How To Reduce Expensive Employee Turnover In A Competitive Industry
Employee turnover is an important and expensive, and often overlooked, aspect of running a business. Especially in competitive industries like tech and manufacturing.. It is defined as the rate at which employees leave an organization and new employees are recruited, interviewed, and selected.
Employee turnover is costly both in terms of recruiting, interviewing, and selecting new employees, and onboarding, as well as the more intangible costs of losing institutional knowledge, decreased productivity, and morale. We looked at our own costs associated with onboarding a new employee and found that a side by side comparison showed that the new employee was 50% less productive than the existing employee. Every time there’s turnover there’s cost – even in the best scenarios.
In this video, Brad Weber of InspiringApps shares his unique approach to keeping employees happy and turnover low.
Factors That Contribute to Employee Turnover
While many factors contribute to employee turnover, McKinsey just surveyed why people left in 2022. Of the top five reasons, four had to do with a lack of focus on the people and HR agenda. The most common include lack of career advancement, uninspiring leaders, lack of meaningful work, and burnout. In general, poor job satisfaction, poor employee-employer relationship, uncompetitive wages, and a lack of career advancement opportunities have been trends for years, too. Poor job satisfaction can stem from various factors, such as not feeling adequately compensated or respected in the workplace, inadequate resources or tools necessary to do the job, or a lack of purpose in the local team.
Poor employee-employer relationships often lead to a lack of trust and communication, making it difficult to build a successful working relationship. This can be due to overly strict or unreasonable policies, a lack of recognition or appreciation, or a power dynamic between the parties that is difficult to overcome. Uncompetitive wages can be a major factor of employee turnover, as it reflects a company’s commitment to its workforce, as well as employees’ ability to provide for their families in the case of single-income households. Lastly, a lack of career advancement opportunities can create a feeling of stagnation and lack of purpose, leading to employees feeling like their skills are not being used to their fullest potential.
As evidenced, employee turnover is costly for any organization, as there is a cost for training and onboarding new hires, as well as the intangible costs of lost institutional knowledge, decreased productivity, and morale. However, there are certain steps that employers can take to reduce employee turnover and create a more productive and successful working environment. These steps include offering a career path, competitive wages, better benefits and health plans, building more meaning into the work, and fostering a positive work environment where employees feel appreciated, valued, and respected.
Employee turnover is a major issue in the modern workplace and can have serious consequences for any organization that impact more than the financials. Understanding the factors contributing to employee turnover and implementing steps to reduce employee turnover, like providing competitive wages, offering better benefits, and fostering a positive workplace environment, are essential to decreasing costly turnover.
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