What is The Real Cost of Employee Turnover?

Employee turnover is never desirable, but, unfortunately, it's becoming more and more prevalent. The latest studies suggest that the average employee tenure is about four and a half years. This high turnover rate costs businesses huge sums of money every year.

What can your company do to combat this alarming trend? In this blog post, you'll learn three top ways to better retain your talent. Let's dive in!

Employee Turnover: A Definition

Employee turnover refers to any occurance where an employer and an employee end their working relationship. There are a number of reasons this may happen such as an employee discharge (i.e. a firing), a voluntary termination, or layoffs.

If, for any reason, a team member leaves your company and must be replaced by someone else, it can be classified as employee turnover.

The Facts Regarding Employee Turnover

A company's employees are its most valuable asset and losing team members is never a desirable circumstance. That's why some of the following facts and statistics are so alarming.

• 2.5 million Americans quit their jobs every month. (Source: Celayix Software)

• 80% of either actively looking for a new job or are open to having a new one. (Source: Ajilon)

• Females are more likely to leave for having a bad manager compared to males — 34% vs. 25%. (Source: Ajilon)

• Men are more likely to leave for being underpaid compared to women — 39% vs. 33%. (Source: Ajilon)

• 46% of HR leaders say retention is their greatest concern. (Source: OfficeVibe)

• Almost 25% of millennials have worked for five different employers. (Source: O.C. Tanner)

• 86% of millennials would leave their current position if career development and training were not offered. (Source: Bridge)

• Employee turnover costs anywhere from 16% to 213% of annual salary depending on position. (Source: PeopleKeep)

• Proper onboarding can increase employee retention by 25% (Source: Clear Company)

• Companies with a standardized onboarding process experience 50% greater productivity from new hires. (Source: SHRM)

Minimizing Employee Turnover

The numbers don't lie; employee turnover is prevalent and often expensive. How can your company minimize staff churn and avoid paying these costs? We have a few ideas:

1. Hire Better

Employee retention starts with hiring the right team members. You obviously need to find talented individuals to fill open positions. An employee that doesn't have the skills required to perform their work will have to be replaced.

But you also need to hire for company fit and culture. Top talent won't benefit your company if they're constantly making demands, have a poor work ethic, constantly put a damper on the office environment, or have other negative qualities.

Finally, take into account a potential hire's career goals. Will they be happy at your company for longer than a few years? Will your organization be able to help them meet their personal objectives?

One of the absolute best ways to increase employee retention during the early phases of your company's relationship with a team member is through proper onboarding. Does your organization have a standard process for bringing new hires up to speed?

While nothing is certain, a software solution like HR Cloud's Onboard can be the difference between retaining your company's talent and experiencing high turnover rates. When the right people are hired and onboarded successfully, your company will thrive.

2. Treat Employees Well

We said it earlier, we'll say it again; your company's employees are its most valuable asset. You need to treat them well! That means offering competitive salaries and benefits packages, rewarding high quality work, and allowing employees to have a manageable work/life balance.

Team members that feel underpaid, underappreciated, and overworked won't stick around for long — not surprising. But did you also know that your staff wants to feel invested in their work too?

Most modern workers aren't looking to simply check in and out. From onboarding onwards, they want to feel engaged and like they are a part of something bigger than just themselves. Make them feel this way and they'll have a difficult time leaving your company.

3. Offer Flexibility

Finally, the more flexibility you can offer your workers the more satisfied they'll be. Companies with happy teams experience much smaller employee turnover rates. What can you do to offer a more flexible environment?

Some businesses offer remote work options and unlimited vacation days. Others offer perks like catered lunches and free gym memberships that promote life flexibility as well.

Every company is different and what they can offer their team in regard to flexibility will vary. But to retain top talent and reduce employee turnover, do what you can to make your working environment more flexible. Any small costs or inconveniences will be made up for in boosted employee morale and company culture.

Wrapping Up

While employee turnover rates are higher than they were a few years ago, the tactics outlined in this blog post will help you keep your talent from abandoning ship. It all starts in the hiring phase. Be sure to only bring on new team members who have the skill and fit the culture.

Once a new employee has been hired, treat them right! Offer competitive salaries and benefits packages. Engage them in their work and make them feel like their role has meaning. When possible, offer them flexible working environments.

The more you're able to give your team, the more likely they'll be to stick with you for the long haul.