Every business owner wants to feel like they’ve created a work environment in which people can be productive and thrive as both workers and individuals. Unfortunately, this is frequently not the case. In fact, millions of businesses are forced to pay thousands of dollars per year due to high turnover. That said, there are certain tactics to cut down on the costs of hiring and employee training. Nonetheless, it is still important to address the issue of high employee turnover at the source. So, in today’s post, we will look at exactly how employee turnover is hurting your business, as well as a few strategies you can use to reduce your company’s turnover rate!
Employee Turnover Is Expensive
If you’re worried about employee turnover at your company, you are definitely not alone. Research estimates that employee turnover costs U.S. businesses more than $1 trillion every year. Looking at each business individually, you can estimate that every employee you need to replace will cost between 20% to 30% of that employee’s annual salary. So, if you need to replace just 10 employees per year with an average salary of $40,000, you might need to pay as much as $120,000 every year, just for turnover.
Naturally, this is a huge expense, particularly for small and medium-sized businesses. Consequently, improving your retention rate should be a priority. Not only does it help improve productivity at your business, but it also eliminates the very costly expenses of rehiring and training new employees.
High Turnover Is Usually a Red Flag
High employee turnover can cost your business a lot more than just dollars and cents. If your annual employee turnover rate exceeds 20%, this could be an indication that something is not right at your company. Perhaps salaries and benefits are too low, the work environment is too hectic, or employees simply feel a lack of compassion from management. The reasons can vary widely, but high turnover is usually a red flag that can affect your business on many different levels.
For example, if prospective hires see that employees are leaving your business in droves, they will be far less likely to accept your job offers. Additionally, it can end up hurting your brand. Businesses that have high employee turnover often run into PR issues, whether or not the turnover rate is related to elements within your control. Thus, improving your employee retention can help you look and function better as a company.
You Let Talent Walk Out the Door
Finally, when you have a high turnover rate, it means that you are losing existing employees. They may even choose to take up job offers from your competitors. Since you hired these employees in the first place, it means that you saw value in them. When they leave your company, their value and talent walk out the door with them.
More often than not, the best way to avoid all of these problems is to talk to your employees directly. What are their concerns? What are their pain points? Do they feel fairly compensated? Do they feel fulfilled? Asking all of these questions can help you devise a strategy to reduce turnover rates and improve your business at the same time.
Want even more advice to help grow and improve your business? If so, be sure to check out some of our other business posts on Desoto Central Market today!