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Why Curbing Employee Turnover = Bottom Line Impact

Retention is top of mind right now amidst a year of hiring difficulty and high employee turnover. The pandemic shook things up. As the economy re-opened, businesses opened new jobs fast in order to keep up with consumer demand. At the same time, many workers in industries like hospitality, retail, health care began to reevaluate their careers and pursue many of the newfound opportunities that were out there.

This created one of the biggest waves of mass resignation we’ve seen in our lifetimes. In fact, experts estimated that 47 million people quit their jobs in 2021. And 4.5 million workers quit their jobs in March 2022 alone. And while some experts may be predicting that the resignation wave is slowing down somewhat, others estimate that about 40% of workers are still thinking about leaving their jobs.

The Great Resignation did (and still is doing) more than just frustrate your recruiters and hiring managers. High turnover can have monumental effects on your business’s bottom line. 

The relationship between retention and your bottom line

The most obvious cost of high employee turnover is the basic expenses associated with replacing an employee. According to SHRM, the recruiting and training costs required to replace someone add up to 6-9 months of that employee’s salary. For an employee making $60,000 per year, that comes out to $30,000-$45,000.

But there are less measurable costs to high employee turnover — namely on overall productivity and morale at the company. When people leave, someone else has to pick up the work. Over time, this erodes your existing employees’ happiness and wellbeing at work. They feel overworked, burnt out, and more likely to eventually leave themselves. And if they stay, they’re likely less engaged and productive.

Retention is hard though. Over the last year we’ve seen a real shift in what employees are willing to accept in a work setting. People want more from their employers and given that there are still nearly 2 open jobs for every job seeker, they have the leverage to go out and find it. So getting people to stay requires a real shift in how you design jobs and what you offer employees.

5 ways to reduce employee turnover

The good news? You don’t necessarily have to hike pay to get people to stick around. While it’s always important for pay to be within an acceptable range, the highest offer isn’t always going to win out. In fact, a recent Hireology survey of more than 6,000 recent job seekers found that 84% of workers will stay at their jobs even if given a higher paying offer so long as their other needs are met. What exactly are those needs? Read on to find out.

Good onboarding

First impressions matter. An employee’s onboarding experience can absolutely make or break their perception of you as an employer. And what most employers overlook is that onboarding starts well before an employee’s first day. As soon as someone signs an offer letter, send them a welcome email along with company SWAG like branding coffee mugs or sweatshirts to show that you care and to get them invested in the company. You’ll also want to send over all of the necessary paperwork right away so they can get it all done, digitally, well before they start. That way when they do show up for day one you can focus more on setting them up for success with relationship building and job training.

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Growth opportunities

In order to stick around, employees need to see a future with you. That means they need to know that there are opportunities they can work toward that give them different work, more responsibility, higher pay, etc. That means at a bare minimum building out career paths for every type of employee — yes, even hourly workers like servers and bartenders or automotive technicians. Additionally, make sure you offer structured training programs that allow people to build new skills so that they can work toward those positions you’ve built out. And make it known that you welcome folks to move departments. At a hotel, for example, you might offer classes and other training for folks to move into property management roles. 

Regular recognition

Regular recognition can go a long way in showing employees that they are valued and that their work makes an impact on the company. Without it, people can feel burnt out, disengaged, and disillusioned with their work over time. 

Effective recognition starts at the top though. You can’t just rely on middle management to give employees the positive feedback they deserve. You have to lead by example. Take 10 minutes every day to identify someone who went above and beyond or excelled in their role that day and send them a shoutout either privately or publicly via email or all-company meetings. When giving feedback, always remember that good feedback is:

  • Timely: Always give positive recognition on behavior or performances right away, don’t wait weeks or months
  • Frequent: Make positive feedback and recognition a regular part of your daily or weekly routine
  • Specific: Clearly describe what the employee did well and why it was beneficial to the company
  • Visible: Many employees are motivated by public recognition 
  • Inclusive: Make sure your feedback spans across departments and levels
  • Values based: Tie your feedback to your company’s values and mission — this gives employees a framework for what great work looks like

Flexibility

The biggest impact the pandemic has had on the workplace is in bringing flexibility to the forefront. We learned that businesses can operate — and in many cases thrive — when employees have more control over when and where they work. It’s important to remember that flexibility does not always mean remote work. For most, it simply means more autonomy and trust from their employers. For example, for roles like caregivers or housekeepers, the work needs to be done in person. However, you can offer flexibility by allowing employees to choose their own hours, providing mid-shift flexibility for appointments, or offering additional no questions asked PTO.

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Company culture and meaningful work

And finally, we all spend so much of our lives at work that we want it to be an environment we enjoy and we want the work to be meaningful. Of course many could argue that not all work is meaningful on face value. But there are ways to ensure that your team feels like they’re making a difference in what they do. Perhaps you tie everyone’s work to your overall company mission so everyone can see how what they do — no matter how small — impacts the business and the customer. Or you might give everyone goals each week or quarter to give people something to work toward and to show meaningful progress. On top of this, defining a set of core values that influence everything you do at your company can not only help make the work feel meaningful but it is the foundation to creating a company culture that people are loyal to.

Employee turnover has always been a concern for business leaders, but in recent years it has made its way to the forefront. At a time when work is largely being redefined and the number of open roles far outweighs the number of active job seekers, employees have the upper hand. They can and will leave if you don’t offer them the opportunities and working environment that they want. Thankfully, there are things you can do to keep employees around other than simply hiking pay. Try to implement one or two of these today and your bottom line will thank you for it.

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