A key factor in the long-term success and sustainability of a business is employee retention. When you’re unable to retain your top employees and keep them around for the long haul, it can negatively impact several areas of operations and hurt your bottom line. This is an area that demands your attention and should be a top priority.
Employee Turnover Statistics
To get a clearer picture of the current state of average turnover, it’s helpful to look at some relevant statistics found on the HR Business and Legal Resources website:
- Over 50 percent of people recruited into an organization will leave within two years.
- One in four of new hires will leave within six months.
- Nearly 70 percent of organizations report that staff turnover has a negative financial impact.
This information shows just how difficult it is for today’s companies to retain loyal employees for more than two years. With 25 percent of new employees leaving within six months of being hired, this can create some real problems for employers and proves just how much focus you should place on increasing your retention rate.
The Cost of High Turnover
You should also know that in addition to the stress and inconvenience involved with replacing employees, high turnover can be a profitability killer. In fact, research from ERE Media’s website finds:
- For entry-level employees, it costs between 30-50 percent of their annual salary to replace them.
- For mid-level employees, it costs upwards of 150 percent of their annual salary to replace them.
- For high-level or highly specialized employees, you’re looking at 400 percent of their annual salary.
The reason for these costs is primarily due to the money you spend on recruiting, interviewing, hiring and training new employees as well as the overtime hours that existing employees may need to work in order to fill in the gaps until you make a new hire.
The good news is that there are several ways to retain your top employees and keep them from leaving at the first sign of another opportunity. Here are some strategies to consider:
- Offer competitive pay
- Offer comprehensive benefits such as healthcare, life insurance, investment planning, retirement plans, etc.
- Give periodic raises to your top performers if possible
- Strive to create a positive culture that encourages employees and celebrates accomplishments
- Provide top employees with rewards such as perks and gift cards
- Promote from within, and offer advancement opportunities
- Maintain open communication with your employees, and always be willing to listen to whatever feedback they may have
- Take the time to get to know your employees on a personal level
- Host periodic events away from work so you can build team chemistry (e.g. company picnics and attending sporting events)
- Conduct exit interviews to determine why employees want to leave, so you can avoid making the same mistakes in the future
If your employee retention rate isn’t what you want it to be, it’s time to take measures to increase it and minimize your turnover. By using one or more of these strategies, you should be able to retain your top employees and keep your business from falling into a vicious cycle of turnover.