Lower Employee Turnover and Improve the Bottom Line
Follow this five-pronged strategy to make staff departures exceedingly rare.
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Employee turnover costs money.
A 2012 study by the Center for American Progress shows that it costs a business roughly one-fifth of an employee's salary to replace that employee once they're gone.
These costs show up in obvious and subtle ways.
They show up in the hard costs of hiring a new person (what's involved with advertising, interviewing and screening). They surface in the training and management time spent onboarding a new employee. More subtly, but no less significantly, these costs also show up in the time it takes a new hire to reach a predecessor's productivity.
The more turnover a company has, the more these costs eat away at the bottom line. While there's no way to eliminate employee turnover completely, here are five strategies that companies can implement to make it the exception and not the rule:
1. Don't pay the minimum wage.
Think about what paying the minimum wage says -- that a company wants to pay its employees only the bare minimum allowed by law. It says their contribution is worth just what the government says it must be and if the company could get away with paying less, it would.
Why would employees want to commit to a company that placed such little value on them? Even if you pay just 10 cents more an hour (or 80 cents a day), you're still providing more than the minimum and that matters.
2. Keep hope alive.
Employees have aspirations. They want to grow, be promoted and grow some more. Foster an open and approachable dialogue about growth opportunities within your organization. Let employees know about job openings and promote from within the company when possible.
When you pass over employees for a promotion, treat them with respect and let them know why you didn't pick them so they can work on any shortcomings before the next opportunity arises.
3. Let staffers know they matter.
Companies have to do more to show appreciation for hard work and loyalty than simply offering a paycheck. Even small businesses with thin profit margins can boost morale easily.
Hosting opportunities and events for employees that reward, celebrate and appreciate success when goals are met or just letting them blow off steam and have fun can go a long way toward building a company culture.
This can be as simple as having an office barbecue, ordering pizza for various departments or making a big deal out of acknowledging top performers.
4. Fight job burnout.
Some jobs are tedious, and the more tedious and repetitive they are, the higher the burnout and turnover. Avoid burnout by offering flexibility and variety as well as challenges for employees to demonstrate they're ready for the next step.
This helps keep employees engaged and loyal. Some companies set up fun committees with a tiny budget to plan events for all employees to participate in. These activities can have different themes and include team-building exercises.
5. Give back.
Companies are citizens of their communities. Employers should be good corporate citizens and give back to the community when possible and involve employees into that process. Whether participating in a used clothing drive for homeless teens or a canned food drive for a local food bank, corporate social responsibility is a great way to help a community and let employees feel they're working for more than just a paycheck.
Don't forget, the turnover rate is directly linked to employee morale. The higher one is, the lower the other. This, too, has an impact on the bottom line.
Lowering employee turnover is a project that requires authenticity and buy-in. It's not something that can be done with a cursory effort or laissez-faire approach. The efforts have to be real and sincere. Employees will see through anything else and you may create an even bigger problem.
Treat your employees like the assets they are and, as is the case with any good investment, you should see an appreciation in their value.