This avoidable situation is costing US businesses $11 billion every single year
In the recruitment space, many companies fail to recognize the lessons inherent in customer loyalty schemes. And according to The Bureau of National Affairs, that lack of recognition is costing U.S. businesses an estimated $11 billion in lost revenue -- every single year.
This situation is what we call "employee turnover," or the number of employees who leave an organization and need replacing.
Employee turnover is on the rise. It leads to ballooning recruitment costs and a whole host of talent management problems. The average cost to fill a position ranges from $3,000 to $18,000, so it's easy to see how numbers can quickly get out of hand.
But here's the worst part: employee turnover is entirely avoidable.
If your HR department wrestles with this challenge, then understanding its primary causes will help you make sense of the problem.
By implementing a clear and coherent strategy, you can keep top talent happy, engaged and excited.
Measuring Employee Turnover
Measuring employee turnover plays a crucial role in identifying the severity of the problem.
In fact, it's something that should be done on a monthly basis, though you may want to contextualize this by conducting an annual survey as well.
The process is fairly simple. You'll need three figures:
- The number of active employees at the beginning of each month
- The number of active employees at the end of each month
- The number of employees who left during that month
First, add your beginning and ending employee numbers for each month, and divide that by two. This gives you the average number of employees for that month.
(Beginning Employees + End Employees / 2 = Average Monthly Employees)
Next, divide the number of employees who left during that month by the average. Then, multiply that figure by 100 to get your final turnover percentage.
(Employees Left / Average Employees x 100 = Monthly Turnover %)
It's important to conduct regular measurements of employee turnover, so you can track fluctuations and better plan for necessary hires.
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The Causes of High Employee Turnover
Measuring employee turnover is a good start, but to reduce and overcome it requires a more thorough understanding of its causes and triggers.
Quite often, high turnover is the symptom of one (or many) underlying problems. Rather than throw money at quick-fix solutions, the best approach is to cast your gaze upstream. Ask yourself: what factors are causing staff to leave at such an alarming rate?
To help you better pinpoint and identify where the problem starts, let's cover some of the most common causes of high employee turnover.
1. No Standardized Onboarding Process
It's surprising how many companies have yet to standardize an engaging and informative onboarding process. Today's world is fast-moving and hyper-connected, so getting your staff up-to-speed is a pivotal aspect that simply cannot be overlooked.
2. Expectation vs. Reality
When hiring managers aren't equipped with the right tools, they can't sell the job properly. This results in hires that don't match job requirements or fit with wider company culture, in turn leading to greater turnover.
3. Lack of Recognition
People may take a job for more money, but they often leave it for more recognition. At the end of the day, we're all seeking acceptance and appreciation. Find new ways to promote internal success and reward your employees publicly for good work.
4. Poor Work/Life Balance
Shifting social values and norms means that today's businesses must account for a healthy work/life balance. If your staff are overcooked and underwhelmed, then simple solutions like flexible or remote working can make all the difference.
5. Lack of Career Development Opportunities
It's a natural human instinct to push forward and aspire for more, so make sure your company structure accommodates vertical career development. Regular discussions with employees can help keep both sides aligned and on the same page.
6. Empty Promises
When attempting to move your star candidate across the line, it's natural to want to promise the moon. Before you do, be careful about what you commit, and don't extend more than you can realistically deliver.
How to Design Better Employee Experiences
Ultimately, high employee turnover is the symptom of a larger, more systemic problem.
To reduce turnover and turn employees into happy brand advocates, companies need to re-think the entire recruitment process. This begins by mapping the candidate journey from start-to-finish, so you better understand the process candidates walk through.
Once hires are confirmed, it's extremely important to develop a coherent onboarding process that can be scaled across the business. Then, focus on ways you can make employees feel empowered, and deliver on their expectations for growth and development.
Not only will this create happier, more engaged employees, it also has the potential to save you millions of dollars.