Employee retention has always been a major focus for business leaders and HR teams. The cost of recruiting, hiring, and training a replacement is quite high. The disruption of service that occurs as a result of losing a loyal employee is a disadvantage to the business. At the same time, institutional and customer knowledge also walks out the door when such a thing happens. That's where reducing employee turnover comes in handy.
Content Overview
What Causes High Employee Turnover?
What are The Effects of High Employee Turnover?
Tips for reducing staff turnover
- Communicate with Care
- Make Good Use of Time
- Create Importance with Prioritising
- Take Staff Development Seriously
- Surprises are Always Welcome
- Give a Sense of Rythm
What Is Employee Turnover?
Employee turnover rate or employee turnover is the number of employees that leave a business organisation during a specific period. This measurement is typically calculated every year. Tracking employee turnover is a data-driven method that helps calculate how many employees are leaving the organisation every year and under what circumstances.
It includes both voluntary and involuntary turnover. Voluntary turnover means employees who leave the company on their own accord for a new job or personal reasons while involuntary turnover means employees who are terminated by the company for various reasons including performance issues, behavioural issues, and employees that are part of a seasonal layoff.
Calculating Employee Turnover
Calculating employee turnover is important to keep track of employees who leave the company for whatever reason during a specific period such as a month, quarter, or year. Divide the total number of employees who leave the company during a specific period by the average number of employees that work within that time frame, and multiply that number by 100 to get the employee turnover rate.
For example: If a company has 200 employees working during a year and 50 of them leave the company for whatever reason, the employee turnover rate is: 50/200 X 100 = 25%. Don't include temporary hires when calculating the employee turnover rate since it may skew the turnover rate higher than it is.
What Causes High Employee Turnover?
Voluntary employee turnover is caused by employees seeking fulfillment and better benefits. Here are some of the most common causes of employee turnover.
- Bad Management - Toxic managers are one of the main reasons for higher employee turnover. A good manager will know his/her employees well enough to motivate and make them succeed.
- Poor Compensation - Compensation and benefits are a major reason for people to leave their workplace in search of better employment opportunities. Financial instability disrupts an employee’s focus on tasks, so paying them appropriately will reduce their tendency of searching for other employment opportunities.
- Overworking - Burnout is a result of asking employees to perform certain tasks without being given enough time to finish them, or without the resources to succeed. When an employee consistently feels daily stress than he or she can manage, they will get fed up with the job and seek other opportunities.
- No Recognition Or Feedback - Many employees get fed up with their jobs when they don't get the right kind of manager feedback.
- Lack of alignment - This is when employees’ values are not aligned with the values of an organisation, and cannot relate their personal mission to the mission and vision of the company.
What are The Effects of High Employee Turnover?
Although a certain amount of staff turnover is inevitable, a high percentage can quickly become overwhelming for both managers and co-workers. A whole series of knock-on effects arise when an employee quits:
- Their existing work has to be passed to their colleagues, who (more than likely) have little spare capacity;
- If an employee leaves suddenly, an effective handover will be impossible and client satisfaction will suffer.
- Managers need to dedicate time to finding a replacement, which takes them away from looking after the existing team.
- There is no guarantee that the replacement will turn out to be a good team member.
- New staff members take time to become productive and during this time the team's productivity is affected as they are helping the new person get up to speed.
- It's pretty clear then that investing in improving employee loyalty should deliver a good return on investment and help reduce staff turnover. Let's look at some ways of creating a happier workplace, so your colleagues don't feel tempted to look around.
Tips for reducing staff turnover
Staff turnover is most effectively reduced by implementing a range of actions, all of which should be as close to the staff as possible. By close to the staff, I mean actions that impact their ordinary work day, as distinct from some new policy implemented by upper management and which might only be actioned once a year.
1. Communicate with care
Are email explosions the new road rage? Leadership indeed starts at the top. However, everyone can show leadership in the way they communicate with colleagues. Consider driving to work. Although fellow road users drive according to the law, many do more than this – they extend personal courtesies to each other – allowing other cars to pull out at congested junctions, giving other road users lots of space, for example. Rude road users stick out like a sore thumb, even though they may be breaking the letter of the law.
So too with email. It's not enough just to write with good grammar and spelling (although even this is becoming a rarity nowadays). Emails are so easy to write. People are tempted to dash one off quickly, thinking that communication has taken place. But no communication has taken place at all, as communication involves a two-way exchange. Sending an email simply starts that process, even though many people view it as completing the communication too.
Overall, I believe too many emails are sent. Why not pick up the phone and speak to the person instead? At least that way you can be sure communication has occurred.
When you do have to send emails, draft them first; leave them a while; review and send.
2. Make Good Use of Time
Leaders must demonstrate respect for their fellow employees. A good way to show respect is through effective timekeeping. It also has the benefit of improving productivity. If you carry this through to how meetings are conducted too, so much the better, giving everyone time to voice their opinion while respecting everyone's time is invaluable.
3. Create Importance with Prioritising
Sometimes employees have challenges prioritising their work. Managers can help by giving them a few short priority assignments. They'll know exactly how they should be spending their time and they will feel that they're making a valuable contribution. This should help them overcome the temporary challenge and help them preserve their self-worth and confidence.
4. Take Staff Development Seriously
Surprisingly, some members of staff don't look after their careers as much as they ought to. One upshot of this is that they can be tempted away by headhunters fairly easily. One of the easiest ways of reducing staff turnover is to show your employees that you care for them. Remind them that their careers are important to them, not the company. Help them to create a career and personal development growth plan. This is a great way to improve loyalty. It's also a great way for employees to come to their conclusion as to whether they do belong with your company for the long term.
5. Surprises are Always Welcome
Beyond the serious (and well-documented) annual bonus, what else do you do to celebrate your employees? Do you mark their birthdays? How about the achievements of their children? Do you know what they do in their spare time? Can your company contribute to the charity where they volunteer their time on weekends? Ritualistic annual bonuses are okay, but put some effort into coming up with more innovative ways to surprise your employees. Unexpected rewards can have tremendously positive effects.
6. Give a sense of rhythm
Companies have their seasons; daily newspaper newsrooms have wild afternoons, as deadlines approach. In the UK, accountancy firms have very busy Januaries and Aprils. Your company will have a rhythm too – does everyone know what it is? Is everyone tuned into it? Make them adapt to seasonal pressure, and celebrate after.
Final Thoughts
Staff turnover can't be eliminated and nor should it be. New blood is important to the future of all organisations. However, looking after the people you already have is a great investment that will pay valuable long-term dividends.
You can make employees go the extra mile to achieve individual and company success. Start with an assessment of their engagement, or contact us and let’s make your team consistently happy and motivated!
