Losing an employee is expensive. Here are 5 strategies to improve employee retention.
The cost of replacing an employee can range anywhere from 50 to 400 percent of an employee’s annual salary according to the Society of Human Resources Management. Meanwhile, The US Department of Labor Bureau of Labor Statistics reports that more than 2 million people voluntarily leave their jobs each month. What do these numbers mean? They mean that the cost of replacing an employee with an annual salary of $45,000 could be between $16,000 and $160,000. And the cost of replacing your employee with an annual salary of $150,000 could range from $60,000 to $600,000. Losing an employee is costly — very costly. Yet, many organizations don’t know how to ensure that its human resource assets don’t just walk away.
Here’s what Maynard Webb, author of the New York Times Best Seller Rebooting Work had to say in a 2013 interview with Tech Crunch about cultivating a company culture in which employees choose to stay.
“You can create an environment where people have a say…the best way to have your people be happy and satisfied is to earn the right to have them come back to work for you the next day, knowing that there are tons of other places… you are going to create an environment where they’re challenged, and inspired, and learning.”
For companies that are willing to put in the effort to create the culture that Webb describes, the payout will be particularly sweet in the face of recent jobs outlooks. The Tompkins Supply Chain Consortium projected an increase in turnover within the supply chain industry in its most recent 2013 Supply Chain Talent Report. The report expected the most impacted positions to be in planning, procurement, and manufacturing. Reasons for employee departure included plant closures, outsourcing, and the need for more specialized skillsets. The Consortium isn’t the only one to recognize employee retention is worthy of attention. Accenture conducted a study (across industries) and found the top four reasons why employees quit their jobs are: a lack of recognition (43 percent), internal politics (35 percent), a lack of empowerment (31 percent), and because they don’t like their boss (31 percent). For managers, there are several lessons to be learned here.
Consider these employee retention strategies before prematurely bidding adieu.
Build buy-in and create opportunities for success
It’s important to gain buy-in from your employees. If an employee is going to be motivated to not just do their job, but to excel at their job — they need buy-in. Gain buy-in from employees by giving constructive feedback regularly and creating opportunities for employees to succeed and realize progress. A great resource on achieving buy-in and enabling success is The Heart of Change by John P. Kotter and Dan S. Cohen.
Recognize employees
Much in the same way that creating buy-in is so key to an organization’s success, employee recognition motivates and encourages employees – leading to happier clients and customers. Whether you use informal or formal employee recognition techniques, it’s important to acknowledge a job well done. Recognition lets your employees know you appreciate them and strengthens communication, which is especially helpful when working through tough issues that might arise.
Empower employees
Take steps to ensure your employees feel empowered. Make the path to advancement clear and regularly provide challenging work that expands an employee’s skill set. Set clear expectations for employees; beyond conveying unambiguous responsibilities, make certain employees know how and with what frequency they can expect to have their performance measured.
Remove the red tape
Staid bureaucracy and tumultuous internal politics can make anyone want to leave a work environment. Create a culture that values openness by eliminating red tape and increasing communication between departments and employees working within different functions. Start by moving financial reporting from monthly to quarterly, making senior managers responsible for their own strategies, or broadening approval levels of internal reports.
Explore a transfer within the company
If an issue is only germane to your team, or if it is impacting productivity and team morale within only your department, consider the transfer of an employee within the company. This approach addresses the specific issue at hand, but ensures the company retains top, and importantly, already trained talent.
While the time and expense of retaining an employee may seem daunting, the cost of losing an employee is much greater. Want to learn more about improving employee retention and hiring top talent? At Fronetics we work with clients to understand and execute on talent acquisition, performance management, learning and development, and succession management. Additionally, we offer management and leadership solutions to organizations within the supply chain and logistics industries during times of transition.
