“Open to Work” statuses are popping up all over LinkedIn feeds for months now. Individuals are either leaving their companies on their terms or have been on the list of involuntary turnover due to layoffs and downsizing taking place across the tech sector. While some businesses are keeping their companies smaller for the foreseeable future, others may be looking to hire for new roles later down the road. Some – perhaps your own business – deal with multiple turnovers regularly due to the nature of your commonly vacant or open positions.
Employee turnover is a familiar term but is often viewed on an individual basis. Departments or businesses with a higher turnover rate are places of employment that experience a larger number of employees who leave a position or company in a specific time frame. Typically, companies experience more turnover within entry-level positions and job titles with lower pay.
However, other factors can contribute to employee turnover including poor work culture, insufficient opportunities for advancement, and management issues. There are rarely any black-and-white explanations for why companies experience turnover, and a multifaceted approach is necessary to understand what is going on within your company. Additionally, you’ll want to be aware of the steps you can take to keep your business and departments from becoming a revolving door of employees.
Turnover Stats
Oracle recently put out a report stating that an 18% turnover rate is both expected and considered healthy in most businesses. This is affected both by the age of employees and the industry they work in. For instance, the average tenure of someone between the ages of 25 to 34 is only 2.8 years, but this number goes up when looking at older individuals.
If your business has never calculated this rate, you can utilize a turnover calculator specifically formulated for this metric to determine what percentage of your employees can be expected to leave the company within the next 12 months.
Take a look at past year’s employee turnover rates and keep a running list of external indicators that point to higher or lower numbers. Perhaps your business had to lay off numerous employees during the pandemic, or maybe due to the nature of your business, you had to hire more people to keep up with demand. Fluctuations in retention numbers always have multiple causes, so make sure everything is taken into consideration when you put your report together.
Understanding the Causes of High Turnover
As stated before, there are many nuanced reasons why voluntary or involuntary turnover takes place. It’s an expected part of running a business, but there are often occasions when a person’s resignation or layoff could’ve been prevented. Knowing the early warning signs of a disgruntled employee is important for not only HR departments but also the managers who work with individuals every day.
Having a firm understanding of why your business experiences turnover is especially important when forecasting the budget and financial wellness of your company. The average cost of employee turnover for hourly employees sits at $1500 and a whopping 6 – 9 months’ worth of income was lost when looking at salaried positions.
Money shouldn’t be the only reason to look at why your employees are sending in their two-week notice. Overall dissatisfaction with the way big corporations have been operating led to The Great Resignation, and a massive shift in where people were willing to work and how much compensation they were willing to work for. Mass amounts of expert and entry-level positions are being left vacant which causes dips in productivity, loss of morale among the employees who stayed, and a higher price tag on the onboarding costs for new employees.
Naturally, these are all hindrances to keeping a business running smoothly and maintaining a culture that people want to join and remain a part of, but there are ways to get ahead of the situation and keep your turnover rate at a manageable level.
Strategies to Effectively Manage and Prevent Turnover
If you just calculated your turnover rate and are panicking a little on the inside, the next few steps are great places to start. You can implement these steps immediately or over time as you look at the type of individuals needed to fill vacancies.
Create an Engaging and Supportive Workplace
71% of employees would rather work for a company with a positive culture that fits their criteria and would take a pay cut to work in a business that fits this description. Take the temperature on the lived experience of every person in your business and be open to negative feedback that reflects the true opinions of your workforce. This can be done via anonymous surveys and encouraging honest feedback from all departments. Often upper management has a much different experience versus those who occupy entry-level positions and lower management roles. So, resist the temptation to assume that if your department is happy with how things are that this will be the case down through the structure of your company.
Conduct Stay Interviews
Exit interviews are too late. To better understand why people would potentially want to leave your company and intercept a resignation in the coming months, conduct stay interviews with everyone regularly. This is different from a performance review and is a chance for your employees to (in a safe and confidential space) express their concerns about management, workloads, and advancement opportunities and take meaningful action to help them reach their career goals. When employees feel heard and valued there is a much higher chance they will stay with your company!
Developing an Effective Hiring and Onboarding Process
First, it’s important to identify potential candidates and clearly define the ideal skills and expertise required for the role. A job description should provide more in-depth details and requirements and reveal to the candidate what they can expect in terms of compensation and benefits.
Once potential candidates have been identified, the interview process can begin. Keep this process quick and make sure recruiters are highly responsive to any questions the candidates may have. Lack of response and lengthy hiring processes are often why businesses have a hard time filling open positions. There are only so many things you can know about an individual starting, and there are always risks when hiring a new person for the job.
After the ideal candidate has been identified, the onboarding process can begin. If your company regularly hires large numbers of individuals at a time, you’ll want to ensure you have a robust onboarding program that includes anything they will need to reference in the coming weeks and months. If this is something you haven’t been able to find room in your budget for, look into some alternative funding options for your business to make sure you have the best tools available. You’ll quickly notice that with the right onboarding tools in place, the software will start paying for itself with reduced onboarding and employee turnover costs. Additionally, incoming employees will notice and appreciate the level of attention you give to their training which can be a big reason they recommend you to friends and family in their job search.
Offering (Actual) Competitive Compensation and Benefits
While this might not be an area within your control at your company, it’s important to at least know where your positions of high turnover compare with other companies related to compensation. If your business is losing out on hiring or retaining employees because they can get higher pay elsewhere, then it’s time to reevaluate and solve your compensation issues. Depending on the role, multiple changes may be necessary, including raising the base salary or hourly pay, or changing how people are evaluated for raises based on competency and niche skills.
Low pay that falls at or below market value can often be viewed as an insult to potential employees and they will quickly look elsewhere for someone who can and will reward their experience at a better rate. Be honest and open to compensation negotiations both during and after the hiring process to show your employees that you value the expertise and knowledge they bring to the table.
With all this in mind, employee turnover doesn’t have to be a nightmare. Even though it’s a fact of life for many organizations, you can use the strategies in this guide to make it an opportunity for growth, nurturing new relationships, and creating an improved work environment. When managed correctly, employee turnover can bring positive changes to the organization. If you’re ready to tackle your company’s turnover rate head-on, the insights in this guide can provide the keys to success.
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