Effective strategies for reducing employee turnover

Employee turnover is a pervasive challenge that organisations face across all industries. While employee turnovers are natural, a high rate could be disruptive to a company. In worse cases, it can even kill a business.

Just the cost of separation compensation, the sourcing, recruitment, and hiring process for the vacant position, and the overall time spent looking for talent can be expensive.

In fact, the cost of replacing a staff member is estimated to be 1.5 times the salary of the departing employee, according to the Australian HR Institute.

Moreover, in cases where a more senior member quits, workforce productivity usually takes a hit. And that’s just for one employee. Imagine if you have a few people quitting your company every month.

Understanding employee turnover

There are two kinds of employee turnover. The first one is voluntary turnover, a situation where an employee resigns. According to a Harvard Business Review report, at least 38% of voluntary turnover happens within the first year of the employee with the company.

A 2022 SHRM study that surveyed over a thousand HR professionals across the US showed that the topmost reason for voluntary turnover is compensation. At least 74% of the survey respondents said most of the employees who quit their organisation thought the pay, benefits, bonuses, or profit-sharing systems wasn’t enough. The same HR professionals in the study said that they had to increase the salaries of their employees to at least 8% to prevent them from leaving.

The top two reasons for high employee turnover rates is the lack of career advancement. The respondents said that more than making money, people want to grow professionally. Most employees said that their company lacked a clear career plan for them, leaving them stagnant in terms of professional development. This is important today as new technologies require constant learning, upskilling, and reskilling, and it is the company’s responsibility to provide these to the workforce so the organisation can adapt and innovate.

READ MORE | Fostering a sense of belonging among employees

The other top reasons for voluntary turnover are as follows:

•          Work flexibility
•          Unsustainable work expectations
•          Uncaring or uninspiring leaders

The other kind of turnover is involuntary. This happens when the company decides to separate ways with one or more employees. It can happen because of poor employee performance, cost-cutting measures, or a change in organisational direction. While poor employee performance is the typical cause of involuntary turnover, sometimes, it is also a result of poor recruitment.

There are also instances when a recruitment team missed some details that led to the hiring of a person who turned out to be incompatible with the position. Sometimes, too, it can be caused by external factors, like economic conditions forcing companies to lay off some employees.

Providing competitive salaries and benefits

It is not a secret that the best way to retain people is to provide competitive compensation and benefits. The best way to do this is through a scientific and structural approach. Conducting regular market research would provide relevant insights for HR leaders.

Knowing whether your salary and benefits offerings are in the context of your competitors will allow you to craft not just lucrative offers for recruitment, but also preventive measures, like fair salary increases, to prevent the possibility of your people looking for career opportunities elsewhere.

You may also want to use your own employee performance data to identify high performers who deserve a salary increase. Low performers, meanwhle, can become an asset if you put a bit of effort and provide them with training and motivation.

Beyond salary, comprehensive benefits packages contribute significantly to employee satisfaction and retention. Consider offering benefits that address various aspects of employees' lives, including health and wellness, work-life balance, and long-term financial security. The most lucrative offers in the job market provide work flexibility, fitness programs, healthcare coverage, mental health and wellness packages, and more.

What will make it hard for your employees to leave the company is a chance to grow. Craft a structured career development program for your teams. Provide specific requirements for them to reach certain levels. In doing so, always include a retirement plan. Nothing beats a company that is willing to grow their employees until retirement.

READ MORE | Strategies for improving job satisfaction

Building a positive work culture

The issue of turnover goes beyond compensation. Employees also leave because they didn’t like the organisation’s culture. It can be because of a toxic work environment where the people that make up the teams exhibit unpleasant behaviour. But there’s a structural approach to cultivating a positive work culture.

One good way to start is by crafting organisational values that employees can believe in. Putting up signs about company values is not enough. People need to relate with them. Remember: words are just words, and they need action to resonate with the employee community.

Another way to start cultivating a positive culture is by fostering inclusivity in the workplace. Embrace diversity and inclusion initiatives to create a workplace that values and respects individuals from all backgrounds. A diverse workforce contributes to a rich tapestry of perspectives and ideas.

Regularly acknowledge and celebrate employee achievements. Whether through formal recognition programs or simple expressions of gratitude, recognising people's contributions fosters a positive atmosphere.

READ MORE | Creating a culture of recognition and appreciation

Organise team-building activities that encourage collaboration and camaraderie among employees. Building strong interpersonal relationships enhances job satisfaction and creates a supportive work environment.

Lastly, establish safe and open communication lines. Effective communication is fundamental to a positive work environment. Open lines of communication foster transparency, trust, and a sense of community.

Consider doing regular feedback sessions beyond performance reviews. Use data from these sessions to conduct surveys and probe more into what they need from the company. Employees are also people who want to be valued and involved. The more they feel that they are part of the company’s decision-making processes, the more they become invested with the organisation.

READ MORE | The role of HR in workplace culture

Reducing employee turnover is a multifaceted challenge that demands a proactive and strategic approach. By understanding the causes of turnover, fostering a positive work environment, offering competitive compensation and benefits, and investing in employee development, organisations can create an environment where employees are not only motivated to stay but are also inspired to contribute their best.

Remember that success is within reach if there is a collective will to prioritise employee satisfaction and retention. Organisations that genuinely commit to building a workplace where employees feel valued, heard and adequately rewarded will reap the benefits of a stable, engaged, and high-performing workforce.