How to Reduce Employee Turnover

As difficult as it is for companies to accept, employees come and go. Today’s workforce is a lot less loyal than the previous generation. This isn’t a knock – it’s just the facts. Times have changed and employees would much rather jump around and try out new opportunities than stay married to one company for 30 to 40 years. 

Having said that, you want to hang on to employees for as long as you can. Otherwise, your organization will suffer from a lack of stability.

The True Cost of Employee Turnover

If you’ve never taken the time to measure your company’s turnover rate, now is as good of a time as any. It’s an extremely simple calculation, but it helps you understand the health of your business from the inside out. All you do is take the number of employees who leave your company over a given period of time and divide that figure by the total number of employees. 

So if you have 100 employees and seven of them leave over a 12-month period, your yearly turnover rate is seven percent.

As mentioned, some turnover is normal. But it’s also costly. Research suggests it costs a company 1.5-2-times the employee’s salary to replace them. That means an employee earning $60,000 costs between $90,000 to $120,000 to replace by the time it’s all said and done. For hourly workers, the average is $1,500 per employee. 

On top of the financial cost, there’s the inconsistency it creates. Processes slow down and, in some cases, come to a screeching halt. Then there’s the cost of training employees. And, on top of all of that, there’s the impact on culture and relationships. 

Tips for Reducing Turnover

You’re never going to have a zero percent turnover rate. It’s just not possible. But if you can keep your turnover rate low, you give your business the best chance to thrive. Here are several helpful tips for doing just that:

  • Hire the Right People

The health of your company’s workforce ultimately starts with your ability to hire the right people. If you hire the right people out of the gate, it increases the chances that they’ll be happy in their role (and stick around longer). But if you hire people who are under- or over-qualified, there will be dissatisfaction.

“A big part of hiring the right person is making sure that recruiting is looking for the right person from the beginning,” entrepreneur David Luther explains. “Less than half of workers believe that job descriptions reflect actual job responsibilities, and nearly a third have left a job in the first 90 days because it wasn’t what they expected.” 

Whether you’re hiring employees on your own or using a staffing agency, it’s all about setting the proper expectations and finding people who fit the roles you’ve carved out. 

  • Keep Employees Motivated

You have to continually invest in your employees over and over again. You can’t give them a pat on the back once and count on them feeling appreciated for several months. It requires an ongoing investment.

While money is one motivator, it’s not the only one. Many employees are equally motivated by recognition, job perks, and time off. So before you reach for a pen and a check, consider if there are more effective tools up your sleeve.

  • Switch to a Four-Day Workweek

There’s always going to be another company that will outbid you for a talented employee. Someone else can always pay more. So if you’re only competing on salary, you’re never going to solve your turnover issue. You need something more. 

One of the best secret weapons in the industry is the four-day workweek. If you give your employees three-day weekends every week, they’re going to think twice about jumping ship and going to a company that operates on a standard five-day workweek (even if the pay is higher). 

  • Weed Out Toxic Employees

While easier said than done, do your best to weed out any toxic employees in your organization. Toxicity – which usually shows up as negativity – rubs off and can quickly pollute the rest of your workforce. When you notice employees exuding toxic behaviors, pull them aside and have a conversation. In many cases, the root cause of their negativity is a simple misunderstanding. 

Develop a Culture of Consistency

Consistency is a big part of building a successful business. As you grow your business, look for ways to create consistency within your team. You can’t keep every employee for decades, but it should be your goal.