Replacing an employee can cost up to 200% of that employee’s annual salary. “Even during a time of high unemployment, top salespeople are always in demand, and their skills are easily portable from one sales environment to the next,” says Katherine Graham-Leviss, founder of XB Consulting. “Losing them to a higher bidder or a more lucrative sales opportunity is too easy to be taken lightly.” Whether a great employee quits or a poor employee is fired, the costs add up – from severance pay and vacation accrual to job advertising, recruiting fees, and staff time used for paperwork, resume reviews, and interviews, it’s all lost resources. Because there are many better ways to spend your company’s money, here are seven great ways to reduce employee turnover.
1. Market the job properly.
A lot of new hire turnover is due to bad hiring decisions. While it is possible that a candidate seems like a great fit in the interview and just doesn’t work out, more often poor job descriptions and failure to provide a clear understanding of the work are to blame for a new employee’s inability to thrive in a position. “When you hire people for the wrong job, they leave” says Graham-Leviss.
2. Pay attention to cultural fit.
Just as hiring people for the wrong job doesn’t work, hiring people for the wrong company doesn’t work. “Employers should focus their efforts on acquiring candidates who are not just skilled for the position, but are also a strong cultural fit for the company,” says Nathan Parcells, VP of Marketing at Looksharp. “Behavior-based screening and interviewing will help to make best long-term hires.” Employees that enjoy your corporate culture are more likely to stay and to do well.
3. Don’t let them get bored.
Boredom is the enemy of employee retention. Allowing employees to rotate between functions within your company not keeps them challenged and excited by the variety, but can also make them understand the company’s big picture more and be more invested in its success. "It [Michelin’s rotational program] keeps it new and exciting and they're challenged," says David Stafford, executive VP of human resources at Michelin. “And when people are challenged we know they perform better, both individually and as a team."
4. Develop your employees.
Employees want what is best for them, just as you want what is best for your company. By committing yourself to developing your employees and promoting within, you combine those interests and suffer the loss of fewer great employees to higher positions and better compensation packages at other companies. “If each employee has a concrete development plan that is reviewed at least annually and contains a variety of growth opportunities, the employee will have little reason to look for greener pastures elsewhere” says Bob Whipple, CEO of Leadergrow.
5. Pay attention to your employees’ needs.
Compressed schedules, on-site or back-up daycare, and subsidized or on-site fitness facilities help maintain work-life balance and both prevent burnout and promote loyalty. For companies with tighter budgets, offering flexibility for telecommuting is a more cost-effective way to improve employee satisfaction. “Telecommuting works for so many smart reasons for so many these days.” says Meghan M. Biro, CEO of TalentCulture. “Studies show that organizations that offer workplace flexibility have less absenteeism and turnover, and higher levels of engagement and productivity. Balancing schedules and workloads can be complicated if you’re managing telecommuters. But the results are worth it.”
6. Offer a competitive compensation and benefits package.
Getting and keeping the best talent involves many factors, but competitive compensation and benefits are among the most universally valued by employees. “Offer an attractive, competitive, comprehensive benefits package with components such as life insurance, disability insurance and flexible hours,” says HR expert Susan Heathfield. “I'll never forget a young employee whose stated reason for accepting our job offer was the availability of our 401(k) match.” Especially for your top talent, it is quite possible that they can — and will — work elsewhere if their compensation isn’t competitive.
7. Talk to your employees.
Open communication is important in all relationships, and employer-employee relationships are no exception. “Ask your employees what they want,” says Bethany Perkins, Talent Acquisition Manager at Delphic Digital. “Take what they say and implement it. Not every suggestion will be viable, but it’s important for them to know you value you them individually, that their voices are heard. Open communication can also give you advanced warning if someone is unhappy and thinking about leaving so that you can address the issue.”
Dealing with employee turnover will always be a part of running a business and sometimes it is necessary to let an employee go. To save your company the hundreds of thousands of dollars that high churn can cost, be smart about proactively reducing employee turnover.