Retention Strategies

By Georganne Weeks
Concept H.R.

 

Employee turnover is a measurement of how long your employees stay with your company and how often you have to replace them. Turnover can be calculated by dividing the number of employee separations in one month by the average number of active employees during the same period of time.

There are two types of employee turnover; voluntary and involuntary.

Involuntary turnover is when an employer decides to separate an employee due to a financial downturn or other changes in the business, or because of something the employee has done that is unacceptable, or something the employee did not do that was required or expected.

Voluntary turnover is when the employee decides to leave the company for reasons such as; job dissatisfaction, not feeling valued, conflicts with management, a better opportunity, personal reasons or retirement.

While it’s difficult to fully calculate the cost of turnover, industry experts often quote 25% of the average employee salary as a conservative estimate of financial loss due to the cost of recruiting, interviewing, hiring, training, and the initial loss of productivity.

Employees who leave take with them valuable knowledge about a company, its customers, current projects and past history.  Sometimes this information is shared with a businesses competitor and the time and money that was spent on the employee’s future return will never be realized.

Customers and clients do business with a company in part because of the employees. Relationships are developed and when an employee leaves, these relationships that the employee built for the company may be severed, which could potentially lead to the loss of a customer or client.

Because employee turnover is expensive, and good employees can be hard to find, it is very important for business owners and human resource managers to reduce turnover rates by attempting to understand the main reasons employees are leaving their companies.

Some of the top reasons for employee turnover are:

• Lack of opportunities for growth and professional development
• Poor work life balance
• Job stress / unfair treatment
• Inadequate compensation and benefits

Employees with no room for growth are likely to leave. Business owners would benefit from listening to their employees and what they want to achieve and then provide them with challenging developmental opportunities. This will go a long way toward retaining good employees.

Organizations facing economic challenges are often forced to do more with less and this often leads to one person doing the work of two, resulting in longer hours and working on weekends. This can quickly lead to stress and burnout, causing the employee to find work elsewhere.

It’s been proven that when employees are offered flexibility in how they do their work and are allowed to take care of their home and life responsibilities, they respond in proactive ways by doing more.  When employers are able to offer reduced workweeks, job-sharing, flexible hours, and working remotely, it generally results in happier employees, increased commitment and this ultimately leads to higher retention rates.

Providing your employees with an attractive compensation and benefits package is one of the most important factors in increasing retention. Employers should determine what the competition is offering and what’s important to their employees and then tailor their benefits package to meet their needs. Because healthcare options are so complex, it’s important that employees understand their options so they can make informed decisions. Employers would also be wise to communicate the total value of what they are providing along with a summary of what the employee has chosen and how much the employer is contributing towards the cost of those benefits.

Employer may want to consider offering perks such as new hire gift baskets, casual work days, bowling nights or softball games, discounts to movies, amusement parks or other entertainment venues, and celebrations for achievements and birthdays. Don’t be afraid to think outside of the box. Perks don’t have to be expensive. Small perks such as occasionally offering a meal or providing free coffee, snacks and soft drinks can go along way toward improving morale and loyalty and thereby increasing retention.

There’s no one size fits all answer. Business owners must create there own specific formula to increase retention. However, employers who are creating a pleasant workplace, hiring the right people, and then investing in those people, are demonstrating that they have the employees’ best interests in mind, which in turn, will create a stable workforce and give them an edge over their competition.

 

Georganne Weeks is currently PHR and SHRM-CP certified and has more than 25 years of human resource management experience.  She has conducted numerous training seminars and has supported hundreds of clients for Concept H.R. for over nine years.  Concept H.R. has solutions to many common human resource issues including payroll, benefits, 401(k) and risk management administration unique to the dynamics of a diverse workforce.  You can find the expertise needed to maintain compliance with employment labor laws and regulations on a federal, state, and local level, all given with the highest personal customized care