Lowering Employee Turnover Rates & Cost
“Treat employees like they make a difference and they will,” a word of advice from Jim Goodnight, a co-founder, and CEO of SAS Institute Inc. Goodnight is known for the positive work culture he has created at SAS and his commitment to a work-life balance. As a result, SAS has peaked at number one on both Fortune and Great Place to Work Institute’s best workplaces lists.
Goodnight hasn’t made an earth-shattering discovery. He simply understands and recognizes the importance of his employees.
Employees come and go. It’s part of operating a business. Departing with toxic and under-performing employees is good; however, losing productive and loyal employees can have a negative and costly impact.
The trend of American workers voluntarily quitting their jobs is climbing. According to the Work Institute’s 2019 Retention Report over 41 million (27%) workers voluntarily left their jobs in 2018, costing employers $617 billion. The Bureau of Labor Statistics reports trade and utilities, construction, retail, customer service, and hospitality have the highest turnover rates.
There are many reasons why people leave their job. In 2018, the top reasons employees quit their job was for career development (22/100), work-life balance (12/100), and manager behavior (11/100) according to the Work Institute’s report. Other reasons include compensation and benefits, job not as expected, work environment, well-being, or unsatisfying work.
No matter the reason, turnover costs are significant. The Center for American Progress predicts the average cost to replace low-paying jobs ($30,000 or less) is 16%, mid-range positions ($30,000 – $50,000) is 20%, and highly educated positions like executives can be up to 213%.
Why are the turnover costs so high? For starters, the employee needs to be replaced initiating hiring and on-boarding costs, including training and management time. The vacant position could lead to loss of productivity, as well as, add stress to remaining employees that may be assigned extra work. A loss of an employee can also impact a company’s morale plus, exiting employees often take company and industry knowledge with them.
According to the Works Institute’s report, employers could have retained three out of four employees who quit. If three out of four employees were retained, U.S. employers would have saved $469 billion in turnover costs in 2018. Here are ways you can help retain quality employees.
Hire the right people – Easier said than done. When it comes to hiring, matching candidates’ skills to the job duties is crucial, but it’s also important to learn about their behaviors. Ask behavioral interview questions that require them to reflect on past work experience and handling difficult situations. Also, show candidates around the facilities and demonstrate the company’s culture to help them identify if they belong to that culture or not.
On-boarding process – get employees engaged right away and assign meaningful tasks as early as possible.
Competitive pay and benefits – do your research on the market/industry and competitors to see what they offer employees. Identify common benefits offered and implement non-conventional ones too (gym memberships, daycare, etc.).
Work-life balance – it’s important for employers to recognize life outside of work. A healthy work-life balance is needed so employees can attend appointments, family matters, and conduct a life outside of their job. Not all companies can offer flexible work schedules, but there are other things they can do to provide more time outside of work, like more paid time off.
Employee recognition – while you don’t need to praise employees for everything they do, give them credit where credit is due. When large projects are complete or tasks get done ahead of schedule, acknowledge that. All employees want appreciation and recognition will make them more loyal.
Opportunities for advancement – Employees show different levels of ambition, but all employees want to know there is growth available. Help them lay out a career path, identify possible higher-up positions, give them more responsibilities, or invest in additional career-development training.
Remove toxic employees – negative employees can be contagious and have a ripple effect on all employees, potentially bringing down morale and reducing productivity. Remove these employees and those who cannot meet the company standards.
Twin City Staffing not only matches skills to the job duties, but we take the time to get to know you and your company’s culture. Our recruiters conduct thorough pre-assessments and interviews to get to know candidates and match them to the best company for them. Using an employment agency allows a company and candidate to determine if they are the right fit for each other before investing too much time.