Add up the cost of high turnover and consider 6 ways to bolster employee retention
Nothing lasts forever, and that’s even true of the relationship between your company and its employees. Although you would love to have your best and brightest people stick with you and contribute to your organization’s success until the day they retire, that isn’t always the case.
Losing any valued employee can be a serious blow to your business’s ability to compete and thrive in the marketplace. When that same type of loss hits you multiple times in a year, however, the impact can be even more severe. Being caught shorthanded or having to make do with a relatively inexperienced team means you can’t be firing on all cylinders, and your business suffers as a result. This is why fighting turnover and enhancing retention should be a high priority no matter what.
What is employee turnover?
Employee turnover is the number of people who leave your company within a given period of time. For example: if a company with 100 employees loses 10 people within one year, the company has a 10% annual turnover rate.
What causes employee turnover?
There are countless reasons turnover happens. Sometimes they’re within your control; sometimes they’re not. Direct causes include employees finding better opportunities, getting terminated or quitting. Indirect causes include mismanagement, personality clashes and poor hiring practices.
Why does employee turnover matter?
Continuity is essential for any business. Turnover is a huge disruption. It costs a lot to hire and train replacements. A high turnover rate means your organization is constantly playing catch-up instead of serving customers or being productive. This game of catch-up can lead to lost business and burned out team members picking up the slack.
Cost of high employee turnover on your business
Loss of experience and institutional knowledge
When people leave your company, they take their experience and expertise with them. That puts you at risk. That knowledge gap can lead to mistakes, inefficiencies and missed opportunities — all things your competitors can exploit.
Decreased productivity — across your team
The productivity you lose isn’t just from that missing team member. If other team members need to step in to cover for the loss, even temporarily, it hurts their ability to do their own jobs. Then they fall behind. Morale sinks. Everyone gets further behind. You may even lose more employees from burn out.
Burn out and damage to employee morale
No one wants to be on a sinking ship. High turnover can give your team the feeling that the company is failing. Loss of valued co-workers, colleagues and friends can change the mood of your whole workplace and lead to even more turnover.
Difficulty attracting new talent
Job candidates do their research. If your company has a high turnover rate, they might be wary of applying to a job with your company or responding to a recruiter. To them, high turnover signals something about your company culture or financial stability. That perceived reputation can hurt your ability to recruit and hire the most qualified people to fill your open positions.
Poor customer service
Being shorthanded or having an inexperienced workforce means you’re not firing on all cylinders when it comes to serving your customers. Customers may lose satisfaction with your offering and lose patience with your services while you fill in the gaps.
Increased stress and employee burnout
Forcing other people to make up for lost productivity caused by turnover has a compounding effect. Team members struggle to keep up, grow more stressed and become less capable of productivity. Burnout ensues. High turnover can trigger a vicious cycle that motivates more people to leave too.
Increased cost of hiring
Studies show the cost of replacing an employee can be as much as 3/4 their annual salary. The price of losing an employee, losing their experience and productive time, hiring a new person and ramping them up to productivity cuts into profitability.
Your business wants to focus on working toward goals and innovation. But turnover shifts focus from growth to survival. When too much energy is devoted to just making it through the day, it’s almost impossible to break through the struggle and get to the other side.
6 ways to combat employee turnover and improve worker retention
1. Start with stronger hiring practices
Shore up your hiring practices so you’re sure the people you hire are the right fit for the position and your team. Better hiring practices bolster employee retention because you’re starting on a stronger foundation. High-quality candidates and the right-fit hires are less likely to fall into the performance and personality challenges that trigger the turnover cycle.
2. Outsource recruitment processes
An RPO partner can provide your organization the recruiting expertise, strategies, processes, talent networks and technology you need to hire better candidates faster. Expertise from an RPO provider can help you optimize your recruiting operations and avoid mistakes that lead to turnover. RPO services are built to extend your team or apply expertise right where you need it.
3. Build a strong(er) employer brand
Giving employees a clear sense of your organization’s WHY and how it matches or supports their own is a solid way to keep employees engaged, motivated and retained. Collecting feedback and processing it can help you understand problems and opportunities. Defining your employer brand can give you a better sense of which candidates will be the right fit for your roles and your team.
4. Improve employee engagement
Employees who don’t feel engaged with their work are more likely to walk away than someone who is engaged. Mentoring programs, smart internal communications, employee appreciation initiatives and feedback loops can help bring engaged and dis-engaged employees to the conversation.
5. Provide better leadership training
Ineffective management frequently leads to employee frustration, performance issues, clashes and attrition. Professional development and training for hiring managers can change the experience, productivity and satisfaction of employees at all levels.
6. Create growth opportunities
Employees are more likely to leave their jobs when they feel trapped in their current roles and they have no room to grow. Providing opportunities for growth, training and advancement within your organization (instead of hiring from outside) can encourage team members to invest themselves in your business the way you invest in them.
Infographic: Understanding the impact of high employee turnover
Recruitment Process Outsourcing (RPO) solutions from Advanced RPO can help you evaluate and improve your hiring processes to get the talent you need to succeed. Contact us today to learn more about our high-touch solutions.