Employee turnover is a growing concern for firms all over the world. For one, it takes time and money to find a replacement for the employee that just left. And for another, high and frequent turnover is bad for business.
After all, would you trust a firm that sees skills going out the revolving door a tad too often?
There are two types of turnover to consider here; the one where your workers are retiring from the force or taking up another offer and the one where you have to let them go due to incompetence and suboptimal performances.
The question being; is employee turnover always bad for an organization?
The short answer? Yes, and no.
The long answer is, turnover is a dicey situation. It works out favorably for you if the replacement you find catches up quickly enough to do an even better job than your former employee. But not so favorably, if they’re cultural misfits and eventually harm the productivity of your existing workforce. Let’s reopen the subject with a look at some statistics and then journey into the strategies to reduce employee turnover.
Employee turnover rate by industry
Traditionally, the retail sector experiences high turnover due to inflexible shifts and work pressure. According to figures crunched by Linkedin though, technology and retail sectors are neck to neck with an average employee turnover rate of 13%, in comparison to the health sector which fared considerably better, at 9%.
This goes to show that while inevitable, employee turnover is best understood if you’re aware of the circumstances surrounding your employee’s exit. You should also be looking at what it will cost your firm in terms of reaching both short and long-term business goals. Here’re a list of costs associated with employee turnover :
The high cost of employee turnover 2018
The hire, fire and/or retire cycle is full of known and hidden expenses. These include onboarding and training costs( the time to absorb new workers into the talent pool) and productivity costs (the time taken by the new hire to gain full mastery over work). In 2014, an Oxford economic and unum study revealed that that the average cost to replace an employee was ￡30, 614. And the productivity costs ran as high as ￡25,000! Think about the astronomical sum you’d incur if 5 or more such employees left and had to be replaced in this manner. Prevent this from happening to you with the tips in the following section.
Tips to reduce high turnover rates:
1. Hire the right people
Reducing the employee churn rate starts from the hiring process itself. Besides possessing experiential know-how, relevant and critical skills that the job calls for, the people you hire have to be a strong cultural fit too. Conducting at least one interview in person lets you gauge the vibes interviewees are giving off.
More importantly, it’s during the hiring process that flags get raised, such as long gaps between jobs, or several job changes. You even have the option of administering a situational judgment test to check behavioral responses. This way, you can make a holistic assessment of their profile and decide if they’re in for the long-haul. To put your mind at ease, call in references and verify if the particulars listed on a resume match what your applicants tell you. Consequently, an informed decision can be reached before rolling out offers.
2. Build your teams up
A collaborative culture is the route to building your teams up. It recenters workforce productivity around how supportive and communicative skilled employees are with one another. The shift to this style of working has come about in line with the advantage of working as a cohesive unit rather than in siloed blocks.
Collaborations boost the effectiveness of team dynamics and ensure that competent employees are utilized optimally. After all, the more involved your staff are in prioritizing business-wide activities, the better positioned they are to give starving projects that much needed momentum. Building such teams not only gets more work completed quickly but also lets your employees feel connected to their work and with each other. This, in turn, influences their decision to remain for the long haul.
3. Invest in business agility training
Business agility dictates your firm’s staying power. And more importantly, how employable your workforce is, in times of change. The first step to achieving this agility is to detect existing skills gaps and invest in digital training schemes your resource pool can be placed on. It not only lets you size up and tap into internal capacity but also lets your workforce pick up new skills on the job.
Besides bringing about a business transformation, agility training brings down employee turnover by conveying a very important message to your workforce: that you, as their employer, are as concerned about job security as they are. What’s more, identifying shifts in demand and the skills needed to drive such projects reduces employee turnover by enabling your workforce to be change-ready in the future.
4. Regularize feedback
Before falsely assuming some of your staff are too incompetent, ask yourself this- when was the last time you gave them feedback concerning their performance?Providing regular feedback lets you check in on your teams and inform them of what they’re getting right as well as wrong.
Everybody thrives on a word of praise every now and then, but you’ll find your staff just as appreciative of constructive criticism if it’s brought to their attention during feedback sessions. What’s more, teams can also bring up issues they faced. Once you know what’s preventing your employees from giving their jobs their 100% best, you can rethink the business strategy rather than let them go without cause.
5. Collect exit data
Exit interviews are a necessary part of the hire-to-retire and hire and fire cycles. For one, it collects data that explains the circumstances surrounding an employee’s departure. And for another, it lets you know if the turnover was restricted to a particular department or across the enterprise.
Exit data lets you understand what your former employees liked and were dissatisfied with during their association with your company. You can subsequently communicate revised policies to your existing workforce and avoid the ‘churn and burn’ routine.
6. Bring bench hours to 0
Given how skills relevance determines workforce longevity, making optimum use of all the right competencies is pivotal to completing work on time. In this regard, the more hours they’re benched, the less likely employees are to remain for long.
The reasons are simple. Benched staff feel undervalued when they aren’t learning anything new nor using existing skills on active projects. Worse, the lack of visibility into workloads causes you to mismanage schedules. You then wind up either overloading or under utilizing potential. By identifying vacant, halted or abandoned projects and optimizing time-tracked activities, you can drastically reduce the number of bench hours.
7. Offer generous incentives
At the end of the day, you’re renting out your staff’s time and effort. In additional to crediting performances back to the efforts invested by your staff, appreciation complemented with promotions, raises and perks goes a long way.
There’s always a firm offering more competitive advantages. The focus, therefore, should be on incentives that benefit your employees without causing you to overrun budgets. For example, flexible work options such as remote work not only save your staff the long commute but also lets you reduce the carbon footprint and energy bills at the office!
8. Align roles to company vision
An interesting point that this Cisco post brought up was that in the bid to embrace new processes and technologies, people were often neglected. The real risk begins when employees do not know how their role fits into achieving business goals.
When exceptional workers walk out the door, you risk facing newer costs, such as the cost of replacing an employee and absorbing them into the company. Aligning roles to the company vision lets employees know the purpose of the role and how their contributions are paying off. What’s more, they’re the first to know of leadership changing hands and how this affects their staying power.
9. Share information on time
Timely communication notifies your staff of imminent and future changes. The earlier they know, the better prepared they are for work. It helps to conduct walking meetings, power lunches or even a simple group discussion which includes concerned employees
More importantly, sharing information lets employees exchange ideas or hash out a new plan to get projects up and running. It lets coworkers piece together activities using a combination of personal experiences and capabilities. By creating an environment that’s transparent in its dealings, you not only stop sending out mixed signals to your staff but will also get updates concerning work in time. Even better, unifying conversations, actions and decisions help your current staff avoid the mistakes former employees made.
10. Encourage skills diversity
How does skills diversity fit into the grand scheme of things? Quite simply, your teams can have skill sets comprising of primary and secondary competencies, which may be useful to a different department.
Creativity at the workplace aside, encouraging your staff to diversify their interests lets them participate more actively at work and on a wider range of projects that capture their interest. A secondary advantage here is that in the event of a crunch in capacity, you can repurpose existing skills by distributing them optimally to high and mid-priority work, thus ensuring projects finish on time without a lower quality of build.
Over to you
If you’re keen to prevent employee turnover from sneaking up on you, these tips are part and parcel of a resource management software. After all, with skills reports, utilization management and time-tracked schedules, you’ll not only manage the resource pool well but will also benefit from acute insights into both work and people!
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