Tag Archives: minimize turnover

Improve Your Bottom Line By Minimizing Employee Turnover

A good employee is neither easy nor inexpensive to replace. However, some employee turnover is good and is an essential part of any business. Those that do well are promoted, those that under-perform are let go.

This type of employee movement is good for an organization, it puts the talent in the right spots and makes room for new growth. But what happens when you start to see too much employee turnover? While not uncommon in the hospitality and entertainment industries, when you lose employees at a high rate, it can start to cost you.

Retaining an employee is much cheaper than hiring a new one, not only because of lost time and the cost of the hiring process but also because new employees are inexperienced and must be trained before they can be fully productive. With inexperience also comes an increased potential for injury, which can raise the number of workers’ compensation claims filed by your employees. This can result in hefty insurance rate increases.

 

The Cost of Turnover

Hiring processes have become increasingly more complex over the years. There is a substantial amount invested in even considering an applicant for a certain position. Besides the time put in by those doing the hiring, things like drug screens and background checks add to the cost of bringing on new employees.

However, even though these processes slow down the progression, it is important that you hire employees who will not become liabilities for your company in the future. The background checks, in-depth interviews and other safeguards increase your chances of getting a valuable employee are essential.

On the other hand, the search for suitable employees can leave positions vacant for a significant amount of time, causing a loss in productivity along with other general interruptions to your operations; it is important to weigh the risks of hiring a potential liability against the risks of employee shortage.

Even after a new employee is hired, replacement costs may still continue. Regardless of their experience in the field, new employees must be trained in the specific requirements of the position. During this time, they will not be as productive as other employees. Since they are working in an unfamiliar environment, new employees are also at an increased risk for getting hurt at work.

Jobs may present unique hazards that are unknown to the new hire, increasing the chance for an injury that will result in a workers’ compensation claim. A high number of workers’ compensation claims mean an increased cost to your insurer. Insurance providers take this into account when deciding coverage cots for companies with high employee turnover, which can mean higher premiums for you.

 

Preventing Turnover

If you have productive employees who do quality work, the financial benefit of keeping them around is obvious. The key to reducing costs and keeping premiums low is hiring the right people from the start, investing money in effective training and emphasizing the importance of safety on the job. Job satisfaction also plays a key role, so keeping employees happy will also play an integral part in  protecting your company’s bottom line.

Retaining a productive and experienced staff can go a long way in your cost-saving efforts. Not only do you avoid hiring costs, but experienced employees allow your company to operate at a much safer level. A safer workplace means fewer injuries resulting in workers’ compensation costs, saving you money in the long run.

 

 

Best Ways to Retain Your Top Employees

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.

 

Retention Strategies

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.