Let’s face it: Finding a replacement after a key employee leaves can be downright exhausting. It costs time, money, and — let’s be honest — a little patience.
The higher our employee turnover rates become, the more time we spend training new employees again and again and again.
The average total turnover among all industries in 2015 was 16.7%, with a voluntary turnover of 11.6%.
In short, it doesn’t matter how big your business is — it’s a pretty significant cost that can’t be overlooked.
I know what you may be thinking: “OK, OK, but what can I do about it?”
Well, the good news is that while employee turnover may be inevitable, there are some big (and often overlooked) things you can do to stay competitive and keep top talent.
If you want to keep your best people around longer, read on to discover the realities of employee turnover, as well as best practices to improve employee retention for your company.
Employee Turnover Rates: What You Should Know
Massive droves of rapidly fleeing employees aren’t just a problem for bad employers; almost all businesses experience this problem at some point.
In fact, 32% of employers say that they expect their employees to job hop (and know this even during the hiring process).
Employee turnover costs more than you might think, too.
The costs vary highly from business to business, but they’re still pretty mind-boggling.
For example, a CAP study found that even high-turnover, low-paying jobs that earn under $30,000 a year still cost a whopping 16% of the employee’s salary. This means that replacing an employee that earns $10 an hour would cost over $3,000.
The reality is that the more an employee progresses in their company and role, the more losing them will cost.
So, it’s really no wonder why many companies are making employee retention a major priority.
Factors that Contribute to High Employee Turnover Rates
So, what causes higher turnover rates in great companies?
Everything from having more career pressure placed on employees to bad management can make great employees jump ship.
With the job economy being the way that it is, it’s hard to imagine that turnover rates are as high as they are.
Why is it that people are consistently leaving their jobs when it’s so difficult to find new ones?
Here are some of the biggest factors that contribute to employees fleeing for greener pastures:
Scenario 1: Bad management.
The truth is that your leaders ultimately set your company culture, and having a manager your employees can trust and be inspired by is essential to keeping people around.
Scenario 2: Feeling undervalued.
Who doesn’t like feeling appreciated? Really, though — as it turns out, feeling undervalued is one of the biggest reasons employees go running.
Believe it or not, getting a scheduled pay raise isn’t always enough — most employees need fairly consistent acknowledgment that their work is both good and appreciated.
Scenario 3: Low pay.
If you’re offering pay that isn’t competitive, you might as well leave your help wanted ads up permanently. It’s competitive out there!
Scenario 4: The stress is too much.
Have you ever thought, “this job isn’t worth what I’m making?” That’s a thought most of us have had, but if your employees have it too often, you’ll lose them fast.
Some jobs have stress that’s too much, and whether it’s because of unrealistic demands from clients or management or because they’re picking up the slack when the business is understaffed, we all have our breaking point.
Scenario 5: Stagnation.
Many good employees will go into a new job and work hard to climb the ranks. These are the employees we really want to keep on board, because they’ll likely become our top talent.
If high-achievers stay stuck in the same position or aren’t given enough responsibilities, they’ll get bored, restless, and disengaged (in other words: NOT good for your employee retention rate).
Best Practices for Improving Your Employee Retention Rate
Some employee turnover is inevitable. If you’ve found a way to maintain perfect employee retention for 10+ years, then you’re most definitely magic.
For the rest of us, the best thing to do is to double down on improving employee retention rates.
Luckily, there are a number of awesome ways to keep your best talent around:
Solution #1: Hire off of referrals.
That old saying “it’s not what you know but who you know” is at least a little true — and hey, there’s nothing wrong with that. Your employees will refer you to people they actually want to work with.
Several studies have backed this up. One study found that traditional recruiting had a 20% retention rate after 2 years, while recruiting from employee referrals had a 45% retention rate for the same time period.
And that’s a massive difference that shouldn’t be overlooked.
Solution #2: Give regular raises.
Most employees want raises about every twelve months.
One study actually found that about 35% of workers said they would start looking for a new job if they didn’t receive a raise in 12 months.
Raises should be given both annually and when an employee gets a promotion.
Solution #3: Recognize value.
We discussed above how feeling undervalued is a reason employees leave, so it only makes sense that recognizing their value will keep them around.
While some companies use cash bonuses for a job well-done, a sincere acknowledgement can actually go just a little bit further.
Giving employees credit and validation for their work will make them feel great, and who doesn’t like feeling great? Training your company’s leaders and managers to recognize and vocalize their employees’ value will go a long way.
Recognizing value can also mean trusting your employees with appropriate levels of increasing responsibility as they’re ready for it.
Telling a worker that you know they’re ready to take the lead on a big project will let them know that you value them, and it will keep them engaged and growing.
Even if you’re taking a chance by giving them new (and bigger) responsibilities, the fact that you believe in them will go a long way.
Solution #4: Offer continual coaching.
We naturally (hopefully) want our employees to continue to get better and better, so it’s no surprise that our best employees want the same thing for themselves.
Offering continual education is crucial to their personal growth and their growth within your company. Conferences, courses, and one-on-one feedback will boost their performance and show them that you want them to advance in your company.
Keeping your employees is far from easy, especially with the consistently revolving door that many businesses are experiencing — which is why focusing on employee retention is vital.
With the high costs of recruiting, hiring, and training new employees, it’s an exceptionally important investment that brands and businesses of all sizes should be making.
How does your company lower employee turnover rates? Let us know in the comments below!