How to Reduce Employee Turnover within Your Company

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Turnover is becoming a serious problem that many organizations are facing in today’s business environment. The costs associated with turnover are very high for many companies because of the resources invested into the hiring and training process. Estimated costs vary from business to business and can be calculated by dividing the number of annual terminations by the average of employees in the workforce. According to the Bureau of National Affairs, the average employee turnover rate is 14.4% annually and depending on the level of the employee, turnover costs can run anywhere from 50% to 200% of an employee’s annual pay.

Turnover is proven to be tougher on small businesses.  Unfortunately, departing employees are more likely to be the ones who possess a particular skill or knowledge that may be harder to replace.  It also leaves your company with a smaller pool of employees to cover the work of the lost employee and may leave you with fewer resources to cover replacement costs.  

There are a number of factors that contribute to employee turnover.  Some of which include; pay, better career opportunities, poor job fit, benefits, inadequate training, management philosophy and lack of recognition.  Here are five steps to take to reduce turnover within your company:

Hire the right people and develop their careers. It is imperative to make sure you are hiring employees that are a good fit with the culture of your company.  Make sure that their values, goals and principles match those of your organization. It is also important to train your new employee as necessary; the proper training will help ensure employee retention and loyalty.  If you are having trouble finding an employee with the goals and skills your company desires you may want to consider using a staffing agency to assist you in finding an employee who is the right fit for your organization.

Pay attention to employees’ personal needs. Learn what is important to your employees in order to retain the best staff.  Look to motivate your staff by offering flexibility and rewards when possible.

Develop a compensation package. Review compensation packages annually and pay attention to market trends.  Be fair and consistent and if possible, avoid hiring on new employees with a higher rate than current employees.

Create a positive work environment. Recognition and praise can go a long way and is a cost effective way to maintain a happy workforce. Take the time to send emails to employees on a job well done after they have completed an important project or ask your team for weekly and monthly updates to help track achievement.

Outline career paths. Employees are interested in knowing the future of their job and where it’s headed.  Encourage employees to come to you with questions they may have and give annual reviews to provide feedback on how they are doing at performing their job.

There are helpful tools, such as this turnover calculator, to help you determine the actual cost that employee turnover is costing your business.  By knowing the actual cost of losing and replacing an employee, it will help you determine how much you should invest in employee retention initiatives. Identify the factors in which you do have control over and make necessary changes to reduce turnover rates within your organization.