Employees Walking Out? It's More than Bad Luck, It's Bad Business
The total cost of losing an employee is estimated to range from 90 to 200 per cent of the employee's annual salary. When an employee walks out the door, it impacts your business immediately.
The pain of employee turnover, having to continuously re- hire for the same positions and the demoralizing effect on your people, hides more serious issues under the surface. The total cost of losing an employee is estimated to range from 90 to 200 per cent of the employee's annual salary. When an employee walks out the door, it impacts your business immediately.
You lose the business knowledge that's in their head and the relationships they've built with colleagues and stakeholders. This causes a general disruption in the day-to-day flow of the organization.
A high turnover at your business can also:
» Harm customer service and quality
» Compromise your competitive advantage
» Kill motivation and morale According to analysis by LinkedIn, the worldwide average staff turnover rate is 10.9 per cent, with these industries struggling with higher than average rates:
» Tech — 13.2 per cent
» Retail -13 per cent
» Media and entertainment — 11.4 per cent
» Professional services — 11.4 per cent
Can Just Blame This on Industry Trends?
Sorry, but shrugging and saying "that's just how the industry is at the moment" isn't going to convince anyone. The best way to see just how well you're doing in turnover rates is to see how you fit within the wider industry. Then look at what action you can take to beat the industry benchmark.
Retail, for example, has a reputation as a high-churn industry. This is because of:
» Typically low pay, making it easy for other stores to lure your people to greener pastures.
» Entry level jobs for most young people, who don't plan for retail to be their longer term career.
» Managers are often promoted from sales positions and may not be great natural people managers.
» Boom and bust cycles, and the pressure to get workers up and running ASAP, causing training, development and onboarding to be neglected.
The tech industry, on the other hand, sees high turnover and massive challenges retaining talent. This is because of skills shortage, high demand and cashed up competitors ready to pay top dollar to poach your best people.
Can Buying a Ping Pong Table Fix Things?
Good try, but even a beer tap won't stop your best people from leaving if there are bigger issues at play.
If talented people are treating your organization like a short-stay truck stop, it's time to ask some serious questions:
» Are people leaving because you're recruiting people who aren't actually a good fit for the job and for the culture? » Did their expectations not match the reality?
» Are they leaving for better pay? Or better growth opportunities?
» Is pervasive low morale creating a path to the exit door?
Research shows staff turnover is one of the most expensive and difficult workforce challenges facing organizations. Whatever the reason, there are things that you can do to improve staff retention rates, and understanding the underlying factors can help focus on what will have the biggest impact in your organization.
(This article was first published in the July 2019 issue of Entrepreneur Magazine. To subscribe, click here)