High employee attrition costs way more than you think. A study by the Center for American Progress recently found that the cost of employee turnover for a single worker can add up to more than 16 percent of their annual salary, and for un-salaried employees it can come to a whopping 213 percent of their wage especially when it comes to individuals with specialized training.
To put it in context, for a mid-level manager making $80,000 a year, the real cost to the company can be in excess of $170,000. And the jaw-dropping expenses related to attrition apply to younger, less highly trained employees, too. A story in Forbes revealed that the average cost of replacing a Millennial is between $15,000 and $25,000. These are startling figures by any measure and, particularly for small- and medium-sized companies, they represent lost profits that can make or break a business.
Perhaps it’s a sign of the changing workplace, but why does it cost so much to replace an employee? Consider the time and money spent on recruitment, interviews, advertising, impact on morale, ramp-up time, lowered engagement, and even loss of key customers. The heavy financial burdens associated with employee retention demand we take a look at some proven effective strategies for dealing with it.
1. Ensure compensation and benefits are competitive
Do you know the prevailing local wage for each of your employees based on their level of experience, training and education? Rest assured they do. It’s surprising how many companies don’t offer raises that keep up with the market, or pay wages that are below the average. Smart people know what they’re worth, and if they feel they are underpaid, they will eventually look elsewhere. Offer them competitive benefits and pay.
2. Provide a flexible work environment
With a growing number of single-parent families, households with two breadwinners, extended family commitments and a myriad of other demands that stretch and strain our lives as we bounce between personal and professional, it is not surprising that flexible hours and the ability to work from home often makes a huge difference. Some innovative players are seeing the benefits in terms of employee retention by offering compressed schedules, and onsite daycare. While it certainly is not always feasible, more companies are discovering that this flexibility is key to keeping the best people on board.
3. Make work-life balance a priority
We hear a lot about work-life balance, but the honest truth is, not many of us are good at it. It might surprise you to know that, according to joint research from The Wall Street Journal and iOpener Institute, happier people achieve their goals 31 percent more often than their colleagues, and help their coworkers to achieve their own 33 percent more often. Work-life balance is the key to happiness in employees. Make it a priority.
4. Nurture respect in the workplace
Gratefulness engenders a warm environment where respect can flourish. Respect starts with nurturing a sense of self worth in your employees: Take the time to listen to your employees when it comes to their needs and desires, learn their key strengths and communicate with them openly and consistently. You’ll discover that not only does respect in the workplace increase productivity, it leads to greater employee retention and satisfaction.
5. Set goals and incentivize results
One of the two biggest reasons for employee turnover is boredom and lack of reward for achieving results. It is critical to set achievable, realistic goals for growth and to provide employees with a tangible return. Work together with employees to determine the parameters against which their work will be judged, and encourage them to reach tough targets with incentives both in terms of compensation and advancement.-
6. Model and delegate leadership
Hand over the reins of responsibility and leadership to members of your team who are ready to make hard decisions and eager to move their career forward. Imagine the best boss you’ve ever had. Was this person genuinely interested in your welfare? Did they encourage you to take on important work, and push you to achieve your professional goals? Providing employees with the ability to lead instills a sense of value, generates good ideas and increases retention.
7. Provide ongoing training and enrichment
A recent survey conducted by Cornerstone demonstrated an important connection between the lack of professional development opportunities and high employee turnover. Providing people with opportunities for growth is not only appreciated, but it demonstrates that you are investing in them. Ultimately, investing in your employees is investing in your company, and the return you receive is more loyalty, better training, and a stronger connection to your workforce.
Employee turnover is a wake-up call for companies trying compete for talent, recruit new workers and keep existing employees. With an estimated 19 million Americans planning to change jobs each year, which equates to 13 percent of the total workforce, turnover will cost upwards from $2 trillion. Now is the time to put strategies in place to stave off losses, build a culture of success, and keep turnover low so your best employees stick around for years to come.