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Employee turnover rate impact: 5 ways to reduce turnover

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Having an employee leave your business can create challenges in scheduling, increased costs for hiring, and a decrease in productivity. As such, it’s important to build a work environment that will make employees want to stay and thus reduce your employee turnover rate.

Reasons for employee turnover: natural turnover vs dissatisfaction

Employee turnover can often just be from the usual change in staff. That is quite natural and has to do with employees who are retiring or taking parental leave, but also with cyclical fluctuations in the labor market.

If, for example, the job market is good for those willing to quit, they will be ready more quickly to give up a secure job and change. In contrast, in times of high unemployment, employees tend to be more cautious.

The industry also has an impact on employee turnover rates. There are seasonal fluctuations, as there is, for example, lower demand for harvest workers, waiters in outdoor restaurants or workers in construction and painting companies towards winter.

Non-company fluctuation, also known as employee turnover, means, however, that an employee leaves the company by giving notice and moves to another company. The fluctuation rate indicates in percent how many employees have left the company in relation to the size of the company within the last twelve months.

Other reasons for employee turnover can include:

  • Dissatisfaction , for example due to a lack of career prospects
  • Changes in the personal area such as the birth of a child, relocation of the partner due to a change of job
  • Reorientation in professional terms, for example through illness or living out a hobby
  • Demands on the surrounding infrastructure, for example better transport connections or cultural offers

Effects of employee turnover: The disadvantages of a high turnover rate

A high turnover of employees rarely means something good. In times of economic downturn, it may be advantageous for a company to reduce its workforce.
On the other hand, there is sufficient evidence of cases in which employees leave on their own initiative, namely dissatisfaction – according to surveys, money only plays a role in a third of all cases.

Depending on who leaves the company, it has particularly painful consequences for the company: Namely when a replacement is difficult to recruit – keyword shortage of skilled workers , experts are already talking about the “war for skills”.

On the other hand, it can have an impact on the whole department, because important knowledge is lost with top performers . For some companies, this can threaten their very existence. High employee turnover has a number of negative effects :

  • If it is a matter of top performers, then there is a loss of important know-how for the company.
  • The company incurs costs through the departure, for example through bridging costs, procurement costs or through the induction phase.
  • Some workers are not as productive in their last tenure as they were before; be it that you have long since resigned internally, be it because the handover to other employees has to be prepared.
  • If a position cannot be filled with a replacement in a timely manner, projects can be delayed.
  • If a long-standing, experienced employee leaves, the existing team structure is changed, which can lead to demotivation and uncertainty among the teams. Even customers are not always happy when the contact person changes.
  • The induction phase is associated with costs and effort, because, on the one hand, other employees have to be assigned to the new employee, and on the other hand, because the new employee is not yet fully productive.

5 ways to reduce your employee turnover rate

You must make your business a place where people want to work, rather than a place they can make money until something better comes along. Here are five ways to do just that and reduce employee turnover.

Perfect your approach to scheduling

Scheduling is usually a nightmare for small businesses. It’s time-consuming to not only create a schedule but also to add up time cards for payroll. Add in employees wanting to change shifts and requesting vacation time, and scheduling starts to feel like a fulltime job. Too much frustration and employees start to head for the door.

Humanity scheduling software makes scheduling a breeze and empowers employees to log on and work out shift changes amongst themselves. Everything is recorded and centralized, and the platform even includes a time clock and payroll function. Your employees will appreciate the simplified approach and reduction of human error on payday.

Hire the right people

Hiring the wrong person increases the cost to your business when the individual inevitably leaves, whether voluntarily or through termination. Ensuring you have the right people in place for the job, and someone that fits in with your organizational culture can reduce the frequency of this occurrence.

Follow strict hiring protocols, and don’t let them lapse to fill a position quickly. Check everyone’s references and be clear about your expectations during the interview process. Ask questions relevant to their job description and follow your gut when making a decision.

Show appreciation to reduce the employee turnover rate

People want to be acknowledged for the effort they put in. Find different ways to show your appreciation. This could be a group dinner or outing, with the bill footed by your business. Perhaps a gift card or bonus based on sales will act as an incentive to keep employees happy and productive. Even something as simple as treating everyone to coffee and sharing your appreciation verbally can make a significant impact.

Think of this idea outside of the workplace. You work all day and come home to mow the lawn. This is an expected task, and your paycheck is the privilege of homeownership. Regardless, it still feels great to have a neighbor or family member compliment you on a job well done. The same validation applies in a work setting.

Know their values and goals

Take time to get to know your people. What are their values and goals? Where do they hope to go from here? Learning more about what matters to your people helps reduce turnover in many ways.

For one, you are building a rapport that shows your employees that the details of their lives matter to you. Secondly, you are opening up an opportunity to give them more tasks relevant to their career path and add value to their time spent working for you. Finally, you get a better estimate of how long they plan on staying in your business, so you can plan for their departure if necessary. However, the first two considerations may delay that departure indefinitely.

Create a culture of respect to reduce employee turnover

It’s up to you to create a culture that cultivates respect for all employees. This means putting policies in place regarding conduct, how people present themselves, what’s acceptable concerning speaking to and about one another and addressing any complaints in a timely fashion.

Business owners and managers must adhere to the same set of standards and lead by example. If your employees are expected to stay late to get work done, stay with them. If your employees aren’t allowed to speak rudely to customers and one another, follow the same principles. To reduce employee turnover, create a place where people enjoy working and remember the adage “if you find a job you love, you’ll never work a day in your life.”

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