Employee turnover always seems to be a BIG struggle for businesses.
When gauging the health of your business, employee retention is a pretty important measure. Generally speaking, the lower the employee turnover number, the better it is. Though the number alone is only half the story.
For instance, say you employ 50 people, with an annual turnover of just 6%. While this rate of turnover is nothing to worry about, if the three people that jumped ship each held critical roles, there’s going to be considerable collateral damage. This includes a negative impact on your other staff in terms of morale, performance and productivity.
The other costs to business of employee turnover are;
Replacing workers is costly 💰
You can expect to spend at least one-fifth of an employee’s annual salary on replacing that worker. This includes everything from advertising the position, the time and costs associated with recruiting, onboarding and training new hires. It also takes into account lost productivity while new employees come up to speed and master their new roles.
So, lose three employees on $65,000 each, and you’re looking at a $39,000 hit off your bottom line just to replace them. Of course, if you lose key executives, this cost will be much higher. In fact, replacing a highly specialised role can cost you as much as double the initial salary.
Zero voluntary turnover not the holy grail
Equally, even achieving zero voluntary turnover may not necessarily be a good thing, especially if your business is changing and your people are rooted to the past. It’s important for any business to bring in new talent and with them fresh ideas, different experience, and new perspectives. In fact, healthy turnover can actually help rejuvenate a business.
Healthy vs. unhealthy employee turnover 🥗 🍔
The key to managing employee turnover is to first identify whether your current turnover is healthy or unhealthy. And while this is influenced by your industry, profession, and where you’re located, as I said earlier, it all depends on who’s leaving.
Whereas there’s no one magic number for employee turnover, company culture plays a pivotal role in employee retention.
Culture key to retention 🗝️
In fact, in any firm that is considered a great place to work, culture plays a key role. For instance, look at Salesforce, which topped this year’s Best Places to Work list of employers with more than 100 employees. The company puts its success down to a workplace culture built around the spirit of “Ohana”, which means “family” in Hawaiian, and the close-knit ecosystem of employees, customers, partners and communities that the company has built.
Likewise, for Rackspace Australia which topped the list of great places to work for companies with fewer than 100 employees. The company takes its culture very seriously with a team of ‘culture instigators’ who allocate a percentage of their time to making sure everyone feels included and has a say.
When people do leave your business, exit interviews are an important learning tool. Candid feedback here is invaluable. But rather than asking them to tell you why they are leaving, ask them for suggestions on how you could improve the business.
Of course, rather than leaving it until the horse has bolted, an alternative to exit interviews is to hold regular “stay interviews”. Instead of finding out why someone is leaving, find out what you could do to make sure that person sticks around. You can conduct these interviews as part of your regular employee happiness surveys.
Remember, it’s expensive to recruit a new employee. If your company culture is the reason why your employees leave, then it’s a perfect time to have a good look at how you recognise performance, provide opportunities for growth, and the quality of manager-employee-co-worker interactions.
But, as an employer, you can do something about this.
Of course, employees leave jobs every day for any number of reasons, many of which are entirely out of your control. That said, the number one reason people give for quitting their jobs is due to their relationship with their boss. This is definitely something you can work on.
Along with improving your people management skills, there are other practical things you can do to retain the great talent you have in your business. Here are five practical things you can do:
Five Ways to Curb Employee Turnover in Your Business
1. Retraining bad managers to stop employee turnover
Take a good look at yourself in the mirror. If you’re a tough, self-styled Gordon Ramsay kind of manager, then you’ll need to make some changes if you want your good people to stick around.
It’s important to recognise bad people management practices when you see them and stamp them out if you want to keep your top talent.
2. Scheduling and flexibility 📅
Having the right people in the right place at the right time is crucial.
For example in the hospitality industry, consider whether you are overworking some employees to the tune of 60+ hours a week while others complain about not getting enough hours? Lots of workers these days want flexibility. And this means shorter, regular shifts.
If you’re still relying on spreadsheets or outdated technology all this can become a nightmare to manage, and you can easily overcook your shift rosters and schedule an individual beyond the legal parameters.
But, using purpose-built software, you get the visibility you need to ensure optimal staffing levels while you accommodate your employees’ shift preferences.
3. Training and advancement will decrease your employee turnover
When it comes to millennial workers, training is vital. Millennials crave opportunity and are ever keen to expand their skills and acquire knowledge.
However, it’s not just millennials. Providing good training shows your employees you care about them.
So, if you want to keep your employees from jumping ship, give them a comprehensive training program that allows them to hone their skills and develop new ones. And when it’s time to fill new positions, you’ll be better able to promote from within. With highly trained staff, you’ll boost your employees’ confidence, making them feel more invested in their jobs and less likely to leave.
4. Pay and Benefits To Lower Employee Turnover
Of course, it’s easy for your employees to be tempted to move by a larger pay packet. But, if you’re well known for providing exceptional employee benefits that make your employees’ salaries go further, this is something that another employer can’t easily match.
Offering benefits such as competitive personal loans and mortgages, car leases, health insurance, corporate superannuation, makes a big difference to an employee’s personal bottom line.
And while benefits can help you keep your people from looking elsewhere, they also can be used as a powerful draw card when you’re in recruiting mode. Word will get out about the great employee benefits you offer and people will aspire to work for your café or restaurant.
In fact, 80% of working Australians see employee benefits as an important consideration when joining an organisation.
5. Recognition 🤝
It’s so important to take the time to give kudos where it’s due and publicly share this praise. A pat on the back is a great motivator and goes a long way to creating a positive working environment.
This is such an easy thing to do, yet so many owners and managers of cafes and restaurants simply don’t take the time to appreciate and acknowledge the team members that interact daily with their customers. And the best part about this approach is that it costs you absolutely nothing.
While some degree of employee turnover will always be beyond your control, by taking a practical and common-sense approach to managing your people, you can make a considerable difference and reduce employee turnover to a minimum. Learn more ways to keep employees engaged with your business with the How To Reap The Rewards Of Employee Wellness guide.
Employment Hero offers a cloud-based HR, payroll, and employee benefits system for small to medium-sized businesses. Your employees will have access to our marketplace of specially curated employee benefits from Australia’s leading insurance companies. Request a demo today.