How to Reduce Your Employee Turnover Rate

Hire Success
Hire Success

If you’re like many managers, you’re looking for ways to reduce your employee turnover rate. Between severance pay, temp coverage, hiring expenses, and training new employees, the costs of losing staff — especially your top performers — can quickly add up.

That’s why effective strategies to reduce employee turnover pay for themselves. Ultimately, it comes down to being clear about what you need and want, and discerning the same from your workforce. Successfully doing so will be the difference between turnover and retention in your business.

Understanding the different types of employee turnover

Employee turnover can be broken down into two primary types: voluntary and involuntary. Noting the difference between voluntary and involuntary turnover can help you better analyze and manage your employee turnover rate.

Turnover types

What is voluntary turnover?

Voluntary turnover is when a worker willingly makes the choice to leave their position within a company. For example, if an employee leaves because they found a new job, are returning to school, or are unsatisfied with their current role, it would be considered voluntary turnover.

What is involuntary turnover?

Involuntary turnover is when an employer decides to terminate an employee against their will. Some examples of involuntary turnover include an employee getting fired or laid off from their position.

Analyzing your employee turnover rate

Before deciding on an employee retention strategy, you must first determine your turnover rate, which sheds light on how many employees are leaving your company and how quickly. But analyzing voluntary and involuntary turnover ratios and digging into exit interviews can reveal why. If you’re having a problem with high employee turnover, this data can highlight your path to improved retention.

For instance, if you find that most of your turnover is voluntary and due to factors you can control — such as inadequate compensation or insufficient growth opportunities — you’ll know what needs to be fixed. Furthermore, if you find that a significant percentage of employees are departing within their first few months on the job, this can indicate issues with onboarding, and you can make changes accordingly.

The many causes of employee turnover

There are many factors that may cause an employee to leave or convince an employer to let someone go. Some situations are inevitable, such as when an employee retires or relocates. Some are obvious, such as absenteeism or theft. But in many cases, the reason for leaving could likely be avoided with proper retention management strategies.

Common causes of employee turnover include the following:

  • Not a good fit for the company. If an employee isn’t aligned with a company’s culture or values, they may seek work elsewhere, or their employer may seek to terminate their employment.
  • Few opportunities for growth and advancement. It’s important to invest in your employees and offer room for professional growth. Failing to do so could drive top talent away.
  • Misunderstanding the job’s expectations. If your job descriptions are unclear, a candidate may end up taking a job without fully grasping its duties, thus increasing the chance of turnover.
  • Unsatisfactory wages or benefits. Employees will be incentivized to leave your company if you’re not offering a salary and benefits package that's in keeping with industry standards.
  • Feeling undervalued or overworked. It’s fair to expect employees to do their jobs, but an unreasonable workload can quickly send people packing.
  • Lack of feedback and acknowledgement. Without sufficient feedback and recognition for their efforts, employees may experience reduced morale and start seeking new job opportunities.
  • Poor work-life balance. When staff members are expected to sacrifice their personal lives on behalf of work, employee burnout and turnover are often increased.
  • Getting micromanaged. Offering advice and assistance can be a helpful employee retention strategy. But when staff members are limited in their decision-making abilities, they may get frustrated to the point of leaving the company.
  • Failure to accommodate employee needs. Some employees have specific physical, spiritual, or familial needs and could be forced to leave a job if their employers can’t accommodate those needs.
  • Unfair treatment among employees. Picking favorites or failing to apply consistent standards can create a divided workforce and ultimately push staff members out the door.
  • Rude or demeaning management. If management is constantly putting employees down, the employer-employee relationship could be strained to the breaking point, and turnover will become more likely.
  • Lack of organizational stability. A company that’s undergoing frequent operational or managerial changes may appear to be unstable, potentially causing some employees to leave in the process.
  • Poor job performance. When an employee’s work is lacking or negatively affecting their company’s bottom line, it’s often grounds for termination.
  • Violating company policies and standards. Each business has its own set of policies and procedures that help it to function properly. If they’re undermined by an employee, management may be required to let them go.
  • Inadequate skill set. Without conducting skills assessments, a candidate may end up in a job despite having insufficient skills. Management may then be forced to terminate them, causing employee turnover.

7 strategies to reduce employee turnover in your business

An important part of managing employee turnover and retention is ensuring that your employees are happy, involved, and fulfilled in their roles. However, you can begin taking steps to reduce turnover even earlier, because the best way to keep employees is following a recruiting and hiring process that finds you the right person to begin with.

Every time you avoid making a bad hire, you also avoid the costs that come with having to replace that person. By finding better matches for a position and focusing your resources on a shortlist of top talent — rather than investing time and money into too many candidates, many of whom won’t pan out — you can set yourself on the path to improved retention right from the start.

After all, there are several strategies to reduce employee turnover once someone is on the payroll, but their effectiveness will ultimately be dictated by whether you picked the right person for the job to begin with.

Seven strategies

1. Determine what knowledge and skills are essential to a position.

Before recruiting for a given position, it helps to know exactly what skills and experience you’re looking for in a candidate. Those are often the easier boxes to check as you begin to put together your job posting. But what qualities will lead to success in the role you need filled? You can identify these core traits by administering personality tests to existing employees in the position or through a manual process.

Once you’ve really zeroed in on both the hard and soft skills you need, it’ll be easier for you to narrow your search and determine which candidates are most qualified for the job. This can, in turn, reduce the chances of making a bad hire and dealing with costly employee turnover down the road.

2. Tailor your job posting to the kind of person you’re seeking.

Once you’ve collected data on the type of candidate you need, incorporate that information into your job postings. You should clearly indicate the skills and traits you’re seeking in an applicant. But beyond that, you should use specific wording that would attract the type of person who’d be successful in the role. For instance, if your testing and benchmarking reveal that you’re looking for a Type A personality, write your job post in a way that appeals to a take-charge, ambitious person. A good personality test will give you insight into not only what you should say but also what you should avoid.

In addition, make your job postings more effective by talking about your company culture and explaining how the position you’re offering differs from others with similar titles. Describe how the particular job fits within the larger goals of your business. And lastly, don’t forget to provide clear instructions on how to apply for the position.

3. Improve your interview process.

The interview process provides you with an opportunity to better understand a candidate’s desires, motivations, and on-the-job behaviors. You’ll also be able to determine whether they’re a good match for the company culture, leading to better hires and a lower turnover rate.

It’s important to determine your interview strategy in advance. For example, will you be using structured or unstructured interviews to assess candidates? And what interview questions will you be asking?

This is where the hard work of employee benchmarking and writing an effective job posting will pay off. Limit interviews to top candidates so you can focus your resources most efficiently. And if you’ve administered a personality test to each applicant, you can use the results to formulate candidate-specific questions that your interviewee will most likely not have prepared a canned answer for. That means you’ll be better able to have a real conversation and get an idea of who they truly are — and whether they’d be a good fit for your company.

4. Offer a competitive salary and benefits package.

Sometimes, managing employee turnover and retention comes down to plain old compensation. It’s not uncommon for employees to leave a position because of inadequate pay or benefits, so reduce employee turnover with salary and benefits packages that are competitive and comprehensive. Staff members are more likely to feel valued and comfortable in their roles, making them less inclined to seek employment elsewhere.

An attractive benefits package can include a number of options. Affordable health, dental, and life insurance plans are a great place to start, as is a generous paid time off policy. You may also want to include additional perks, like commuter assistance, performance bonuses, and health and wellness programs.

5. Provide flexibility and a good work-life balance.

As interest in working from home increases and schooling changes create childcare challenges, the demand for flexibility at work is surging. Offering your staff a flexible work schedule can reduce employee turnover by promoting work-life balance and supporting employee engagement. Beyond being an effective retention management strategy, these policies can also help with attracting new talent to your company.

6. Create opportunities for professional growth.

According to research from the Work Institute, the No. 1 cause of employee turnover is insufficient career development. If you’re worried about keeping your best employees, providing opportunities for career progression is a highly important retention strategy to use in your business.

To create these types of opportunities for your staff, you can offer ongoing training sessions, career coaching services, and access to conferences and other professional events. Using pre-employment personality tests can also improve employee development and succession planning processes by helping you better understand each employee’s goals and skills so you can facilitate their continued growth.

7. Make employee engagement a priority.

Even in high-turnover companies, the most highly engaged teams achieve 24% less turnover. In other words, an effective way to reduce your employee turnover rate is with management strategies that effectively address your workers’ engagement.

With the results from your employees’ pre-employment personality tests, you can tailor the right strategy for each employee. For instance, knowing how someone likes to receive feedback or deal with confrontation will help you enhance communication and improve the employer-employee relationship. And there are several other ways you can improve engagement in the workplace, too.

Reward your employees’ hard work.

Recognizing and rewarding your employees’ accomplishments and achievements can make them feel more valued in their roles, reducing turnover as a result. Some ways to do this include compensation, such as performance incentives, bonuses, and profit sharing. But they don’t have to be limited to money; companywide events that celebrate success may be just as effective on some occasions.

Don’t forget the positive feedback.

In some cases, it may be appropriate to offer criticism, or even a reprimand, to an employee. But it’s just as important that you make an effort to praise employee efforts and acknowledge their contributions to the company, as well.

Positive reinforcement can reduce employee turnover by fostering a stronger connection between your company and staff. And understanding what kind of personality an employee has can help you make the positive feedback for that person much more specific and effective.

When appropriate, involve employees in decision-making.

Employees who are given a say in some of the policies and direction of the business are more likely to invest themselves in their work. That’s why it’s vital to create opportunities for open dialogue between management and employees.

Through improved communication and inclusion, you can increase employee loyalty and engagement, which is bound to pay dividends in retention.

Manage employee turnover and retention with Hire Success®

Employees are a company’s greatest asset, which is why it’s so important to have effective retention management strategies in place. And the foundation for retention is laid before you even see a potential job candidate’s application, early during the hiring process.

With the right tools and system, like those offered by Hire Success®, you’ll be able to not only quickly identify and shortlist top talent but also use our pre-employment tests to improve the hiring and managing of your new employees. Our data-driven approach allows you to take the guesswork out of hiring as well as management. You’ll save both time and money as your business is better able to find exactly the right staff, in less time, and then hold on to your top-performing employees longer.

Hire Success
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