High employee turnover can have a demoralizing impact on your workforce and hurt your bottom line. With a high employee turnover rate, your organization will continually be in a cycle of replacing employees.
That’s why it’s important to regularly measure employee turnover rates and find ways to reduce employee turnover. With a clearer understanding as to why employees are leaving, you’ll be able to introduce measures to turn the tide. These initiatives can transform your company culture and reverse a high turnover rate.
In this post, we’ll provide:
- reasons why it’s important to reduce employee turnover, and
- 10 tips for reducing employee turnover.
Why is it important to reduce employee turnover?
Calculating and tracking employee turnover should be a part of your ongoing practices. Understanding the full cost of employee turnover helps to quantify the impact on your organization. The costs are likely considerable, including increased hiring, onboarding, training, and operational costs.
When considering changes to the organization, be mindful of the considerable benefits to lower employee turnover and higher employee retention, including:
- Increased productivity. When teams are familiar with the work and the procedures, operations are more productive at every stage.
- Efficient training. Teams that are experienced know how to operate software, machines, and tools. With less turnover, highly experienced teams can bring new colleagues up to speed quickly.
- Improved employee engagement and morale. Employee engagement is a measure of how connected employees are to each other and your organization. With low turnover, employees can develop stronger relationships and bonds with each other. Deeper connections benefit them and the company
- Better products and services. When your team knows your products and services well, there are better outcomes. Experienced employees create deliverables that work and are reliable. There’s less rework and better products and services each time
- Satisfied customers. When employees remain, they forge relationships with your customers. Your employees develop deeper connections to customers and understand their needs and pain points.
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10 effective ways to reduce employee turnover
Below are 10 strategies to consider as part of your employee turnover focus.
1. Promote work-life balance across your organization
Employees today are feeling a greater need to balance work and home considerations. The pandemic shifted the way people work and employees today prioritize time away from work more than ever.
Work-life balance considerations are an important way to show people you value their contributions and respect their time out of the office (or away from their desks). Here are three ways to enhance work-life balance in the workplace and help employees.
- Offer flexible work schedules. Today, many employees need to work—and not work—during certain hours. By allowing employees to determine when they start and stop work, you can accommodate their needs, such as child care.
- Allow remote work. The pandemic shifted millions of employees to at-home offices. Now, employees want and expect remote or hybrid options as a way to reduce commuting time and provide work-life balance. Invest in technologies that enable remote employees to connect and access the platforms they need.
- Separate vacation and sick time tracking. Employers often provide paid time off (PTO) which is a catch-all for time away from work; this includes sick time, vacation time and any other personal needs to be away. By separating sick and vacation time tracking, you’ll allow employees who are ill to keep their vacation days, improving their overall well-being.
2. Recognize and reward high-achieving employees
Employee recognition is a compelling way to demonstrate appreciation for your teams. There are numerous employee recognition programs you can use (or just break out a spreadsheet and do it the old-fashioned way) but you should be sure to publicly celebrate hard work and the impact that work has on the organization.
Employees who feel valued and appreciated for their work are more likely to stay with the organization. Employee recognition also helps boost employee morale and the employee experience.
There are many ways to provide employee recognition. Today, one popular option is to use peer-to-peer recognition, where employees recognize their co-workers.
Typically using a cloud-based platform, these solutions allow employees to call out great work and provide points to their colleagues. Points can be redeemed for gift cards, branded merchandise, or items from various online retailers.
You may want to try Employee Appreciation Days, which are formal programs that call out employee excellence. They are occasions where employers can bestow employee awards, recognize teams, or honor milestone anniversaries.
Recognition can also be very informal, such as kudos for top performers in company newsletters, team lunches, or appreciation letters from leaders.
3. Provide the right resources
If your company is facing high employee turnover, burnout may be the cause. If employees are feeling stretched at work, this can lead to overwhelm and resentment.
That sentiment can become palpable when employees leave. If remaining team members are expected to make up the work of their departed colleagues, ill will sets in quickly. Burnout and exhaustion can become a burden for those employees, leading to higher rates of workplace accidents and absenteeism, and in turn, employee turnover.
Employers can address these issues by providing the right resources for their employees. That expectation starts with having the right workforce in place to complete the work that’s needed. Recruitment must be a priority, as should addressing high employee turnover rates. While recruitment is taking place, consider hiring contractors to pick up the slack.
In addition, it’s important to invest in tools and technology that will automate menial work and enable employees to focus on critical tasks.
4. Sponsor team-building activities
One way to build a positive company culture is to create multiple team-building activities each year. Team-building activities are a way to escape the grind of day-to-day work and forge new connections with teammates. They can also be used to develop skills such as communication, problem-solving, creativity, and teamwork while having fun.
Team-building activities can be done indoors, outdoors, or even with virtual or hybrid teams. They can be incorporated into existing team meetings or become a part of team retreats and company-wide gatherings; you can try a company scavenger hunt or trivia contest.
Want a quick and simple way to build connections? Before kicking off meetings, have managers pose icebreaker questions. Or, be sure to host regular get-togethers with no business agenda—there’s also real value in activities that are simply social, such as organizing a team lunch or holiday celebration.
Finding the right team-building activities can take some planning and trial and error. You want activities that employees will engage with. Getting employee feedback on potential activities and completed ones alike helps you improve the outcomes.
5. Encourage professional development
Professional development is essential for any well-functioning workplace. Offering employees the chance to learn new skills and network will benefit your team and your company as a whole.
Professional development opportunities can take on many forms. At the most basic level, it’s about offering free training and development courses on concepts, skills, products, and tools. These programs can be delivered live via onsite trainers or via webinars and other online programs.
Employers can also encourage employees to attend local Chamber of Commerce events and forge community ties.
You may also choose to invest in opportunities for employees to attend conferences and encourage them to get involved with industry organizations as volunteers or presenters. These activities are a great way to gain new perspectives and learn new ideas.
Attendance at trade shows and conventions is another way to connect with others in the industry. In addition, these activities can lead to acquired knowledge and connections with current or potential clients and customers.
Professional development can also mean supporting employees as they pursue their education, be it GED, college diplomas, or more advanced degrees. These investments in employees are some of the most powerful ways to show employees how valued they are.
6. Involve managers
Managers play a critical role in the connections employers have with their employees. There’s an old maxim that employees don’t leave bad jobs, they leave bad bosses—and it’s true: managers can make or break an employee’s experience.
Conversely, when your managers are deeply invested in employee retention, they can have a profound effect on your turnover rate.
Employees often give signs and signals that they are looking to leave well before they actually do. A recent Gallup analysis shows that 43 percent of employees spoke to a colleague about leaving; 36 percent spent one to three months looking before giving notice.
That’s where managers can play a role, communicating clearly with top talent and identifying employees who may be at risk.
Managers can also be trained to be empathetic listeners, understanding problems and looking for solutions and mentoring. While managers may not be able to reduce the workload, they can prioritize what work needs to be done first.
Consider empowering managers with the authority (and the budget) to implement many of the actions covered in this post. For example, managers should be able to provide schedule flexibility, recognize employee work, and create team-building experiences.
7. Evaluate your hiring and onboarding processes
Want to make changes at your organization? The best place to start is with regular evaluations of your company’s hiring and onboarding processes; these play a surprisingly significant role in employee engagement and how valued employees feel.
Hiring practices can inadvertently attract or repel certain candidates. The way jobs are listed, expectations expressed, and interviews are conducted, can lead to important results. A new hire who feels they were not given an accurate understanding of the organization or their role will likely not last very long.
Today, employees want to feel as though they are part of an organization that is making an impact. Your job descriptions, interviews, and hiring practices should detail and explain company’s mission, vision, and values. This will help you attract the right employees.
Candidates will be more apt to accept offers when they can understand the impact the organization has on a larger community or population; today, job-seekers want to work for companies that play meaningful roles in communities or society.
Similarly, the onboarding process and training programs set the tone for how new employees experience the organization. Those first few days, weeks, and months can help employees feel welcome and a valued part of the team. On the other hand, if done poorly, they can drive new employees to look elsewhere.
8. Review compensation and benefits
Salary is a major reason why employees stay or leave. The wages your organization offers should be aligned with (or more competitive than) competing companies in the region and in the industry. Otherwise, you will constantly be battling your competitors for talent.
Consider the benefits you offer, as well. Are your benefits those that employees truly want? Assessing usage and assessing employee feedback on benefits is a critical step to reducing turnover.
Hiring an outside partner to analyze aspects of your compensation and benefits package is a smart way to improve retention. These partners have insights into the industry and region, and they can evaluate how competitive your salary and wage ranges are for various job categories.
9. Invest in training programs and career pathing
Employees are far more likely to stay with an organization if they see a career path. They want to see the opportunities to progress in their careers within their organization without having to “start over” elsewhere.
Employers should develop multiple career paths with progressive responsibilities and opportunities available. With clearly defined career ladders, employees can understand what they need to do to progress. These pathways should spell out the experiences and skills required for the next step.
Developing the pathways is just the first step. Next, employers have to provide the career development opportunities and experiences required to progress. If the pathways are a paper tiger, employees will become discouraged and look to leave.
Don’t forget that your organization needs to commit to promoting from within, as well. When employees see others work hard and be recognized with promotions, it’s a visible, compelling motivator to stay. If you’re only hiring from outside the company, this can lead to resentment and disengagement among your employees.
By building a portfolio in multiple functional areas, employees are more valuable. They’ll also gain more insights into the company as they progress up the career ladder.
10. Communicate well
Effective communication helps employees understand where the company is and where it is going. It also needs to be a two-way street, allowing employees to communicate and share insights and observations.
Organizations are increasingly turning to survey tools to help them with communication and feedback. Implementing employee engagement surveys may be effective in understanding what’s working—and what isn’t. Subjects can include policies, managers, reasons for staying, strengths and weaknesses, and areas for improvement.
Complementing broader surveys with pulse surveys is a smart move. Pulse surveys are brief queries that focus on one area, whether it’s an issue raised in the larger surveys or an emerging topic.
When employees do leave, conduct exit interviews to see where your company can improve in the future.
Consistent communication may also include newsletters, one-on-one meetings and performance reviews with managers, and company-wide forums or town halls. Collectively, a broad communication strategy can provide transparency and clarity, build trust, and reduce turnover rates.
Keeping employee turnover rates low benefits employees and employers alike. With low turnover rates, organizations are more connected, have deeper institutional memory, and are more efficient.
At Gusto, we understand the importance of employee retention. That’s why we offer solutions that help employers with HR, benefits, hiring and onboarding, and talent management.
