Of all the things that cost employers money, hiring a new person is near the top of the list. Compared to buying new equipment or paying rent, replacing an employee might not seem like that much money, but when you consider what you’re getting for the money, it is. This is because the cost of hiring someone new doesn’t actually include their salary – it simply covers the recruitment process and the time and effort required to train someone.
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So, what is the cost exactly? Well, it varies from company to company, but on average it costs a business $15,000 to replace an employee who has left. Some industries can expect high turnover rates as a result of the nature of the job. For example, many people undertake hospitality and retail jobs as their first job or for seasonal income in between school terms, and this means employers in these sectors should expect a higher level of turnover as their employees move on to something else.
That being said, there are still averages that should be aimed for. In general, if your business exceeds a 10% turnover rate per year (or 60% in retail/hospitality), there is likely an underlying issue with your company that is pushing people to leave.
Unless you have tens of thousands of dollars to spend on staff turnover every year, you should aim to boost your employee retention in any way you can. Here are some tips on how you can begin to reduce staff turnover.
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Incentivize Your Staff
For a lot of employees, work benefits and perks are beginning to outweigh salary in terms of importance. With such a large proportion of time spent at work, it’s essential that employees get more than a basic living wage out of it. Ways you can incentivize your staff to stay include:
- Providing comprehensive health insurance
- Flexible working hours
- Annual leave exceeding the bare minimum
- Paid expenses e.g. commuting costs
- Set number of paid sick leave days
Providing your employees with one or a number of the incentives above will show them that you care about their general wellbeing and will set you apart from competitors who may not necessarily offer such benefits.
Job Progression Opportunities
Growing numbers of people are leaving their current jobs because they don’t have the opportunity to progress. Careers are at the forefront of most people’s minds – especially the younger generation who are beginning to enter the workforce. To retain employees, consider what you can do for them by way of progressing their career. You can think about:
- Creating new job titles with higher salary points
- Providing educational courses to advance a person’s qualifications
Doing the above could reduce the chances of a person feeling stagnant in their job and will demonstrate that you care about their career, therefore influencing them to stay.
There’s a reason children react to positive reinforcement: it works. Contrary to popular belief, it isn’t something people grow out of. Everyone likes being told they’re doing a good job, especially when they’re putting in a lot of effort and are routinely trying their best. A few ways you can reduce staff turnover through providing feedback include:
- Sticking to quarterly performance reviews
- Taking the time to praise employees every day
- Giving rewards for positive reinforcement
Doing all of the above will go a long way to making your employees feel valued and, ultimately, encouraging them to stay.
Try implementing the above points and see if it has a positive impact on your staff turnover rates. Chances are, you’ll notice your employees sticking around longer and having a better morale.