There are several very important reasons that make it essential for businesses to retain employees. Throughout the marketplace, employee retention isas challenging as ever. While the employment rate is at a record low, job opportunities promising steady professional growth are not as scarce as in recent years.
While today’s dynamic marketplace environment can be a powerful motivator for your most talented and productive personnel, it can just as easily prompt them to market themselves for alternative opportunities. For those feeling they are underappreciated or under-compensated, the opportunity to explore an alternative career is especially appealing.
Managing and Retaining Talent in a Modern Competitive Market
Most hiring managers, whether working for an agency or in-house, understand that managing and retaining top talent is just as important as controlling the overall rate of employee turnover. This challenge is, without question, one of the most pressing problems faced by employers in every industry. Workforce management isn’t easy, and increasing competition in the hiring market isn’t making things any better. This blog explores:
- What Employee Turnover Costs Your Firm
- Understanding Why Good Employees Leave
- Tips on Retaining Your Talented Workforce
Let’s take a closer look at each:
What Employee Turnover Costs Your Firm
The most immediate consideration for employers dealing with turnover is the fiscal damage to the company’s bottom line. Make no mistake – the financial costs of employee turnover are anything but insignificant.
Simply put, it can cost an average of 33% of Worker A’s annual salary to find a replacement in Worker B. For an employee that earns around $45,000 annually, the replacement costs would be around $15,000.
There are other less obvious costs associated with employee turnover. They are more difficult to quantify in financial terms, but that does not diminish the fact that they impede growth and progress. Some of these costs include:
When talented members of your workforce leave, a series of immediate problems arise. As an example, it can take weeks, sometimes months, to find a suitable replacement. Add to that the time needed to train a replacement to handle the predecessor’s tasks and responsibilities, and before you know it, a fiscal quarter or more has gone by. This strain is shared by the entire team.
In the fast-paced title and mortgage industry, for example, a mortgage staffing agency could take up to two weeks to identify a qualified professional to occupy an open position. Once hired, it will inevitably take the replacement some time to acclimatize to the employer’s business, culture, and working environment. Given the necessary, if uncomfortable, disruption to operations and processes, it’s critical to get the hiring process right.
Low Workplace Morale
Two aspects that further contribute the most to workplace morale are turnover rates and company culture. As it happens, both of these factors are inextricably intertwined. If a firm has an unusually high employee turnover rate, it will manifest itself in the company culture. In a corrosive environment, few, if any employees will consider their positions over the long-term. As a consequence, morale in the workplace sinks quickly.
Loss of Consistency in Knowledge
Wherever the turnover rate is high, there are bound to be gaps in key company processes. When too many employees depart a firm at once, there will be fewer opportunities for the necessary transfer of critical company and procedural knowledge. When knowledge transfer is inconsistent within any workforce, the results are acutely and immediately felt.
Not only will it take longer to bring new talent up to speed, but subsequent adherence to industry and company practices may be patchy at best. In no time at all, the quality of work, and the subsequent quality of talent, will decline considerably.
Understanding Why Good Employees Leave
There is no one reason that prompts an employee to look for a different career opportunity. They may not gel well with their immediate superior. It’s possible they do not see any opportunities for advancement or growth within their firm. Maybe they simply found an opportunity better suited to their lifestyle or skill set and simply decided to move on. Almost everyone in hiring management has had to deal with these problems.
For all the factors dictated by external circumstances, there are several other mistakes employers make that result in higher employee turnover rates. Many employers don’t appreciate the pitfalls of overworking their employees. Others may fail to honor the commitments they made to members of their workforce as a consequence of the daily stresses of business on a company. Those reasons aside, employees might also express other motives for departure:
- They feel the wages are uncompetitive
- They feel a lack of development potential
- Don’t receive due recognition or reward for their work
- They have limited means or encouragement to exercise their creativity
- They feel their job and/or assigned responsibilities are not challenging enough
Tips on Retaining Your Talented Workforce
It goes without saying, every employer strives to retain skilled, talented, and productive employees. For all the reasons mentioned above, however, this can be more challenging than many people think. Luckily, these worthwhile tips can help anyone to do a better job of managing and retaining the most talented members of a team, thereby reducing employee turnover rate:
Set Clear Expectations for Potential Employees
To ensure a good employee experience, it’s critical to set the stage for a smooth transition even before the onboarding period begins. The period between an employee’s acceptance of an offer and the start of a new job can be one full of anxiety and uncertainty for even the most seasoned job seeker.
For example, in Information Technology staffing, candidates often change their minds during this transition period, particularly if the job descriptions for the positions to which they were hired are too vague or misleading. To reduce any such pre-employment attrition, it’s always better to set clear expectations from the first meeting, and well before the onboarding begins. This can settle a potential employee, enabling him or her to focus on a smoother transition.
This can pay dividends, especially if the hiring team continues to keep the lines of communication open throughout the employee’s tenure.
Strong Onboarding Protocols
The onboarding process sets the tone for every employer-employee relationship. Onboarding defines what the employer expects from employees, and what employees should expect from the employer. A poor onboarding experience can demotivate a new employee to the point of considering other options. It may even discourage others from joining the organization. Conversely, a sound and mindful onboarding experience can motivate an employee to refer other talented individuals to your firm.
Setting up Performance Feedback Channels
A feedback-centric work environment tends to have a lower employee turnover rate than an environment based on a strict hierarchical rule. To retain employees, then, it’s imperative to establish frequent, face-to-face meetings for two-way feedback between employees and management. This helps employees work on their performance, and to discuss constructive criticism in a safe environment.
Offering a consistent feedback channel is critical to retaining top talent. As long as employees know that their hard work is recognized and valued, and are aware of their areas of improvement, – the professional relationship between an employer and employees will grow and prosper.
To that end, an annual performance review that takes into account the employee’s performance throughout the year, along with his or her expectations and goals, is an extremely valuable tool, and a time to clearly define the responsibilities of the employer and the employee.