$8,606 – that’s the cost of turnover for the average employee according to a study by human resource management expert Dr. Wayne Cascio. His study details the price tags on separation, replacement and training of the new employee. Recently, many experts have begun to suggest the expense of replacing staff can be as costly as three times the original employee’s salary in lost revenue and training time. Want to find out how much turnover is costing you?
Whatever your specific results, one thing is certain: turnover is not good for any business’ budget. As many as 50 percent of all employees leave a job within two years and 25 percent leave within the first six months. This is especially problematic for small businesses where there isn’t a large workforce to mitigate some of the losses caused by turnover. Employee retention challenges are numerous and it’s important to make sure employees are happy and loyal. What challenges do you face as an employer?
There are five main reasons that contribute to employee turnover. Other challenges certainly exist but most can be grouped under these categories:
- Uncomfortable environment or culture: This issue can result from the temperature of the office to working in an oppressive corporate setting where creative ideas are undermined.
- Undervalued/unappreciated: If your employees feel like they aren’t being engaged or appreciated, they may begin to question their worth in the company and begin seeking a relationship with a company they feel values their contributions.
- Lack of support and trust: Generally, employees aspire to do a good job and they require the support of management to do so. Employees need to trust their managers to perform well. If employees aren’t getting the support they need, it can lead to frustrations which will build until the employee decides to move on.
- Inability to grow: Growth isn’t necessarily limited to promotion. Almost everyone is driven by the desire to be better tomorrow than they are today.
- Inadequate compensation: Everyone wants to be compensated at levels they believe are fair. However, money isn’t always the first reason why an employee stays with or leaves a company. Employees value appreciation, being challenged, growing and being a part of interesting projects over the salary amount.
The role of the human resources department has changed drastically over the years. Initially, it was a given that the job was to ensure compliance with hiring and employment laws, payroll, recordkeeping and to oversee hiring practices and procedures. Human resources have since evolved to include retention, homeland security compliance, conflict resolution, wellness, training and compensation.
It’s important to have a strong human resources department with the time and means to provide excellence to your employees. The need for streamlined processes should be at the forefront of every managerial mind. Software and consulting services are available to handle indirect management processes, such as payroll services, time, attendance and personnel tracking. With your human resources department freed up to focus on employee engagement, you can begin to implement changes that will improve employee retention. Consider the following:
- Training and mentoring: Training can help employees reach their goals and ensure they have a solid understand of their job responsibilities. Mentoring programs integrated with the employees’ goals in mind and coupled with training provides a mechanism for developing strong relationships between employees and management.
- Culture shift: As a company, you should establish a core set of values — honesty, reliability, excellence, attitude, respect and teamwork — to focus on and clarify your mission with. Support your mission with training, rewards and compensation and frequent discussion. If you’re focusing on reliability, implement a ‘my word is my bond’ philosophy and enforce it with well-defined deadlines and solid communication. Not only will you develop increased reliability but the boost your employees will receive from knowing you trust them will greatly benefit your retention efforts.
- Innovative compensation: Show appreciation for your employees through innovative compensation and benefits. Competitive salaries, profit sharing, bonus programs, pensions, wellness plans, vacation time and tuition reimbursement are pretty standard ways to earn your employees’ loyalty. However, all employees are different and the rewards given must be meaningful in order to create beneficial organization buy-in and positive perception. Most importantly, if you promise a reward, follow through with it.
No company wants to suffer the loss of a great employee. Having a strong human resources department is a great place to foster employee retention. Your employees need to feel valued — find the rewards that best serve them.