“High employee turnover hurts a company’s bottom line. Experts estimate it costs upwards of twice an employee’s salary to find and train a replacement. And churn can damage morale among remaining employees.”
By Alexandra Zatarain
Even in times of high unemployment, turnover rates can be high. Industries would expect to see lower rates, but the reality is surprising.
And employee turnover is definitely a threat to organizational stability. It brings unexpected costs and hinders employee morale and productivity.
Estimates point out that the total replacement cost of replacing an employee is roughly 150% of the employee’s salary. These costs add up and go directly to the bottom line.
Addressing the issue is not that complicated; however, companies still struggle with high turnover year after year, with a key common denominator: poor leadership.
The following are some ways to lower turnover in the workplace:
- Develop leadership. This provides with an inherent advantage in managing turnover. The main reason why employees leave a company is because of lack of leadership, motivation, and failed management; all of these stem from leaders.
- Develop people. Focus on developing employees; this will lead to higher satisfaction and thus a lower turnover. Each employee should have a concrete development plan and review it with management annually. The plan must present a variety of growth opportunities so the employee can understand that there is a clear professional path within the organization.
- Recognize good performance. When employees feel appreciated they are more likely to keep performing at their best and feel motivated to stay in the company. It also creates a link of appreciation between the employer and the employee.
- Build trust. If employers extend their trust to employees, it’s more likely that employees will trust the organization.
- Reduce boredom. When employees get bored, they will start thinking of going somewhere else… where they don’t get bored. Employees who get bored may feel underappreciated and underutilized in their capacities.
- Communicate more. Communication needs to be consistent, both ways and in different forms.
- Cross train. As Bob Whipple, CEO of Leadergrow Inc., highlights: “employees, who have been trained on several different jobs recognize they are of higher value to the organization and tend to be less inclined to leave.” Employees appreciate the opportunity to take on additional skills.
- Don’t overtax. If employees burnout, they may just as well quit in disgust over the abuse of their time and work. Management must understand how far resources can be stretched.
- Keep it light. “If leaders grind people down to a stump with constant pressure for perfection and ever higher productivity, the quality of work life suffers”, and eventually employees will break down and possibly quit.
- Provide performance feedback. All employees must be provided of constant feedback on their performance, in a way that makes them feel appreciated for what they are doing and guided towards what they should do next.
- Train leaders. A culture that nurtures leaders doesn’t happen by accident. Senior leadership has to make sure that management is ready to champion leaders and train them towards company objectives, ideals, and processes.
- Set the right compensation and benefits. Pay packages must be reviewed annually to make sure they are on top of industry data. Always pay employees what they need to not worry about the pay.
- Pay attention to employees’ personal needs. Companies that advocate for life-work balance have lower turnover rates, as they provide more flexibility when needed through options such as telecommuting, compressed schedules, etc.
But without a doubt, the most important action towards lowering employee turnover is: hire the right people from the start. Interview and filter candidates carefully to make sure they have both the right skills and the right fit with company culture.