There are few things more catastrophic to a small business owner than high employee turnover. It’s expensive, frustrating, and detrimental to the morale of the company. And while you can’t prevent every employee from leaving, there are certain steps you can proactively take to improve retention from the ground up.
The True Cost of Employee Turnover
High employee turnover is something many businesses struggle through, and it’s particularly costly on many fronts.
Financially, the data says it costs six to nine months of an employee’s salary, on average, to replace them. So if an employee is making $60,000 annually, you can expect to spend roughly $30,000 to $45,000 in recruiting, training, and benefits by the time you onboard your next hire.
And that’s just the dollars and cents directly attached to the employee. You also have to account for the loss in productivity. Then there’s the impact on employee morale and the friction that’s created inside the company culture.
“One of the reasons the real cost of employee turnover is such a mystery is that most organizations don’t have systems in place to track exit costs, including recruiting, interviewing, hiring, orientation and training, lost productivity, potential customer dissatisfaction, reduced or lost business, administrative costs, and lost expertise,” HR expert Chase Charaba writes.
If you want to improve your company’s bottom line and strengthen the culture at the same time, you should put more emphasis on your employee retention rate. It’s one of the most productive things you can do.
3 Tips for Higher Employee Retention Rates
Want to retain more of your employees and reduce costly turnover? Here are several tips and ideas:
Offer Comprehensive Benefits Packages
Benefits are one of the best ways to attract and retain talent. According to a survey by Glassdoor, 57 percent of respondents say benefits and perks are one of their top considerations before accepting a job.
Here are some of the most attractive ones:
- Health Insurance: This is often considered the most important benefit. Comprehensive health coverage can provide peace of mind for employees, making them feel more secure in their job.
- Retirement Plans: Offering a solid retirement plan, such as a 401(k) with company matching, can encourage employees to stay with the company long-term.
- Paid Time Off: Generous PTO policies allow employees to rest and recharge, leading to increased productivity and job satisfaction in the long run.
- Professional Development Opportunities: Offering benefits like tuition reimbursement or professional development stipends can show employees that you’re invested in their long-term growth and success.
- Wellness Programs: These might include gym memberships, mental health resources, or other wellness initiatives. These programs demonstrate a company’s commitment to its employees’ overall well-being.
Invest in Professional Development
When an employee sees a very clear pathway for advancement within your organization, they’re much more likely to stick around and invest in it than to seek opportunities outside of the four walls of your company.
Consider offering in-house training or workshops to help employees learn new skills or improve existing ones. This could also involve bringing in external trainers or sending employees to conferences or workshops.
Tuition reimbursement is another option. Some companies offer to cover all or part of the tuition for courses or degrees that will help employees in their current roles or prepare them for advancement within the company.
Introduce Flexible Work Options
Do you know what today’s employees want more often than not? Flexibility. They want to be able to work on their own terms. (Within reasonable limits, of course.)
Flexible working arrangements can be a secret weapon that puts your organization way ahead of your peers (in terms of being an attractive place for people to work). This might include any combination of:
- Remote work: The ability to choose whether to work in the office, from home, from a coffee shop, or anywhere else.
- Flexible schedules: Some people are night owls. Others are morning birds. Rather than requiring everyone to work 9-to-5, why not allow people to pick the eight hours they work between 6 a.m. and 8 p.m.?
- Compressed workweeks: Some people would rather put in extra hours at the front of the week to get extra time off at the back end of the week. This is why four-day workweeks are becoming more popular.
Set Your Business Up for Success
There are dozens of levers you can manipulate to help your business grow in a more profitable direction. However, don’t forget about the importance of employee retention. It might not be as sexy of a topic as other things, like digital marketing campaigns and sales strategies, but reducing turnover stabilizes your organization and helps it scale.
Make sure you’re giving it the focus it deserves!