The Bureau of Labor Statistics (BLS) delivered some interesting information this week, reporting that Americans who voluntarily quit their jobs hit a post-recession high (3.1 million) in December.
At the same time, Labor Department data said the U.S. economy added 151,000 in January (along with 280,000 jobs in November, and 262,000 in December) and that unemployment dipped below 5% (officially 4.9%) for the first time since 2006.
But the cost of employee turnover is prohibitively high. The Center for American Progress says the cost of replacing an employee ranges from 10-30% of their annual salary, depending on the industry and length of time on the job.
That’s bad news for employers who are not doing their best to retain talent. According to Tim Gates, senior regional vice president at Adecco Staffing USA, the core reason that employee turnover costs are rarely considered is simple: the expenses are passive and are therefore easily overlooked.
“Investing in finding and hiring the right person for the position in the first place is the best way to reduce employee turnover,” Gates says. “Employers must interview and vet candidates carefully to ensure they have the right skills for the position, but also that they fit in with the company’s culture.”
Offer the right brand
Gates explains that it’s currently a job seeker’s market and employers are competing with each other to attract and keep top talent. In order to even attract top candidates, Gates says employers should focus on building a compelling employment brand.
"They can do this by showcasing how their organization provides a culture that people want to be a part of, as well as giving them a sense of how they can add value to the company’s overall mission," he explains.
Offering the right compensation and benefits is critical. To properly reward employees and have them feel appreciated for their hard work, employers must work with human resources to get creative with benefits, flexible work schedules and bonus structures. Review these packages annually to align with trends in the marketplace.
“Sometimes managers overlook how important a positive work environment is for their employees," Gates says. "Awards, recognition and praise is a cost-effective way to maintain a happy, productive team.”
Career development is key
Career development is another aspect of talent retention, he says. It’s smart business to bolster employee engagement in their careers and provide them a challenging position with room to learn and grow. Also, hold regular check-ins and reviews to discuss their career paths, challenges and goals.
When it comes to unskilled workers across a variety of industries, Gates says avoiding turnover means providing a clear understanding of the job description early in the recruiting process. Specifically, this group of workers appreciates tips from their managers on ways to be more efficient in their jobs. In addition, they appreciate consistent recognition on a daily or weekly basis.
"Even a simple ‘Thank You’ makes a big impact," he says.
To avoid turnover among skilled and professional workers across various industries, it’s important to provide information beyond job descriptions.
"This group wants to see the big picture and how they fit into it," he says. "They appreciate information surrounding the company’s performance, culture and promotion opportunities."
Another idea for employers is to use all available resources. For example, Adecco offers an online tool, called the Cost of Turnover Calculator to help employers evaluate how much employee turnover can cost them.
In the end, the best way to ensure that turnover costs are minimized is to hire carefully and build a “true retention” culture.
"By striving to maintain the employees you have, you can avoid employee turnover expenses while increasing the quality of the products and services you provide to your customers," Gates says.
