The employment landscape has changed significantly over the past 20 years.
Gone are the days when employees stay with one employer for most of their careers. In 2019 employees have more options than ever to switch employers easily or even industries. They expect their workplace to be a regular paycheck and meet various personal and professional goals.
A recent survey by Robert Half clearly shows staff turnover rates have increased massively over the last three years, with 15% of Australian employees likely to seek a new job within the next 12 months. Furthermore, 67% of Australian employers say turnover rates are growing fast!
That means Australian businesses expect a workforce turnover of at least 15% annually. The turnover rates for specific industries like hospitality can be as high as 50%.
SO WHY DOES EMPLOYEE TURNOVER MATTER?
Quite merely, employee turnover costs businesses big time. A recent research project estimated the actual cost of each employee that leaves is $4,129!
High employee turnover levels can also cause havoc on company cultures and productivity - mainly if the most talented employees leave. Therefore, businesses must carefully consider departing employees' impact and manage them.
SO HOW CAN YOU RETAIN EMPLOYEES?
1. Hire Well
It should be reasonably evident that retaining employees should start by hiring the right people.
Unfortunately, many recruitment decisions are rushed or completed by poorly trained interviewers who often make the wrong hiring decisions.
Take the recruitment process seriously, ensuring you hire only employees with the right skills and personality traits to match your business. If new hires are not the right fit, they'll leave you to find another job that better suits them.
As business owners and managers, you are always better off taking your time and carefully vetting candidates to find the best employees for the long term to commit to the company and grow with it.
2. Professional Development
These days most employees want a job that will enable them to grow personally and professionally. It's especially true for top talent eager to take on new responsibilities and see a clear path for progression.
The best employers with the lowest employee turnover meet regularly with employees to discuss their individual professional goals and outline steps for achieving these goals within the business.
3. Competitive Pay
Whilst it's not always about the money, ensuring your business pays its employees at or above the industry average is a vital consideration you must review regularly.
Recently, a Glassdoor survey revealed that 45% of employees who quit a job noted salary as the main reason. Other factors that closely follow include professional development, location, flexibility etc. However, the pay was the most important reason.
That said, running a profitable and financially viable business can sometimes be challenging. Therefore, it is essential for operators not to put financial stress on the company by unrealistically increasing salaries.
Instead, it's best to ensure your business offers employee salaries and benefits comparable to similar organisations in the area.
4. Culture of Recognition
Ensuring you have a transparent approach to employee recognition will greatly assist retention rates. When employees feel that leaders notice and genuinely value their hard work, they will feel motivated to keep going and have a sense of loyalty to the business.
Whilst financial recognition such as pay raises and bonuses are great, sometimes a public "thank you" means much more and has a longer-lasting value.
5. Effective Leadership
The quote "people leave managers, not companies" is often valid. A job can be exciting and well paid, but if an employee doesn't feel respected, understood or valued by management, resignation is usually the inevitable outcome.
If your organisation has turnover problems, it could be time to review how you and your managers handle day-to-day leadership and conduct an honest self-reflection of how you can all step up.
6. Regular Performance Reviews
A recent survey by the Society for Human Resource Management (SHRM) showed that managers could reduce turnover rates by up to 15% by conducting regular performance reviews.
Whilst day-to-day on-the-job feedback is excellent; managers should schedule a one-on-one formal feedback session with all employees every six months.
These sessions are great for check-in, discussing performance and setting goals. Well-run performance reviews will leave your employees feeling motivated and valued, and you will notice a massive improvement in productivity and retention.
7. Exit Interviews
You can do all the right things outlined above, but some employees will still leave. Sometimes the reason could be outside the business's control - such as relocation, health or career change reasons.
A formal exit interview with every employee who resigns will provide invaluable insights into how managers can improve retention rates.
Employees tend to be more candid in exit interviews than at any other time during their employment. Therefore, these sessions are a great way to get to the root cause of issues and find solutions and improvements you can implement into the business.
So there you go, seven actionable ways management can help reduce employee turnover in any business. These tips will improve your bottom line and significantly increase your team's morale and productivity if implemented well.
For more helpful reading, check out this post here by inc.com.
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