It takes strong managerial and organizational skills to run a business efficiently and profitably. As an entrepreneur and more importantly, as an employer, there is so much for you to manage. But among all other imperative aspects of business management, managing human capital can be challenging. Not only is it challenging at times but also exhaustive for employers.
It is an undeniable fact that human capital is of immense importance to any organization. Hence, employers and HR professionals invest ample time and effort to micromanage their workforce. This is fair by all means because how are businesses going to run without dynamic talents and sharp minds otherwise? An employer or an entrepreneur always needs the support and skill of his employees to achieve the goals of the company. Therefore, to keep employees motivated and committed, organizations give a lot of importance to employee engagement and well-being. Furthermore, companies consistently evolve strategies to improve employee retention and mitigate employee turnover.
Employee engagement and employee retention are buzzwords in the corporate culture these days. Employers for apparent reasons want to retain their top talents to maintain high standards of efficiency within the company. Furthermore, employee turnover is a common keyword used in corporate culture. The rate of employee turnover across all industries is as high as 19 per cent. But what is the actual significance of this percentage? What is the real meaning of employee turnover, and why does high employee turnover make organizations nervous? This blog is going to discuss all these aspects extensively.
What is employee turnover?
Employee turnover is a global phenomenon and is often a significant concern for businesses. It refers to the number or proportion of employees that quit a company and are replaced by recruits. In terms of human resources management, we can understand it as the rate at which an employer loses his staff members. Further, the indicators of employee turnover help determine the average period for which employees stay in an organization.
So, it is evident that a high rate of turnover among employees can be a nightmare for employers. Needless to say, as a business leader, you should not only strategies for hiking employee engagement. Instead, you should also devise policies to enhance employee retention and minimize employee turnover. But before we look at the various ways in which you can reduce turnover, it is essential to identify the causes of it. Further, we need to look at the importance of low employee turnover for any organization.
Various causes of high employee turnover
Lack of growth opportunities provided by the organization to workersGrowth opportunities are major driving factors for an employee to engage actively. Also, employees are happy to continue in a company that gives them enough exposure to rising through the ranks. Therefore, when workers find a lack of prospects of growth for their career goals, they lose motivation and quit their job.
A feeling of non-acceptance among employeesAll workers want their organization and their bosses to value them. This value can be in terms of their experience, their skills, or their perspectives. Also, a sense of belonging among workers is a source of inspiration for them to give their best to the company. On the contrary, if they start to feel that they are not valued enough by the company, they can leave their jobs. Moreover, organizations these days have diverse workforce based on inclusion. So, workers want acceptance for their uniqueness and diverse outlook.
Hostile work environment within the organizationA positive work environment attracts a positive attitude from workers. But if the work environment is hostile, and there is a sense of insecurity, conflict, and disrespect, workers lose interest in their jobs.
Lack of appreciation and recognition received from the employerAppreciation and recognition are vital for all workers when they put in hard work to achieve organizational goals. Sometimes, even a word of praise or a small written note of appreciation from you can encourage a sense of loyalty in them. But if they feel that their hard work is being ignored consistently, they start to disengage.
Mismanagement or misalignment of workersMismanagement of workers by employers can turn out to be a roadblock in an employee’s commitment to the company. Also, misalignment of job roles and confusion in responsibilities can hinder the interest of workers.
Improper flow of feedback within the organizationWorkers are happy to receive feedback from their managers and employers to improve their performance. Also, regular feedback makes room for effective communication and collaboration between employees. However, in the absence of feedback and effective communication, workers can disengage. Next, disengaged workers start distancing themselves from the company.
Stressful relationships between colleaguesConflicts between workers and unhealthy relationships develop negativity in workers. Further, they can also lead to employee turnover or disengagement. When persistent toxic relationships exist in the workplace, it affects motivation in workers. Besides, if leaders lack conflict resolution skills, it can make workers put in their resignation.
Instability in the organizationInstability in the organization in terms of workflow management or performance can demotivate workers. Also, compliance issues and lack of transparency can lead to disengagement in employees. Furthermore, disengaged employees are more susceptible to leaving their company.
Distrust among co-workersDistrust among workers can create a feeling of envy for each other in them. Besides, it can lead to a sense of disloyalty among employees. Also, distrust among workers disrupts collaboration and team building.
Lack of motivation and security in workersA lack of safety at the workplace in terms of health hazards, fire accidents, and other mishappenings can make staff members quit. Moreover, in the case of females, security against sexual abuse and molestation are significant factors for employee retention. When women do not feel safe at work or when workers, in general, do not feel safe at work, there is a tendency to quit in them.
So, as you can see, there can be multifarious reasons why workers are not happy or satisfied in an organization. Ranging from hung up appraisals to harassment at work, different causes can lead employees to submit their resignations. So, when you look to manage the issue of employee turnover in your organization, you should first try to figure out the causes of high employee turnover. When you have a clear idea of why your workers are leaving after short stints, you can manage employee retention better.
Employees have certain expectations from their employers and company. These expectations can be either on the front of growth and appreciation or related to a safe and happy working environment. Furthermore, when workers feel that the organization is not looking after their interests, they disengage and after that, quit the organization. Besides, when employees often quit and at regular intervals, it brings a massive share of problems for the employers. A lot of monetary resources, efforts, and time goes in vain while replacing staff members. Thus, the higher the rate of employee turnover in a company, the higher are the losses for your business. There is no doubt about the fact that you should address this issue to maintain consistent efficiency and for smooth workflow management.
Moving forward, you need to know that the costs of employee turnover are high. Thus, a high rate of turnover in workers can inflict negative impacts on revenue and profits. Also, according to some estimates, losing an employee can cost a loss of up to twice the salary of the employee. Further, for technical positions and top executive positions, the loss can go up to 150 and 213 percent of salaries respectively. So, you can understand the extent to which high turnover can incur financial losses for your firm. Next, let us look at a few more hidden costs involved in employee turnover.
Latent costs of high employee turnover
- Cost per hire: It includes the expenses that an organization incurs on hiring, on boarding, and providing training to a new employee.
- Cost of vacancy: It is the value of losses that a business faces when essential positions in an organization remain empty for long periods.
Besides, it is also noteworthy that more than 60 per cent of the costs involved in employee turnover are intangible. They include the loss of efficiency and knowledge that fall under the value of vacancy. One one-third of the expenses go futile in the recruitment of new employees. Now, when we have realized how crucial employee retention is, let us shed light on the various strategies you can apply to mini mise employee turnover.
Best practices to minimise employee turnover
1. Promote gratitude within the organizational culture
A culture of gratitude in a workplace creates a positive environment within the work culture. Further, gratitude also leads to generosity and cordial relationships between colleagues. In this way, with gratitude, you can inspire in employees a sense of belonging, mutual respect, and appreciation in workers.
When workers feel motivated, and when employers are thankful to employees for their efforts, workers are happy to continue with their present organization. Hence, little gestures of gratitude and kindness in the workplace can boost employee retention and add to the success of the company.
2. Offer flexibility to your employees.
Employees can sometimes find it hard to maintain a healthy work-life balance. Therefore, when employers offer them some flexibility, it can have positive impacts on the employees.
To substantiate, a study by Boston College Center For Work and Family revealed that more than 70 per cent of managers feel that flexible work cultures boost employee retention. Hence, wherever and whenever possible, you should try to promote some flexibility in the workplace.
3. Priorities employee engagement
As an employer, you should give a lot of priority to employee engagement. To explain, employee engagement is the degree to which your workers stay engaged or committed to your company and its goals.
Furthermore, employees who engage actively are happy, motivated, satisfied, and passionate. Besides, these employees are ready to go beyond their job roles for the success of their organization.
Therefore, finding ways to engage employees consistently should be vital for you. Employees who find passion in their work are less susceptible to quitting their jobs.
4. Offer growth opportunities and recognition.
Your prospects of boosting employee retention can increase manifold if you are offering endless growth opportunities to your staff members. It is evident that every worker has set goals for his career graph, and he wants to scale it to the earliest.
If you are not offering enough prospects for growth, your employees may be attracted to the idea of switching to another organization. Moreover, even recognition is a significant driver for motivation and loyalty in workers.
To encourage loyalty in workers, you should look for new ways to offer recognition and rewards when an employee performs well. It is an undeniable fact that all of us like a little credit for our efforts and even a little pat on the back can do wonders. Therefore, as a leader, you should never be shy of appreciating your workers and making room for growth opportunities.
5. Refine your hiring procedures if needed
One of the best ways to retain employees is to hire the right employee for every job role. So, when you hire a new employee, you should clearly define the job roles for yourself as well as the candidates. There should be a clear description of what is expected of an employee, and the recruitment should be according to the same.
Also, you should try to maintain a large talent pool of candidates that can add more value to your organization. When you find the right people for a respective profile, there is no misalignment. In this way, when you pay attention to detail while hiring, you select employees that show the best commitment.
Hence, such employees are going to stick with you for the longest, and you can bring down employee turnover to a large extent. You should know the types of people entrepreneurs should surround themselves with.
6. Create a culture of empathy
Are you an empathetic employer? Do you ever make efforts to understand the feelings or emotions of your workers? If you do not, you should try to be more compassionate for the sake of humanity as well as for better employee retention.
Furthermore, if you endorse empathy in your behavior, you can attract the loyalty of your workers. Also, you should remember that loyal employees do not quit for small reasons. We are all humans, and it is common for us to grapple with our emotions.
With a better sense of empathy, you can put yourself in your employees’ shoes and comprehend what they are facing. This is going to give your workers a feeling of emotional security.
Moreover, it can also motivate them to focus on their efficiency.
7. Share your core values with your workers.
You should be transparent to your workers to boost employee engagement and retention. When workers feel that their bosses share vital information with them, they tend to engage actively. So, if not everything else, you should at least share the core values of your company with your staff members.
Core values enable a better understanding of the purpose of their job roles. They also explain the ideals on which your organization works. Thus, you must be as transparent as possible to your employees to create an open culture.
To conclude, employee turnover is prevalent in all industries. Workers are vulnerable to leaving an organization for various subjective reasons. As an employer, you should understand the losses attached to the high rate of employee turnover.
Having understood the demerits of it, you should try boosting employee retention in an efficient manner. There are several ways in which you can try to bring down the rate of employee turnover in your company.
However, the purpose of all approaches is to attract loyalty and motivation in employees. Employees who are loyal commit themselves to the goals of your business and stay coherent with your firm.