It’s no secret high employee turnover hurts your bottom line. It is estimated that the average cost of a lost team member is 38 percent of the employee’s annual salary. Considering the average income in the US is $50,000 a year, that’s $19,000 per person!
Turnover is typically calculated by dividing the number of people who have left the organization by the number of people currently working for the company in a given period. For example: If seven people leave and there are currently 100 people in the organization, the turnover formula would be:
(7÷100) x 100= 7 percent turnover rate
When people leave, the ripple effect can be felt throughout the company. The costs of lost knowledge and recruiting/training new employees can quickly add up. Over the long term, turnover can really harm overall business success.
Companies cannot prevent people from leaving. It’s natural for people to seek change after a certain amount of time. However, there are ways to foster greater loyalty within your workforce.
While factors such as a lack of training, ineffective leadership, and a lack of purpose can all pave the way to the exit door, companies that invest more in their people can more successfully grow their businesses in the long run.
Below are a few common symptoms indicating a risk of high turnover, and advice on what to do about them:
1. Lack of Training
Employee retention starts when a new hire steps through the door. Onboarding is critical. Not only does it ensure that an employee has the necessary knowledge, skills, and behaviors to succeed on the job, but onboarding also helps new hires better assimilate into the company culture. When a company implements a successful onboarding program, it can experience 54 percent greater productivity and 50 percent greater retention.
However, retention does not end with onboarding. Employees need training opportunities even after they’ve been established in their roles. Otherwise, they’re at risk of leaving. In fact, 40 percent of employees who receive insufficient training leave their positions within a year of starting.
People want to be challenged. They want to learn and grow. They are looking for opportunities to develop, become better at their jobs, and advance in their careers. No one is interested in executing the same tasks year after year. If people feel their roles are not evolving, they’ll lose motivation.
In order to ensure people feel satisfied in their jobs, its important to provide training and opportunities for mobility within the organization. While an employee may be assigned to a certain role within the organization (such as digital marketing), they likely have certain traits and skills (such as creativity) that aren’t necessarily used within that role. People want to exercise their full range of skills at work, and they often feel the only way to do so is to change jobs.
This is why regular communication between managers and their direct reports matters. Employees should be able to share their career hopes and aspirations with managers. This enables managers to look for opportunities that allow employees to satisfy their needs and ambitions without leaving the company.
2. Ineffective Leadership
It is commonly accepted that people don’t leave their jobs — they leave their managers. In fact, “managers account for up to 70 percent of variance in [employee] engagement,” according to Gallup. Leaders who fail to create the right opportunities for their teams, communicate regularly, or show appreciation will experience high turnover rates.
On the other hand, Gallup also found that people who have regular meetings with their managers are three times as likely to be engaged. To be clear, these meetings are about more than tasks and to-do lists; they are meetings in which managers really invest in the success of their team members.
It is important to cultivate trust between managers and their direct reports. In a culture of trust, people are more likely to speak openly with their managers when they’re feeling demotivated. This gives managers the opportunity to intervene before it’s too late.
The right leader is able to inspire, motivate, and coach their workforce. They regularly seek new opportunities to help their reports reach their professional development goals. When a company has effective leaders, communication is daily and transparent. Everyone clearly understands the vision and goals of the organization and how they fit in.
To foster open communication and a culture of trust, managers can implement weekly or biweekly check-ins with their direct reports. This is an easy way to keep in touch with team members and ensure their needs are being met.
3. Lack of Purpose
Turnover can be infectious. When one person leaves, their colleagues may start to consider their own reasons for staying.
While compensation is important, people don’t just work for a salary. Along with wanting to develop and learn on the job, people also want to feel that what they’re doing has an impact. People want to contribute to something bigger than themselves. They need to feel connected to the company’s purpose and vision. Otherwise, why would they put in 110 percent?
Companies must start by ensuring all employees clearly understand what they are working toward. Then, they should foster strong cultures of recognition and community to reinforce that understanding. There are three ways to do this.
The first is recognizing employees’ work on an individual level. People aren’t required to go the extra mile, so when they do, it is important to show appreciation. One survey of 2,700 people found that 45 percent of them hadn’t been recognized at work in more than six months. Recognizing people’s contributions in a timely manner helps employees feel more connected to the company’s overarching goals and, ultimately, more engaged.
Another way to cultivate purpose is to remind people how their work contributes to the company’s objectives. For example, how does staying late to help a client fix their access problems contribute to the company’s brand image or customer satisfaction? How does the company’s work, and each individual’s work within the company, contribute to society? The answers to these sorts of questions should be clearly articulated and tied to specific projects and accomplishments.
Finally, identify the common values and traditions that tie everyone in your organization together. People want to feel like part of a larger community. Understand what makes your company a community, and be sure to spotlight and reinforce those things. That way, even when others leave, your employees will remain connected to your company and their coworkers.
One of the easiest ways to get an understanding of your organization’s health, including turnover rates, is through regular engagement surveys. These enable you to identify and address factors like lack of training, ineffective leadership, and lack of purpose before they lead to high employee turnover. Consider investing in people engagement tools in order to more easily survey your employees and analyze the data generated by those surveys.