Did you know that 64% of today’s workers are regularly job-hopping? According to a new survey by staffing firm Robert Half and another report by the Gallup Institute, 21% of millennials, the largest segment of the workforce, say they’ve changed jobs within the past year.
Employee turnover is on the rise and workers are switching jobs now more than ever. As an independent business owner, turnover negatively impacts the profitability and productivity of your company. While some level of employee turnover is inevitable, it is important to take steps to boost your retention of good employees.
Below, we will provide a few gems you can offer employees that will encourage them to stick around, but first, let’s talk about what higher turnover could be costing your business.
The Real Cost of Employee Turnover
The unfortunate truth is that employee turnover is expensive. A report from The Center for American Progress shows that the typical (median) cost of turnover was 21% of an employee’s annual salary. In other words, for a Full-Time Employee (FTE) making $12 an hour, his or her departure will cost the business owner $5,250 in lost productivity and replacement costs on an annual basis.
In addition to spending thousands of dollars to replace an employee, there are also less obvious ramifications of turnover, like reduced productivity. According to The HR & Employee Engagement Community, about 30% of companies said that it takes a year, or longer, for a new employee to reach the full productivity level of a departing employee. Therefore, high employee turnover means having many inexperienced employees, which will eventually lead to lower employee productivity.
Companies with a smaller number of employees will find it is even more difficult to bounce back from the loss of an experienced employee, productivity-wise, negatively affecting client satisfaction and their bottom line.
So how do you reduce employee turnover?
Step 1: Diagnose Why Employees are Leaving
To improve employee retention in your business, start with an accurate analysis of what employee turnover looks like.
- 1. Determine your turnover rate
The turnover rate is the number of people who leave an organization and are replaced over a fiscal year. Here is a simple formula to help you calculate the rate and consider different scenarios, like how many new hires you are losing within a given year. According to the U.S. Bureau of Statistics, the average turnover rate in the U.S., across all companies, is about 12% to 15% annually.
- 2. In which areas of your business do you see high turnover?
Are you generally losing employees in retail sales, marketing, or other specific departments?
- 3. Are external factors affecting your turnover rate?
Is there high turnover across your industry? What about in your region? Do your employees have specific skills that are in-demand? Is the unemployment rate a factor?
- 4. How does turnover affect your organization?
This could include the cost of an employee leaving, costs of rehiring and training, HR time, a negative hit to morale, and lost profits due to low productivity.
Step 2: Look Internally to Find Out Why Employees are Leaving
After the steps above, if you determine that you do have a pretty high turnover rate and it isn’t caused by external factors, look internally to see where changes can be made.
Ask yourself these questions:
- Do your employees feel valued?
- Are there opportunities for growth within your company?
- Is your management team causing the issue?
- Do you offer incentives and rewards for good work?
- Are you offering the right health benefits?
Step 3: Think about Employee Benefits
56% of U.S. adults with employer-sponsored health benefits said that their health coverage is a key factor in deciding to stay at their current job, according to a survey from America’s Health Insurance Plan (AHIP). If you are losing employees, not offering benefits could very well be the reason why they are leaving.
If you already offer health benefits to your employees, please be aware that if they don’t feel it is affordable it may have a negative impact on your retention. Fifty-two percent of employees who aren’t satisfied with their benefits reported that they want better benefits, and 14% want different benefits altogether.
Providing solid health benefits or improving them is clearly important to retention, but there’s another benefit as well. Offering a good health insurance plan could also lead to healthier employees, which means fewer sick days and higher productivity.
Step 4: Lewer Can Help
Health insurance is a particularly important benefit to help improve employee retention. The team at Lewer Benefits Group can create a customized benefits package that meets both your budget and your employees’ needs. Running a business is hard enough without having to recruit and train new employees all the time! Contact us today for more information.
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