Real Life Solutions for the Money Draining Problem of Employee Turnover
Last fall, we spoke to the members of the Hampden Business Association about Staff Retention. Since that time, we have talked with several business leaders about this issue. The real costs of losing an employee continue to rise, making this an important problem to address. For businesses of all sizes and non-profits as well, finding and retaining the best employees is critical. Recent research on the costs of employee turnover reveal that although studies are all over the map, the dollar figures associated with poor staff retention are LARGE. A February, 2016 article about Employee Retention written by Christina Merhar cites a recent study estimating that every time a business replaces a salaried employee, it costs 6 – 9 months’ salary (on average) for that position. For an employee making $40,000/year, that’s $20,000 – $30,000 in recruiting and training expenses. Also referenced was a study done by the Center for American Progress,providing the following data on employee turnover costs, with the cost of turnover varying by wage, role and level of the employees.
- 16% of annual salary for high-turnover, low-paying jobs (earning under $30,000/year)
- 20% of annual salary for mid-range positions (earning $30,000 – $50,000/year)
- Up to 213% of annual salary for highly educated executive positions
In a recent article on employee retention, Josh Bersin of Deloitte included the following factors for organizations to consider regarding the “real cost” of losing an employee. . .
- Cost of hiring
- Cost of on-boarding
- Lost productivity
- Lost engagement
- Customer service and errors
- Training costs
Many business owners and managers think that retention is based on compensation issues, but the research shows that the top three reasons why employees leave are. . .
- Poor relationship between employee and manager
- Lack of opportunity for growth and development
- Lack of challenging and meaningful work
What to do about improving Staff Retention? Consider the following as you develop your Staff Retention Strategy. Get better at. . .
- Selection, recruiting, interviewing (hire the “right” people)
- Performance management and ongoing development for people
- Communication (be as transparent, authentic and open as possible)
- Loyalty (runs both ways)
- Help people understand how their job/role supports the organization’s vision, mission and day to day work
- Do all that you can to keep compensation and benefits package competitive
- Consider what else you can offer if not more money. . . What do your employees want? (e.g, More time off? A flexible work schedule?, The ability to work from home? Opportunities to grow through special project work?)
- Conduct “stay” interviews (What would it take for you to want to stay with this organization?)
- Give people an opportunity to grow through “larger” assignments
- Straight, clear, timely positive and critical feedback
- Make sure that roles and performance expectations are clear
- Make sure your supervisors and managers are trained and have the skills, abilities and desire to manage others well
- Foster a team environment and reward for performance
- Create a culture/environment of recognition