The High Cost of Employee Turnover and What You Can Do to Stop It
For those of us in the parking industry, we are all familiar with the concept that free parking is in fact quite costly. Parking industry expert, Donald Shoup discusses in his book, the High Cost of Free Parking, how free parking leads to many negative consequences including overuse, shortage and conflicts over parking.
In much the same sense, there is a very high cost to employers who have poor talent management practices that result in high employee turnover and a substandard talent pool. Both turnover and poor quality talent end up being much more costly to employers than investing in their most important asset - talent – in the first place. Employers who adopt competitive compensation packages, innovative employee recognition programs and employee development initiatives can more effectively foster a positive work culture that is essential today to attract and retain “game changing” talent.
Losing top talent can have serious consequences, affecting a company's morale, creating a skill deficit and placing a burden on the remaining employees to take on the workload of the former employee. Turnover also becomes a burden because employers must dedicate resources to finding replacement talent to ensure productivity and service quality levels remain high. And as the economy becomes more robust, workers will have less incentive to stay in a position where they feel overworked, underpaid and unchallenged.
What is the TRUE cost of losing an employee?
What are the most common reasons employees leave?
1. Management- People leave managers, not companies. About half of all workers have left a job because of their boss at some point in their career. It is the mangers who can make or break a workplace experience. Good managers help attract top candidates, motivate their employees and play a key role in keeping employees engaged. Poor managers deflate their workers and cost employers a ton of money in turnover costs and lost opportunities.
This reality is more important now than ever to understand and address as our workplace continues to diversify in every aspect, including age. We now have five generations of workers working side by side who all have different mindsets and expectations regarding work and employment. As this trend continues, there is a growing disconnect among employees from various generations regarding appropriate ways to treat and manage employees. Baby boomers tend to stick to what they know and manage as they were managed earlier in their careers. And too often this mindset is this is the way things have always been done or younger professionals should expect to jump through the same hoops they did earlier in their careers.
Micro management, lack of support and inflexible work policies drive away your high potential talent and top producers.
How to fix this?
Allow your employees to have an appropriate level of autonomy. There is a strong connection between employees who have the freedom to make decisions about how to do their jobs and employee job satisfaction. A good tactic can be to make a job profile flexible for an employee and allow them to map out their role according to how they see it based on mutually agreed upon guidelines.
Take the time to understand your employees’ interests, motivation and strengths. With a better understanding of your employees, you will more likely be able to put the right people in the right seats. Research shows that people are happiest and most engaged when they are able to use their strengths to successfully complete their responsibilities.
Provide training opportunities to both your new employees and current employees. Improperly or untrained employees will have higher frustration levels when their employers overly rely on new employees to be quick-learners and don't provide enough training, mentorship or simple guidance and direction to be successful. To avoid unnecessary errors, unpleasant corrective action and low employee morale, provide employees with the proper training.
Lead by example. If you want employees to behave in a certain way (professional, good team players), then you should behave that way yourself. It is not fair to expect employees to do something their superiors are not doing themselves.
Hold managers accountable. Managers should be assessed on their abilities to manage and provide training while providing resources for managers to learn and grow themselves. Add employee retention rates into managers or supervisors reviews and appraisals.
Measure results not hours. Encourage innovation, destigmatize failure and work as a team.
2. OVERWORK OR LACK OF WORK/LIFE BALANCE
Employees dislike when work regularly bleeds into personal time. Workers who feel there is no balance between work and home and miss out on important moments in their family’s life will be more likely to quit regardless of financial compensation. In fact 89 percent of millennials state that work/life balance is the single most important contributing factor to job satisfaction and happiness in the workplace.
Overworking employees is also counterproductive. Stanford released research findings that show employee productivity per hour declines significantly when the workweek exceeds 50 hours. In fact, productivity is influenced negatively by overwork so much that employees who put in 70 hours of work per week produce nothing more than those who work 15 extra hours. It is unsustainable to work excessively long hours consistently.
How to fix this?
Hire additional help. Business owners who overly rely on employees working overtime or longer than the standard 40 hour work week should consider hiring another employee even on a part-time basis to avoid employee burnout.
Encourage and mandate time off from work. Companies can provide and insist that employees take vacation time to decompress and recuperate. Employers should also limit after hours communications.
Promote your employees. If you must increase the workload or responsibility level of your employees, increase their status as well. Talented employees will take on a bigger or more complex workload but only if their job does not suffocate them in the process. Raises, promotions and title-changes are all effective ways to increase an employee’s workload without creating resentment.
3. Lack of recognition AND opportunities Providing employees with regular recognition and constructive feedback has many benefits. Publicly recognizing the efforts and achievements of your team, encourages future contributions and extra effort while building their confidence. Recognition does not always have to be formal; praise employees in day-to-day communications with your team.
Employees can also be turned off by a lack of upward mobility, especially if there is no apparent motivation for hard work. Talented employees want to know where they’re headed — or, at the very least, where they can go within the company and what it’ll take to get there. A lack of career path, not salary, is the top reason employees leave their jobs, according to Randstad’s 2015 Employer Branding Survey.
How to fix this?
Implement recognition programs that celebrate employees’ performance and behavior. Reward employees who have gone above and beyond their standard responsibilities. Employees remember these moments and goes a long way toward feeling valued and building loyalty to the company.
Provide employees with a strategic career path and development plan. Charting a clear path with your employees allows them to visualize a long-term role with their employer. Employers who implement such initiatives demonstrate commitment to their employees and provide a sense of stability.
The takeaway: If you don't want your best people walking out the door, you'll need to build a proactive retention strategy that meets their individual needs for career development, recognition, and work-life balance.