To be successful, organizations need to attract talented employees from diverse backgrounds, and to retain them for longer.
What is employee turnover?
Employee turnover is an expression of the proportion of employees that leave an organization over a given period. So, an organization with a yearly 10% employee turnover rate has lost one out of every ten employees in the past year. Employee retention is simply the ability of an organization to minimize turnover.
Why do employees leave?
It’s important to understand that there are many reasons for employees to leave an organization and that some turnover may be inevitable: long-term, loyal employees reach retirement, employees may be affected by circumstances beyond anyone’s control, such as illness or accidents, an employee’s departure may be voluntary or involuntary.
Furthermore, some industries will naturally have a higher rate of employee turnover, for instance those that employ seasonal workers. Some locations may be prone to a higher turnover rate, too, for instance areas with a large student population who support their studies with part-time or casual work.
In these cases, organizations must plan realistically for the challenges and costs of this naturally-occurring employee turnover. However, the presence of this baseline turnover is no reason to be complacent or to ignore the negative impacts of higher than necessary employee turnover. Leaders must work at creating an organization that can retain a diverse talent pool.
That’s because there are many factors that can drive employee turnover up, but which are within the control of an organization’s leaders. These include:
- Poor working environment and inflexibility
Organizations that fail to offer the supportive working environment and flexible conditions that modern employees have come to expect are likely to lose employees to other, more welcoming organizations.
- Uncompetitive remuneration
With the cost of living rising, even the most loyal employees can be tempted away by a competitor offering better pay and conditions.
- Work-life balance
How much an employee is paid for their time isn’t the only thing on workers’ minds, how much time they have outside of work for family and other interests is important, too. And don’t forget that employees with stimulating lives outside of work are more likely to perform at their best when they are back at their desk.
- Organizational values and ethos
Even when an employee is well-paid and has a good work life balance, if they are to remain focused, engaged and committed, they still need to feel like they are working for an organization that aligns with their own ideals and values.
- Awareness of diversity
A diverse workforce has well-established benefits for organizational resilience and productivity. To retain a diverse workforce, organizations need to ensure that employees feel they are acknowledged for their own strengths.
How does high employee turnover hurt organizations?
- Loss of expertise
Your people are your organization’s most vital asset: their accumulated knowledge and expertise is impossible to replace. When you lose employees, that expertise is lost with them.
- Cost of recruiting replacement employees
Recruitment takes time, effort and money that would be better invested by nurturing the talent already in your organization, which in turn reduces employee turnover. Furthermore, when hiring new people there is always the risk that they will turn out not to be a good fit for the organization. In the event that an organization has to separate from a new hire, this creates further cost, is time consuming, and is counterproductive to the goal of improving employee retention.
- Reduced productivity
Once recruited, new employees need time to fully integrate in an organization before they reach full productivity. And if a role remains unfilled for any period of time, either work doesn’t get done, or the remaining employees are forced to take up the slack, increasing the chances of more people quitting.
- Loss of customer trust
An organization’s best customers often have a strong relationship with individual employees within the organization. If those employees leave, the customer has less reason to remain loyal, and may even follow the employee, taking their business to a competitor organization.
- Impact on morale
Interpersonal relationships within the organization are important, too. Not only are they essential for consistently successful communication and collaboration, good interpersonal relationships within a team contribute to a happier working environment in which employees will be more likely to want to go the extra mile.
Ten ways to improve employee retention
- Make the right start at the point of hiring
Career development starts before an employee even begins their new role. Be open and honest about the role and the organization during the recruitment process, and set new hires up for success with an onboarding process that orients them within the company.
- Give new hires support and training from day one
Support and training should not be an afterthought, or something that is offered as a reward for long service. Putting training in place at the very start lets employees be confident that their career will follow an upward trajectory.
- Exercise fairness and transparency
Taking diversity and inclusion seriously is known to improve employee retention. Employees need to trust their leaders. Make sure they know they are getting equal treatment with their peers, both in terms of pay and working conditions in a positive and fulfilling workplace.
- Prioritize wellness and health
A workforce that is in good health, mentally and physically, is likely to have lower rates of burnout, lower rates of absenteeism, and higher morale. All of this makes it easier for employees to stay with the organization for longer.
- Enable flexible working
Flexible working prioritizes productivity over presenteeism and encourages a good work-life balance. It means that employees can focus all their attention on their role during work time, while still having time to maintain good health and good relationships. For more tips on this, read our article on how to boost engagement in an era of remote worker fatigue.
- Offer perks, celebrations and rewards
Perks such as social events, meals or rewards for good service are not a substitute for fair pay, good training and work-life balance. But by offering extra perks, you’re likely to earn increased loyalty from your employees.
- Provide good communication, teamwork and feedback
Without good feedback and communication, employees can feel isolated, underappreciated and disincentivized to stay in their role. Being part of a cohesive, mutually supportive team naturally cultivates loyalty between employees and their organization.
- Exercise effective change management
For better or worse, organizations inevitably face change. Good change management means leaders must clearly communicate their vision for the organization’s future and engage with employees when making plans in order to retain the commitment of their people.
- Offer training opportunities and career development
Employees will want to stay in an organization if it goes beyond satisfying their needs in the immediate term, and sets them up for a long, successful and happy career. Having excellent training programs in place helps employees see a clear path to achieving this aim.
The importance of training
Reducing employee turnover becomes easier when leaders are able to identify high-potential employees, nurture their talent, and let them flourish within the organization. Contact us today to learn how training tools such as business simulations and experiential learning can help your organization find the next generation of leaders and secure their long-term future.
