Employee turnover has always been an issue for American companies, as excessive turnover costs U.S. businesses over $1 trillion annually. With the Turnover Tsunami in full swing, it's imperative to focus on reducing employee churn rates. Replacing one employee can cost twice their annual salary. Costs of retention efforts strain companies less and help increase their productivity, as well.
Let's take a closer look at four ways of reducing turnover going into 2022.
1. Manage Employees to Grow in their Roles
As businesses slowly recover from the pandemic, employees are looking for new opportunities. Many of them don't leave because the salary is low or the benefits are insufficient. Instead, they quit because they don't understand their value to the company.
According to Gartner, 40% of employees cite the lack of career development as a reason for leaving their jobs. By allowing employees to grow in their roles, you are eliminating this reason and helping your business thrive.
To help your employees grow and increase their satisfaction, you need to improve the work culture and environment.
- Increase transparency – your employees need to understand how they contribute to the bigger picture. Weak attachment to company goals leads to disengagement.
- Share successes – all employees should know about individual, team, and organization success. Reward those who contribute to this success.
- Build strong co-worker relationships – arrange team-building activities, focus on wellness, and encourage a stress-free workplace. More than 90% of workers want to have better relationships with their colleagues.
Avoid micromanaging your employees. Give them the flexibility to grow and improve in their roles. Doing so will likely keep employees interested in helping your company achieve its goals. Leaving employees to conduct tasks and manage time on their own demonstrates trust, helping them feel empowered in their roles. Providing employees with regular positive feedback or helpful criticism indicates that they're valued and appreciated, as well.
2. Put the Right People in the Right Roles
The right approach to recruitment is the key to employee retention. By putting forth the effort and finding employees who fit the required roles perfectly, you are increasing their satisfaction and contributing to your company's success. A well-fitting candidate is more likely to feel empowered and less likely to look for other employment opportunities.
To improve your hiring process, you can invest in hiring technologies that allow you to analyze resumes, set up structured interviews, and evaluate candidates without bias. You can also invest in training or outsource tasks for your HR team. Partnering with a PEO offsets payroll or benefits administration tasks, freeing up your internal staff's time to focus on hiring and onboarding new employees. Their expertise can also provide advice and consultation to develop smoother systems to help the company adjust most quickly.
Implementing a smooth hiring and onboarding process demonstrates to new employees that you are an organized and efficient company, helping them develop a strong, positive impression as they start. That improves retention because that positive impression makes the decision to leave more difficult. Employees will be less likely to switch jobs if they don't expect another company to be as put together.
There is no need to look outside the company to find the right people for both existing and new roles in many cases. You may even consider cultivating new roles for current employees who show high potential. Focusing on internal hires doesn't help you find the best candidate without going through the hiring process. If you create a new role with an existing employee in mind, then you know they fit in well at your company, and you can be confident that they will put in the effort to succeed.
The costs of external recruiting are up to 600% higher than the costs of internal recruiting. Meanwhile, the turnover rate of internal recruits is minimal compared to the 20% of external hires. It allows you to increase satisfaction rates and improve employee engagement without worrying about culture fit. You demonstrate your investment in your staff to all employees, letting them know that there is room for them in higher roles.
While holding on to the right people is vital, it's just as important to understand when to let someone who isn't a perfect fit go. It's an unfortunate reality and an almost unavoidable byproduct of hiring simply to put a warm body in a seat. Taking the additional time and effort to find the proper employees ensures you will have employees who will fit and contribute positively to your culture.
3. Update Benefits to Keep ThemCurrent
Poor benefits packages contribute to employee turnover, however, a strong benefits package encourages employees to stay longer in their positions. Many employees will accept lower salaries in exchange for better benefits.
High-quality benefits are an integral part of retention efforts. Unfortunately, small companies rarely have sufficient resources to pay for them. However, by partnering with a PEO, you can leverage economies of scale and access Fortune 500-level benefits. Offering better health care shows greater care for your employees, especially if you encourage wellness alongside it.
Besides focusing on improving your standard benefits package, you can consider adding such benefits as:
- Flexibility in work hours
- Rewards to employees of the month
- Free meals
- Grocery delivery
- Legal services
- Employee clubs
These "perks" aren't as expensive as the standard employee benefits. However, they can substantially contribute to workers' satisfaction rates. These additional benefits can also improve your workspace environment and give employees a better sense of belonging.
4. Pay Attention to Employee Morale
The pandemic took a severe toll on everyone's morale. Remote operations, layoffs, and salary cuts made it hard for many businesses to keep the remaining employees happy. Going into 2022, it's imperative to emphasize morale improvement in the workplace.
Keeping your employees happy doesn't have to be expensive. You can consider:
- Focusing on work-life balance – remote work disrupted the work-life balance for many employees. Make it possible to get it back together and avoid burnout.
- Improving engagement – from recognizing top achievers and encouraging flexibility to clarifying goals and improving the workplace environment, keeping your employees engaged during these trying times requires a special effort.
- Increasing transparency – when employees don't know what you expect from them, it can be hard to stay positive or productive. Schedule more one-on-one meetings to increase transparency and discuss company goals and employees' roles in achieving them.
If the employee morale is low, it may take some time to fix the issue. Don't expect your methods to work immediately, but over time you'll notice steady improvement. That will set up your company for further success.
Management quality is a huge contributing factor in overall employee morale. Poor management itself is a major cause of turnover. Keeping a good oversight of your management team and offering managers regular training helps improve your company's leadership, which helps your retention efforts.
HR Outsourcing will regularly include management training and review employment decisions, which will benefit companies who may need additional assistance to put the best people in the right roles.
Improving Employee Retention and Reducing Turnover in 2022
With frustration levels up due to the long pandemic, many companies are struggling with a substantial turnover. Improving employee morale, tweaking your recruitment methods, sourcing better benefits packages, and helping employees grow can keep the churn rates low.
By taking it one step at a time, you can reduce turnover costs, hold on to the top talent, and improve your company's bottom line. Working with a PEO can help you provide better benefits, promote a safer workplace, enhance your HR functions, and much more. Contact us for more information today.