Employee turnover is one of the biggest costs to a company. Sometimes it may be caused by bad hiring practices such as recruiting bad talent that does not match the position or overlooking certain things to make someone fit. However, voluntary turnover (resignations) from your top and best employees can hurt your business.
According to Clearcompany.com:
- 40% of employees who left their jobs did so within six months of starting in the position.
- 42% of millennials expect to change jobs at least every 1-3 years.
- The average cost to replace an $8/hour employee is about $5,500, not including benefits.
- The cost of replacing entry level employees is 30-50% of their annual salary.
- Of the nearly 1,000 companies surveyed, only 9% of senior management believe that turnover is an urgent issue.
- More than 50% of voluntary turnover happens within a year of the new hires’ start dates.
How do you keep the best employees from leaving your company?
- Ensure you have great leadership in your company. Hiring great leadership is crucial to ensuring your employees stay and are devoted to your company. A bad manager can cost your company time and resources quickly. 3 out of 4 working Americans say their boss is the most stressful part of their job. 44% say they’ve been verbally, emotionally, or physically abused by a supervisor or boss at some point in their career, and 31% of workers say their boss doesn’t appreciate them. What happens when people feel this way? They leave. How many times in your career have you worked for a micromanager or a bad boss? If you are an owner of a small business, ensure your management is not the reason for people leaving.
- Pay well and offer benefits. If you are not paying your employees equally to what other companies are paying, you may lose them. Employees want to feel valued, but they also want to pay the bills and have money for other things. For benefits, they at least want health care, holidays, and paid time off (PTO). If your small business is not in a position to offer competitive pay and benefits at the beginning, show your employees your growth plans and your timeline of when you may be able to incorporate these into the compensation package. People will wait for a period of time if it’s a good place to work.
- Listen to feedback. Sometimes it is hard to listen to feedback from the staff. Employees may give feedback on a survey form, but often management may give a quick fix for a solution or an excuse for the problem. If your employees say they don’t like something – listen. Also, ask for suggestions of how they think they can make it better. Sometimes the people who are actually doing the work offer great ideas. Offer a bonus to people who can come up with solutions and improvements to save the company time and costs. Ensure your processes, systems, and policies in your business are smart and make sense. What may have worked in the beginning of the business may have changed as your business grew.
- Make performance reviews meaningful. Over 50% of employees feel performance reviews are not effective. Make changes to your performance review system and ensure you implement daily coaching sessions with your employees. Don’t make the performance review a time to dread, but make it time to really listen to what your employees have to say. This is a great time to figure out issues and quit the guessing game of what your employees are thinking. Also, do you feel your best employees are leaving? This is a great time to ask them. Be honest and sincere and find out what you can do to make sure they stay.
- Treat all employees equally. Even if you have favorite employees, you should ensure you treat everyone equally. Don’t take one out for lunch without offering it to the whole group. If your employees suspect you play favorites, this can cause problems within the team. Coach and manage fairly and ensure no one feels left out.
- Offer flexible scheduling or work-from-home opportunities. Find ways to offer flexible scheduling so that your employees feel like they have options. For your construction employees, could you offer flexibility for their child care needs? If you have an office staff, could they work from home during times of child sickness? Be flexible with your staff because they will appreciate a company that works with their schedule. Don’t make employees use PTO for every dentist and doctor’s appointment. Most likely your best employees have worked extra hours unpaid at some point, so why would you make them use PTO for every small thing? They would probably pass up higher pay if they had job flexibility, but make sure you are consistent and your policies are legal and clear. It’s important that you communicate your company’s needs as well and ensure the flexibility doesn’t hurt your business.
- Make sure every employee has a succession plan. Every person within your company should have an opportunity to move upward within the company. If you do not offer this in your company, your best employees will eventually leave. Most employees don’t want to stay in the same job for years and if they do, they want more challenges within that job because they get bored. They want career growth. Even in a small business, you probably have a plan to grow your company. Talk to your employees individually and find out where they would like to go and then figure out a succession plan together to make that happen.
- Offer training opportunities to reach their goals. Some of your staff may want to seek new areas within your company or become better at what they do for advancement. Whatever the case, ensure you are offering training opportunities. A great time to do this is when you are developing their succession plan. There are many free training programs online which they could do easily and not cost much except time. For example, invest in training programs for those who would like to move into a supervisory role. If time is a factor, research online training courses and start training them before they move into a leadership position.
- Get rid of the bad apples. One bad apple in a department or on the team can hurt the entire team. They will no longer focus on their work, but they will focus on that person. They will talk to others about that person, they will talk to their family about that person, you will hear multiple complaints, and the best employees will start looking for a job if the bad apple is not terminated. How do you know who is the bad apple? They are negative, show up late, miss a lot of work, or may even be the company bully. Get rid of them. Make sure you follow your proper channels, but get them out of your company fast.
Ensure you hire top talent for your company and implement a plan to keep them. If you are losing your best employees and you are not sure why, hire an outside source to conduct exit interviews or confidential surveys to understand your company’s issues and why your top employees are leaving. Losing top performers will hurt your company for financial reasons and high turnover for a small business will hurt your reputation in the community. Keep an eye on sites such as Glassdoor that do reviews on companies and make changes to correct the problems. Make your company the best place to work and hire the best leaders to make it happen.
Author: Kimberley Kay Travis
Kim Travis, co-owner of Travis and Adams Consulting Group, has over 20 years’ experience in human resources and leadership roles.
She has specialized knowledge in employment law, employee relations, recruiting, management consulting, leadership development, manufacturing safety programs, and writing business articles and blogs.