Employee turnover is one of the greatest challenges that companies face as it affects both productivity and profitability. Recent events have caused unprecedented numbers of employees to voluntarily leave their jobs and seek new job opportunities. As employees are instrumental to the success of an organization, this elevated level of employee turnover is increasing competition for good employees, and businesses are having to work hard to hold onto their existing employees.
As organizations face increasing labor costs, these recent employee turnover trends are compelling many businesses to reevaluate their current employee retention strategies. Don’t wait until your valued employees leave to begin taking steps to reduce employee turnover. Mitigate risk and position your company for success by identifying what causes employee turnover and learning what steps you can take to improve employee retention.
What Causes Employee Turnover and How to Prevent it
The U.S. Bureau of Labor Statistics reported that just in November of 2021, 4.5 million Americans left their jobs. Having enough employees is crucial for a company to be able to adequately serve customers as well as meet business objectives. Not only do businesses need employees, but they need the right employees in the right roles.
According to Gallup, replacing an individual employee can cost a company anywhere between one-half to two times an employee’s annual salary, depending on the training, skill, or education level required for a particular job. These high turnover costs typically include:
- Cost of hiring, which includes advertising, interviewing, screening, onboarding, and training
- Cost of lost productivity as new employees are often slower, more prone to making mistakes, and will take time to reach the same productivity level as the existing employee.
Retaining employees is a key component for business success. While employees voluntarily leave their jobs for a multitude of reasons, there are three common causes that all leaders should be aware of. In addition to knowing why employees leave and what that turnover may be costing your business, it’s also significant to realize that much employee turnover is preventable through small changes in development opportunities, company culture improvements, and recognition efforts.
Career Development Opportunities
Employees need opportunities for continued learning as well as clear paths for career advancement. They place such a high value on opportunities for growth that a lack of opportunities is a common driver of employee turnover. Career advancement is of particular importance to mid-career employees where there has been the greatest increase in resignation rates.
Investing in your employees through training, development, and growth opportunities is an effective way to reduce turnover and boost employee engagement. Growth opportunities aren’t limited to only promotions. While internal hiring should be a priority, professional development can also include continuing education, increased responsibilities, or participating in professional organizations. Managers should also collaborate with their employees, working together to create a development plan that takes into consideration how an employee wants to grow in their respective position.
Company Culture
Foundational to the employee experience, company culture plays a key role in determining how much employees enjoy their job. More than ever employees want the companies they work for to prioritize their mental and physical health as well as provide flexible work schedules. Research indicates that approximately 15% of employees are actively disengaged, and among these disengaged employees, almost three-quarters of them are actively seeking new employment. As managers are central to creating engaged employees, certain managerial behaviors, such as being inconsistent or using pressure tactics, can lead to greater employee turnover.
Improving company culture, and reducing employee turnover, often begins with hiring the right employees. Company culture sets the tone for everything an organization does as it incorporates everything from communication styles to leadership behaviors. Hiring managers need to be clear with candidates regarding the workplace culture so that new employees know what to expect.
Recognition
Feedback from managers and colleagues is impactful, and failing to recognize employees can make them feel unappreciated and undervalued. A lack of recognition is a significant contributor to employee turnover.
Rewards and recognition are powerful tools for mitigating employee turnover. Employees who feel valued and appreciated are more motivated to continue performing well in their jobs. Employee recognition could be tied to performance, embodying company values, or an appreciation for meeting a specific employment milestone. At Safeguard, we know that recognition and rewards drive employee engagement and business success.
Business leaders who understand what motivates their employees and provides job satisfaction will be more successful in their ability to reduce employee turnover. Your Safeguard Advisor can help you with personalized solutions that fit your business. Rely on Safeguard for the right products, services, and ideas to help you maintain a competitive advantage. Call 855.778.3124 to get started.
Key Takeaways
- Unprecedented numbers of employees are voluntarily leaving their jobs and seeking new job opportunities.
- Employee turnover affects both productivity and profitability.
- Employee turnover can be preventable through changes in development opportunities, company culture improvements, and recognition efforts.
- Rely on Safeguard for personalized solutions that fit your unique business goals.