$1 Trillion. According to a recent Gallup article, U.S. businesses are losing a trillion dollars a year due to voluntary employee turnover. The March 2019 Job Openings and Labor Turnover Report from the Bureau of Labor and Statistics reported the total number of separations in 2018 was 66.1 million. 61% (40.1 million) of those separations were quits/voluntary turnover. On the conservative side, the estimated cost of replacing an individual employee can range from one-half to two times the employee's annual salary. For example, a 100-person organization that provides an average salary of $50,000 could have turnover and replacement costs of approximately $660,000 to $2.6 million per year! Aside from the cost of training a new employee, losing strong employees can reduce workplace morale, break key customer relationships, and even affect your brand if it was the result of a tumultuous relationship.
When you consider how highly competitive and tight the current labor market is, most organizations may find it difficult to survive after losing good people. Employees may be cogs in the wheel of your company, but they are what keeps the wheels turning. Having the right mix of a top talent team who work well together means that your innovators and go-getters will ensure your organization continues to churn out quality products to be a leader in your field. Fifty-two percent of voluntarily exiting employees say their manager or organization could have done something to prevent them from leaving their job. While we cannot eliminate voluntary turnover, there are things that management can do to provide the most desirable work environment for its employees so that they would reconsider seeking employment elsewhere:
- Create an open and honest work environment. Give feedback on work performed and be willing to listen to the concerns of your employees. Be receptive to new ideas. Accept suggestions for problem-solving. Be available and open when your employee asks for your guidance. Keep your employees informed about what is happening with the company - don't let rumors take over. If there are problems or setbacks, communicate this to your team.
- Communicate your mission. Discuss your vision for the company with your entire team, not just management. Where are you now? Where do you want to go? How can your employees help get you to the next step? Updates (weekly, monthly, quarterly or bi-annual or annual) on the organization's performance should also be provided as appropriate for your industry.
- Conduct “stay” interviews. Over half (51%) of exiting employees say that in the three months before they left, neither their manager nor any other leader spoke with them about their job satisfaction or future with the organization. Consider asking longer-tenured employees why they stay. Ask questions such as: Why did you come to work here? Why have you stayed? What would make you leave? What would you change or improve? Then use that information to strengthen your employee-retention strategies.
- Provide opportunities to grow and learn. Encourage employees to learn new skills and let them know there is room for advancement in your company. Tap into their passion and allow them to focus their time and energy on projects they can enjoy. Let them know what career development plans you may have for them and what opportunities are available for them to grow with the company.
- Provide Perks and Incentives. What can you offer to set you apart from other employers? recognition in front of the company, free snacks or meals, service projects, lunches with the boss, logo clothing, handwritten notes, etc., can all contribute to the positive culture of the company and can be good morale builders as well. Consider offering a revenue-sharing program where part of your employees' wages is tied to the company's performance. This will align their interests with the company's revenue and profit goals and will serve as an inherent incentive to stay with the company as it grows.
According to the Bureau of Labor Statistics, the median number of years that wage and salary workers had been with their current employer was 4.2 years in January 2018. This number varied by age and occupation. The median tenure for workers age 25 to 34 is 3.2 years. Experienced talent, particularly those with technical knowledge, is in high demand. Employment is a two-way relationship; we want the best workers who will increase productivity and profits for us. As such, we should create an environment where they feel appreciated, respected and worthwhile so that we can retain this top talent.