As you’re reading this, up to 50 percent of your employees may be looking for a new job. Employee attrition is a huge drain on your resources. Replacing an employee can cost businesses anywhere from one-half to two times the worker’s annual salary. In this article, we’ll discuss proven strategies to reduce your employee attrition rate.
Recruiting the right talent is hard enough. But retaining them is even a bigger struggle. Today, employee retention is one of the most significant challenges plaguing many human resource departments. A labour shortage, unlimited job opportunities, and fierce competition for talent make it increasingly difficult for companies to hold on to their employees.
When an employee leaves, it can cost the company dearly. In addition to the wasted recruiting hours and training expenses, you should expend additional resources to fill the gap and train a new replacement. This is why it’s important for businesses to mitigate their turnover rates. Minimising employee attrition is essential to improving business profitability.
Causes of employee attrition
To keep your employee attrition rate low, you should understand what causes it in the first place. While compensation matters, money is not always the reason why employees leave you for a competitor. Today’s employees want more than a good pay cheque. They demand a rewarding work environment that guarantees career development and prioritises employee happiness.
According to a 2021 Workhuman report, 36 percent of employees in the US and 46 percent of employees in the UK are actively looking for new jobs. Besides low pay, poor manager behaviour, a lack of recognition, and inflexible working hours are among the top reasons why workers seek greener pastures elsewhere. These departures inflict significant damage on businesses.
The costs of a high employee attrition rate
How costly is employee attrition? The cost of replacing an employee ranges from 50 percent to 200 percent of the individual’s annual salary. This means American businesses must spend anywhere from $30,000 to $120,000 to replace a mid-level manager with an average annual income of $60,000. Voluntary turnover is costing the US economy $1 trillion every year.
And then, there are the indirect costs that can’t be quantified. When someone leaves your company, it hits employee morale. Those remaining may have lost a good work friend, which can affect their job satisfaction. Having friends at work is crucial to a happy working life and to reduce your employee attrition rate.
As your staff loses more colleagues, they will feel less connected and committed to your organisation.
How to reduce employee attrition
Many organisations perceive employee attrition to be a natural churn of talent. As a result, they don’t make any effort to minimise it. This is, however, not the case. Much of employee turnover is preventable. More than half of voluntarily exiting employees say that their manager or organisation could have prevented their departure.
Decreasing your turnover rate can help you reduce costs and improve employee morale. While you might think employee retention strategies are expensive, there are many ways you can preserve talent with no added cost. So, how can you reduce your employee attrition rate? Follow these ten tips to slow down the revolving door.
Hire the right people
If you have a high employee attrition rate, your recruiters may be to blame. The best way to avoid abrupt employee departures is to hire the right people in the first place. A Jobvite survey has found that 33 percent of employees quit their jobs within the first 90 days.
Over 43 percent of those said their job responsibilities did not reflect what they were led to believe during the recruitment process.
To hire the right person for the job, define the role clearly ⏤ both to yourself and the candidate. And then make sure the candidate is not only a good fit for the job but can also mesh well with your company’s culture. Include peer interviews in your hiring process. This helps both the company and the candidate to determine if they’re a good cultural fit for each other.
Give opportunities for career development
If you believe pay is the primary cause of employee attrition, think again. Most employees want to improve their skills and move up the career ladder. The top reason for voluntary employee turnover is due to career stagnation.
According to the 2020 Work Institutes report, 20 percent of employees quit their jobs because of no advancement or promotional opportunities.
Investing in training and development programs will give you the skills you need while deeply engaging your employees in their work. Some ways you can do this are providing tuition reimbursement, paying for continuing education, and signing up employees for online courses.
Many workers may choose a job with lower pay if it provides opportunities for career growth.
Create a safe work environment
Many industries pose a risk to workers’ health and safety. Private employers in the US reported 2.8 million nonfatal workplace injuries in 2018. Workers who suffer an injury or see their colleagues injured are more likely to leave you for an organisation that prioritises their wellbeing. An unsafe work environment is among the top reasons why employees quit their jobs.
Fostering a safe work environment can help you lower your employee attrition rate. Adopting workplace injury prevention programs will show your employees that you care about their health and wellbeing. This not only improves job satisfaction but can also increase employee loyalty. And with fewer injuries, you deal with less compensation claims.
Offer competitive pay
This is a no-brainer. We all work to earn a living. Pay has consistently been ranked as one of the top reasons why professionals change jobs. Over 9 percent of employees quit their jobs because of compensation issues in 2019. If you don’t offer competitive wages and benefits, many of your employees will leave you for an organisation that will.
To lessen your turnover rate, make sure you pay market rates for in-demand skills. Conduct market research to see what your competitors are offering for similar roles and try to match their pay rates. If you can’t afford to increase base pay right now, consider providing other forms of compensation such as bonuses, profit-sharing, and stock options.
Support employee wellness
The COVID-19 pandemic has made us more health-conscious than ever. Employees now prefer to work for organisations that look after their wellness. In one survey, 62 percent of employees said that wellbeing support was the top priority when applying for a new job. Wellbeing extends beyond physical health. Employees also expect mental and emotional health support.
Offering wellness support can make your employees healthier, which in turn helps boost workplace productivity. Digital health solutions like telemedicine and virtual care have made it easier than ever to promote a healthy and happy workforce. You can provide routine virtual health checkups to ensure your employees are in tip-top shape physically and mentally.
Train your managers
You’ve probably heard of the saying, “people leave their bosses, not their jobs.” When you look at the statistics, this statement couldn’t be more true. According to a Gallup report, 50 percent of employees have quit a job to get away from their manager at some point in their career. A company’s line management plays a big role in its employee attrition rate.
Keep a close eye on your managers to improve corporate culture and reduce staff turnover. Your low-level managers must be properly trained to treat their subordinates with civility and respect. Teach your supervisors people skills so they can coach a team, provide constructive feedback, and discipline employees without losing them.
Allow change of departments
Whether due to higher pay or interest in another field, many people embark on a different career path. Career changes are more common than you think. More than one-third of Americans between the ages of 25 to 44 have changed careers since starting their first jobs post-college. Many employees leave their jobs due to a desire for a career change.
If you allow a change of departments, your employees don’t have to leave your company to ationseek another career. By giving them the option to move between departments, employees can go after their dream careers while remaining at your organisation. Implement a clear program for employees who want to switch departments to facilitate a smooth career transition.
Provide flexible work
The pandemic has forever changed the way we work. Once a luxury, remote work has now become the new normal. Employees have come to enjoy the flexibility that remote work provides and consider it important for a healthy work-life balance. In a FlexJobs survey, 81 percent of employees said they would be more loyal to their employers if they offered flexible work options.
Flexible work is not limited to distance working. There are many different types of flexible work arrangements that can help you control your employee attrition rate. Some examples include flextime, compressed workweeks, and job sharing. Providing flexible work options not only leads to greater productivity but can also help you attract and retain top talent.
Increase employee happiness
Obsessed with KPIs and metrics, many companies overlook the importance of employee happiness. But happy employees are essential for achieving the results you want. Studies have found that happy employees are 20 percent more productive than their unhappy counterparts.
When thinking about how to reduce your employee attrition rate remember that happiness creates positive energy in the workplace, making employees less likely to leave.
Increasing job satisfaction is key to reducing employee attrition rates. A great way to make your employees happier is to invest in corporate fun days. Hire professionals to come in and give your staff free massages and manicures. When you make your employees feel valued, you will gain their admiration and loyalty. This, in turn, will help you reduce your turnover rates.
Conduct exit interviews
Is your employee attrition rate alarmingly high? To fix the problem, you should first understand what is causing it. This is where exit interviews can help. Exit interviews help you gain context about why an employee is leaving your organisation. You can use the departing employee’s feedback and suggestions to improve your company’s retention strategies.
Keep in mind that some employees may not tell you the real reasons they’re leaving to avoid burning bridges. This, however, doesn’t mean that exit interviews are unreliable. The information obtained from the interview can help you identify the circumstances that led to the departure. This can throw light on issues like department conflicts and toxic management practices.
There will always be employees who want to leave your company. Some may find a better job elsewhere while others quit to start their own businesses. No matter what you do, you can’t completely prevent employee attrition.
But with the right employee retention strategies, you can reduce your employee attrition rate and keep it to a minimum so it doesn’t disrupt and damage your organisation. Use the tips in this article to reduce turnover costs and make your best employees stay.
About the Author
Aaron Smith is an LA-based content strategist and consultant in support of STEM firms and medical practices. He covers industry developments and helps companies connect with clients. In his free time, Aaron enjoys swimming, swing dancing, and sci-fi novels.