Decades ago you could hire new talent and expect most of them to stay for life.
It’s hard to believe such a time existed. Even before Covid job duration and change were accelerating. The pandemic sped up this trend. Employees expect more from their employees, and with a high demand for workers, employees are in the driver’s seat.
A study conducted by LinkedIn found that the average tenure for an employee in the United States is around 4.2 years. The age of employees does impact tenure. The median tenure for workers ages 25 to 34 was 2.8 years, while for workers ages 55 to 64, it was 10.1 years.
According to the U.S. Bureau of Labor Statistics, the average annual turnover rate in the private sector in the United States was 47.7% in 2020. Certain industries suffer a bigger impact. For example, the hospitality industry has a turnover rate of 70%, while the healthcare industry has a turnover rate of around 20%.
Employee turnover is expensive. There is a cost to acquire talent, then an onboarding cost, and finally you have to calculate the lost productivity the organization experienced during the talent gap. According to a study by the Center for American Progress, the cost of replacing an employee can be up to 20% of their annual salary.
High turnover rates can negatively impact a company’s productivity and morale. It can also create a talent gap and reduce institutional knowledge. Keeping talent and developing them is a boost to the bottom line.
So how can you reduce turnover?
Let’s explore five tips you can implement to reduce employee turnover in your organization.
1. Provide Competitive Compensation and Benefits Packages
You can’t discuss employee turnover without addressing the money question. While it is not the only factor for employee retention, it can not be ignored because of the competitive job landscape. Compensation and benefits are one of the primary factors that employees consider when deciding whether to stay with or leave a company. If an employee believes that they are not being paid fairly or that their benefits are subpar compared to other companies, they may start looking for opportunities elsewhere. Therefore, it is crucial for companies to provide competitive compensation and benefits packages.
Companies can start by researching industry standards and conducting salary surveys to ensure that they are paying their employees fairly. They can also consider offering additional perks such as flexible working hours, remote work options, paid time off, and health insurance benefits to make their employees feel valued and appreciated. By providing competitive compensation and benefits packages, companies can demonstrate to their employees that they are committed to their well-being, which can help reduce turnover rates.
2. Offer Professional Development Opportunities
Professional development opportunities are essential for employee retention. When employees feel that they have opportunities to grow and develop their skills, they are more likely to stay with a company. Companies can offer various professional development opportunities, such as training programs, mentorship programs, and tuition reimbursement programs, to help their employees achieve their career goals.
Prior to the pandemic, the HR Exchange Network said that according to LinkedIn, nearly a quarter of Millennials and Generation Z workers name learning as the top item that contributes to their work happiness, and more than a quarter of them would leave their job if they did not see a chance to learn and develop. According to a report by The Execu|Search Group, 86% of employees would be willing to change jobs if the new company provided more professional development opportunities.
Providing employees with the opportunity to learn new skills and advance their careers can help them feel engaged and motivated. It can also help them feel that they are a valuable part of the organization, which can lead to increased loyalty and reduced turnover rates.
As part of professional development, don’t only think about skill-based training. Ongoing effective coaching conversations are also proven to increase employee engagement, reduce burnout, and even root out toxic work culture.
3. Foster a Positive Work Environment
A positive work environment is crucial for employee retention. Employees who feel that they are part of a supportive and collaborative team are more likely to stay with a company. Companies can foster a positive work environment by promoting open communication, encouraging teamwork, recognizing and rewarding employees’ achievements, and promoting a healthy work-life balance.
Additionally, companies can create a positive work environment by fostering a culture of respect and inclusivity. This includes implementing policies and practices that support diversity and inclusion, providing opportunities for employees to give feedback, and actively addressing any concerns or issues that arise.
A key component of a positive work environment is leadership integrity. Dr. Brad Shuck, an engagement researcher, found that 75% of employees who work for leaders who are compassionate and live with integrity say they are unlikely to leave their current organization in the next five years.
4. Offer Employee Recognition and Rewards
Employee recognition and rewards are essential for employee retention. When employees feel that their hard work and contributions are recognized and appreciated, they are more likely to feel motivated and engaged. Companies can offer various employee recognition and reward programs, such as bonuses, promotions, and public recognition programs, to show their appreciation for their employees’ efforts.
Companies can also offer non-monetary rewards, such as opportunities for career development, flexible work arrangements, and additional time off, to show their employees that they value their contributions. By offering employee recognition and rewards, companies can increase employee satisfaction and loyalty, which can help reduce turnover rates.
5. Provide Opportunities for Employee Feedback
Providing opportunities for employee feedback is essential for employee retention. When employees feel that their opinions and suggestions are valued and acted upon, they are more likely to feel engaged and invested in the company. Companies can provide opportunities for employee feedback through various channels, such as surveys, suggestion boxes, and regular check-ins with managers.
By listening to employees’ feedback, companies can gain valuable insights into their employees’ concerns, needs, and expectations. This can help them identify areas for improvement and make changes that can help reduce turnover rates.
Goodway Group, a digital advertising agency, reached out to Fierce to help with challenges in their virtual work environment.
In 2010, Goodway began working remotely full-time. Shortly after, managers noticed a problem. Employees working on project teams were reluctant to give each other feedback.
All criticism bubbled up to the direct manager. You could imagine how overwhelmed managers became trying to douse fires and keep projects on track, plus employee morale and confidence in the organization diminished
Goodway leadership approached Fierce for help.
After training in Feedback tools, team members don’t immediately run to the manager, but ask questions to uncover the root of problems rather than hide them inside their manager’s shadow.
Since managers received the training, the number of comments that employees submit to management through the “feedback” platform has dropped from an average of 10 a month to one — a clear sign that employees are now delivering feedback directly.
Goodway now hosts regular virtual office hours where employees can practice providing feedback with one of their learning and development managers which improves both employee feedback practice and creates development opportunities.
Reducing employee turnover rates is essential for companies to maintain productivity and morale, and reduce costs. Employee engagement is the secret. While compensation and benefits packages can’t be ignored, professional development opportunities, a positive work environment, employee recognition, and feedback systems are proven actions.