It’s no secret that employee turnover is expensive and time-consuming. The Work Institute’s Retention Report found that the estimated cost of turnover ranges from 33% to up to 200% (!) of the departing employee’s salary. The price only snowballs once you consider that, on average, companies lose 18% of their workforce to turnover each year.
There’s good news— the Retention Report also found that 75% of employee turnover is preventable. By understanding the impact of turnover and applying employee retention strategies, companies can prevent turnover and retain the talent necessary for promoting organizational growth.
The turnover impact
Although most people get hyper-focused on the costs, the consequences outside of costs matter most. The most substantial impact of turnover is damage to your team and company. Specifically, a company may experience:
- Lost productivity: Colleagues pick up the leaving team member’s workload. This creates lost productivity as employees stretch themselves thin across multiple roles.
- Depleted employee morale: When a team member departs, it can take a toll on the team. The departure may lead to frustration, resentment, and burnout. Team members may start questioning whether they, too, should be looking for a new opportunity.
- Diminished employer brand: Companies with high turnover are quickly branded as a “revolving door.” This reputation seems unattractive to particular job seekers, and any open roles can draw in individuals not interested in a long-term position.
- More turnover: When morale is down, and workload is high, employees become overworked, unengaged, and susceptible to burnout – leading to more turnover.
Employee retention strategies
Most people quit their jobs due to a lack of career advancement opportunities, recognition, and compensation. Be proactive and avoid possible turnover by applying these employee retention strategies to achieve satisfied, loyal, and committed employees.
Provide opportunities to grow and develop
Helping employees achieve their professional goals shows that the company is invested in their future and gives employees a sense of purpose. On top of that, research shows that most millennials and Gen-Z workers will choose a job with lower pay if they see development opportunities. You can encourage growth and development through these activities:
- Have quarterly one-on-one meetings to discuss an employee’s Professional Development Plan, performance, and strengths. Identify additional support or training needs. These meetings also benefit the manager because it helps them better understand what development opportunities are most beneficial.
- Take a collaborative approach to organizational goal setting and invite your employees to participate.
- Prioritize skill development by working with individuals to identify actual and desired skills. Think about which skills will push them to become more proficient in their jobs and find opportunities for these skills. For example, if someone needs to enhance their writing skills, encourage them to take a business writing class.
- Encourage continuous learning by having employees attend industry events, conferences, and educational webinars.
Foster a healthy work environment
Your employees’ physical and mental well-being should be one of your top priorities. You can encourage people to set boundaries to respect their work-life balance, such as turning off notifications when the workday is over or having them use their vacation time.
Another method is offering hybrid workplaces. Currently, 74% of the US workforce are willing to quit a job to work remotely. Hybrid and remote work situations are a win-win for everyone. Employees save time and money commuting, have an improved work-life balance, and have fewer distractions. Also, employers reduce absenteeism and overhead costs and experience no geographical constraints when hiring. This means a bigger pool of talent!
Practice a feedback culture
Employees need constructive and positive feedback to improve, and they expect it. Consider giving feedback frequently and often to motivate employees.
But remember that feedback is an exchange—employees want their voice to be heard. Start by having an open-door policy and genuinely listening to concerns. Most importantly, take action on their feedback because it will dramatically improve retention, as 90% of employees say they are more likely to stay at a company that takes and acts on feedback.
When you foster a feedback culture, you show your employees you take concerns seriously. This will also make employees feel more comfortable when giving feedback because you earned their trust.
Give recognition and rewards
Employees who feel appreciated work harder and stay longer at companies, but over 80% of employees say they don’t feel recognized or rewarded.
Employers can significantly impact their employees’ retention, engagement, and loyalty by showing recognition and gratitude for their contributions and successes. Here are a few methods to consider:
- Create a formal employee recognition program and rewards system
- Leverage your communication platforms to allow employees to thank their peers and give shout outs
- Write an employee recognition letter
- Give positive feedback during meetings
- Take your team out for dinner to show your appreciation
- Provide gift cards or physical rewards
People can develop skills and expertise, but hiring someone who mirrors company values will help you retain loyal and engaged employees who feel more comfortable contributing to the organization.
When hiring, first consider asking questions related to your company values and explain how the role correlates with those values. This will also help them better understand what is expected of them and whether they are the right cultural fit.
Offer appropriate compensation
Compensation is essential to any retention strategy. No matter how valued, content, and supported an employee may feel, they are likely to look for alternative career opportunities if they feel their current company is not adequately compensating for their work.
Start by reassessing compensation. Are you providing transparency around their pay? Are you within industry compensation standards? Do you offer well-rounded benefits?
If you think this could be a pain point for your employees, consider offering a competitive salary, raises, bonuses, awards, and better benefits. For example, you can provide health insurance, leave benefits, retirement planning, and wellness benefits.
The benefits of employee retention
With employee retention, you’ll save time and money recruiting, onboarding, and training new hires because you’ll have more long-term employees who have had the time to develop their abilities, knowledge, and expertise. They can accomplish tasks within a shorter time and are more committed to the organization’s success. The longer an employee stays, the more value they add to the organization.
More importantly, you’ll have happy employees that can exude that feeling to their clients and peers. Happiness is linked to high engagement, which leads to a better client experience, and highly engaged employees are 1.8 times more likely to say they’ll be working at their current organization a year from now.
A great team can make the difference between success and failure. Take the first step in retaining your top talent because they are the key to organizational growth and sustainability.
Content provided by Q4iNetwork and partners
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