more likely to stay with you for the long haul. That’s why smart employee recognition strategies should be a high priority in your overall strategies to reduce employee turnover.
More Help for Managing Turnover
You’ve seen how finding the right fit, smart onboarding, and employee recognition strategies can help you establish a more stable, satisfied, and engaged workforce. Ready to learn more? Great, we can help! Download BambooHR’s free ebook 6 Things Your Employees Will Fail Without (link below). You’ll find additional information and expert advice about the topics we’ve discussed here, plus more strategies and best practices that will help you improve employee retention and success. Who knows, you might even convince Nicole in Accounting to stick around!