In October 2020, the number of employee separations rose to 5.1 million, says the U.S. Bureau of Labor Statistics. Of that amount, 3.1 million were due to employees quitting their jobs. That’s a massive and expensive problem for employers.
The cost of replacing an employee ranges from 33% to 200% of the departing employee’s salary, according to the Work Institute. This includes direct and indirect turnover costs, such as those associated with recruiting, replacement, training, absenteeism, and lost productivity.
In short, high turnover can impede organizational growth.
Here are 6 ways to keep turnover in check.
1. Determine Why Your Employees Leave
To reduce high turnover, it helps to know the root cause.
Start by tracking rates of voluntary and involuntary separations in your organization, and then try to uncover the reasons behind them.
Voluntary separation happens when the employee chooses to leave the company, such as due to retirement, going back to school, finding another job, relocating to another state, or health or family reasons.
Involuntary separation occurs when the company decides to let an employee go, such as because of unsatisfactory work, inappropriate behavior, layoff, or downsizing.
While some of these factors may be out of your control, others might not be. The goal is to pinpoint and rectify those within your control.
2. Reduce Employee Intention to Quit
The employee quitting may seem like it came out of nowhere, but the intention was probably brewing for some time. The signs were likely there; you just missed them.
Often, intention to quit stems from job dissatisfaction and workplace stressors, such as conflict with coworkers or feeling overworked. Or, it could be personal in nature, such as financial or health problems.
Always look out for intention-to-quit signs (e.g., the employee becoming disengaged at work), so you can promptly take preventative measures.
3. Hire to Retain
Studies show that nearly 30% of new hires quit within their first 90 days on the job. Most said they left because the day-to-day role of the job wasn’t what they expected. Others said it was because they encountered a bad experience on the job, had issues with the company’s culture, or changed their minds due to getting a better offer afterward.
To increase the odds of selecting the right candidate and keeping them on board:
- Create a well-written job description that includes your expectations for the role.
- Ask the candidate about their aspirations and goals, such as what they hope to achieve in the new position.
- Invite the candidate to share any questions they might have.
- Explain the terms of employment, including company policies and procedures.
- Make sure all terms are mutually-agreed upon, before hiring the candidate.
- Ensure the candidate is the most fitting person for the job.
- Go over the job description with the new hire.
- Give the new hire everything they need to carry out their responsibilities.
- Schedule regular check-ins with the new hire.
Also, verify that your onboarding program is built to retain.
4. Deliver a Rewarding Pay Experience
Employees are placing a higher value on voluntary benefits, professional development, flexible work schedules, office perks, and other non-monetary incentives. However, pay continues to reign supreme.
As noted in Ceridian’s Pay Experience Report, “An employee’s experience with pay directly impacts how they feel about working for a company.”
There’s arguably no greater incentive for employees to flee for greener pastures than issues with pay. In fact, Ceridian’s research found that pay is the top reason for job unhappiness. Another survey found that 49% of employees will start looking for a new job after experiencing only 2 problems with their paychecks.
The bottom line is that financial stress negatively impacts job performance, which in turn fuels employee turnover. So, it behooves employers to deliver positive pay experiences.
Elements of a positive pay experience:
- Satisfactory pay, based on industry, location, experience, skills, education, performance, and years of service
- Accurate and timely paychecks
- Reasonable pay frequency, so employees do not have to wait too long to be paid
- Multiple payment methods, such as paper checks and direct deposit
- Pay reviews on a consistent basis
- Easy access to pay information, such as via mobile-friendly self-service portal
- Proactive pay communication policies
- Financial wellness initiatives, including information on financial assistance
5. Avoid Hiring Bad Bosses
A Robert Half survey reveals that half of employees have quit their jobs because of a bad boss.
Classic traits of a bad boss:
- Poor communication skills
- Doesn’t listen
- Lacks empathy
- Takes credit for others’ work
- Not accountable; passes the blame
- Makes unreasonable demands
- Overly critical
- Doesn’t praise or reward hard work
- Displays favoritism
- Emotionally, verbally, or physically abusive
- Very indecisive
- Lacks focus
- Unprofessional; does not lead by example
- Acutely resistant to change
While you can provide leadership training, the simplest way to avoid bad bosses is to not hire them in the first place.
6. Explore Alternatives to Layoffs
During economic downturns, an employer may have no choice but to lay off certain workers. However, layoffs inevitably spike your turnover rate, plus may cause you to lose valuable employees. You may have a hard time getting these employees to return when or if business picks up.
Moreover, a layoff might induce panic among employees who are supposed to be staying, potentially causing them to jump ship.
Before you lay off someone, see if there are other options, such as:
- Implementing a hiring freeze for non-essential roles
- Providing temporary leave of absence, or furlough
- Joining your state’s workshare program
- Reducing work hours
- Modifying pay
- Offering voluntary early retirement
Be sure to weigh the pros, cons, legalities, and feasibility of these alternatives before adopting them.
Start improving retention today by giving your employees a list of helplines to call for financial relief.
Grace Ferguson is a business writer and blogger covering payroll, employee benefits, and human resources. She has vast experience serving as a payroll and benefits administrator for large and small businesses.