How To Reduce Employee Turnover: Most Effective Techniques
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[fa icon="calendar"] Jun 4, 2020 8:00:00 AM / by Michelle Nystrom

Michelle Nystrom

Most Effective Strategies on How to Reduce Employee Turnover 

Portait of smiling young intern at officeEvery industry has employees that don't stay. These employee separations are called employee turnovers. Employee turnover is the number of employees who leave compared to the number who remain with a company during a given period.

To find what your employee turnover rate is, decide on a limited period, say one year. Add the number of employees you had at the beginning of the period to the number of employees you have at the end. Then divide that number by two. This number is your average number of employees. Next, take the number of employees who left the company during that period and divide it by the average number of employees. Multiply this number by 100 to get a percentage. Let's look at an example:

Beginning of year - 100 employees

End of year - 98 employees

100 + 98 =198

198/2 = 99 (Average number of employees

2/99 = 0.02 or 2 percent turnover rate

Determining whether this is a high rate or not will depend on your field. You can research to see what is considered an average amount of employee turnover in your particular industry.

Costs Associated With High Turnover

When you are always in a state of training new employees, there is a high cost to your business. The larger the turnover, the higher the cost:

  • Cost of Hiring - This includes paperwork such as advertising and applications, personnel, and time for interviewing. 

  • Cost of Onboarding - Training takes time, and it takes at least one other person away from their duties.

  • Lost Productivity - Very few people reach their peak performance level before a year, or more, on a job.

  • Lost Engagement - Having to work with new people continually can make it difficult for the rest of your employees to feel comfortable.

  • Cost of Errors - Mistakes happen. Making mistakes is especially true when you are new to a position.

Actionable Ways To Reduce Employee Turnover

You don't have to give in and accept your current rate of employee turnover. There are some common-sense practices you can put into place now that will help you start seeing a lower employee turnover rate.

Implement An Efficient Hiring Process

One of the most important things you can do is hire the correct employees. Correct doesn't always mean the best skilled or most highly educated. Consider this: You have a laid-back work environment where employees get together regularly outside work. Two applicants come in for an open position. One explained some time gaps in his resume when he was called on to care for kids of an ailing friend who had no family. The second employee graduated with top honors, is young and ready to work, but states at one point he is here to do his job, not make friends. Which one would fit better with your current staff? The first candidate understands personal connection better and would feel more a part of the current environment. 

Craft Well-Rounded Questions

Asking big questions about behavior will help you determine what underlies the employee's motivation and what values the candidate holds paramount. Try to determine if these values match those of your work environment.

Set Accurate Expectations

It can be challenging to know whether or not a candidate will fit into the current environment unless you see that candidate there. Give prospective candidates a tour of your company. Let them have enough time to get a feel for the environment and people who will be coworkers. If the atmosphere is too far removed from what they feel comfortable in, it is likely they will decide not to continue. Give them, and you, a chance to see this before the job offer.

Staff Adequately

Burnout causes many employees to leave. Make sure you have enough staff to cover the amount of work you have. Yes, there may be a time when something occurs, and everyone will need to work harder for a short period, but don't allow that to happen often. Keep overtime to a minimum, enable people to take earned time off without making them feel guilty. Show appreciation when employees do go above and beyond.

Offer A Competitive Compensation Package

Pay your staff what they are worth. If you don't, there will be a competitor out there that will offer them that pay. Make sure you are among the top companies in your field when it comes to pay and benefits. Keep in mind that sometimes you can spend less on salaries if the benefits are exceptional. Health insurance, retirement plans, time off for illness, and other benefits add to the desirability of a position.

Determine What Competitive Means

The only way you can determine whether your benefits package is competitive is to do the research. Look into similar companies in your field and geographical area. Take time to compare them and see where your company fits in.

Cultivate An Ideal Company Culture

People stay where they feel happy and appreciated. They also need to think that they are an essential part of the company. Take time to recognize the work milestones like anniversaries and successes, and to remember things like birthdays, personal anniversaries, children's graduations. Make your employees feel appreciated and needed, and they will give it everything they can.

Give Credit Where It is Due

How often have you heard employees complaining because they came up with a great idea, and their boss claimed it as his own with the top guys? Don't be afraid to give your employees the credit they deserve. Praise can be in the form of acknowledging their input on an idea. It can mean a sincere "Job well done!" when they accomplish something. Don't focus solely on the negative. Yes, you have to bring the negative up at times but frame it between two positives. Don't hesitate about cheering someone on or recognizing their effort.

Link Pay To Performance

Never underestimate the influence money has. Try to find ways to tie performance into a monetary gift. Maybe you can have a fun day that recognizes one outstanding employee each month. Allow the employees to have a paid day off on their birthday and provide a holiday bonus at Christmas time. If at all possible, some type of profit-sharing plan is always a winning step. Periodic raises based on excellent performance are still something to work hard to achieve.

Nurture Interpersonal Relationships

Encourage your employees to get along with each other. Look for opportunities to encourage friendships and cooperation. Getting personal also applies to the employee-employer relationship. Take time to know each employee as a person and show you care. Let them see you as human. Find ways to encourage outside time together. Maybe you can arrange a team-building weekend camping trip. Don't skimp on a summer company picnic and Christmas party. Take time before or after company meetings for everyone to mingle and chat. The more people see their coworkers as human, the higher the feeling of cooperation between coworkers.

Provide A Clear View Of Their Career Path

Very few people want to stay in the same position forever. Get a clear idea of where each employee wants to end up eventually and help them keep that goal in mind. Encourage each employee to work toward their personal goals. Help keep them on track and help keep them encouraged when it seems like things aren't moving along. Be a mentor. You have your position. Yes, there will be employees who have your job in mind as a goal. That doesn't mean they want to force you out of it. After all, you will one day either move on to a different position or retire. 

Training Opportunities

We all understand the importance of training, mainly when the company introduces some new programs or procedures. There are other kinds of enhancements that are just as important. When you know what the career goals of your employees are, you can help direct them to training opportunities that will help them. Maybe the skill isn't useful right now, but it may be further along their path. It is also important to acknowledge the skills your employees bring to the table. Allow them the opportunity to train a coworker or two. Sharing their knowledge gives them confidence, enhances your entire staff's skill set, and builds leadership skills.

Allow Work Schedule Flexibility

Work schedules may seem mandatory items, but if you think about them, sometimes you will find that they can be modified to better fit into the lifestyle of your employees. For example, if someone has to drop their kids off at school at a specific time and you can allow them to come in an hour later and stay an hour later, do so. Maybe someone has something going on at home, such as a sick child or parent. If possible, can you arrange for them to work at home for a time? It may not be possible to change everybody's schedules, but allowing adjustments when possible can make the difference between keeping or losing a great employee.

Involve Employees In Decision Making

You are the boss and may feel it is up to you to make all the decisions. The truth of the matter is that if it affects an employee, they should be allowed to have input into the decision. You do not have to do everything your employees want, but it is crucial to work with them and try to come up with a plan that makes both them and you happy. They spend a third of their day at work. They deserve to have a say in what goes on. 

Value Your Employees

Valuing your employees means giving credit where it is due, appreciating their effort, and supporting them in both personal and professional endeavors. Missing out on any of the above ideas can contribute to high employee turnover. Give yourself and your business a chance by seeing what you can do to retain the employees that are assets to your company.

Before you start making solid plans to decrease your employee turnover rate,
check this post to measure your employees’ motivations.

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This blog post is intended for informational purposes only and does not constitute legal advice.  No attorney-client relationship is created between the author and reader of this blog post, and its content should not be relied upon as legal advice.  Readers are urged to consult legal counsel when seeking legal advice.

Topics: Employee Retention