If you own or manage a business, employee turnover is simply a fact of life. Some employees will grow alongside the business and become a significant asset to the company’s day-to-day operations for many years. Some employees find that their needs and contributions only fit their position for a short time.
However, though every company experiences a constant cycle of personnel gains and losses, it’s usually clear to see when your employee turnover rate is higher than it should be. Some of the common signals of this phenomenon are a constant state of being short-staffed, decreased productivity in the workplace, and a poor sense of morale among existing employees.
Are you wondering whether your company has a problem with high employee turnover? First, it’s crucial to establish an employee turnover definition. Employee turnover is the act of replacing one employee with a new one. To fix the problem, you’ll need to determine your turnover rate to establish the effect it could be having on your company’s image, morale, and productivity.
How to Calculate Turnover Rate
If you’re wondering how to calculate turnover rate within your company, all you’ll need to know are the following distinct variables:
- How many employees left your company within a given period?
- How many employees were employed at the beginning of the period?
- How many employees were employed at the end of the period?
Once you uncover these variables, you can calculate your turnover rate with a simple equation. Divide the number of company employees that left their jobs by the average number of employees during a specific period. Once you’ve determined this figure, multiply it by 100 to get your percentage.
What Causes High Employee Turnover?
If you have a high employee turnover rate, your company is likely using more budget than necessary on new employee onboarding and training. Plus, if your company is widely known for having a high turnover rate, this can be a turnoff to applicants or even potential clients. What’s more, it can negatively affect your team’s morale if the loss of seasoned employees and inexperienced ones is constantly interrupting workflow and hindering productivity.
A variety of factors — depending on the company — can cause employee turnover. However, some common reasons include:
- Lack of sense of community
- Toxic work environment
- Lack of challenge or growth opportunity
- Insufficient pay
The best way to determine what’s causing your company’s high turnover rate is to speak to your most tenured team members. Ask them to give you their honest opinion about the situation, and without any consequence. Often, business owners or managers are surprised to learn of a toxic work environment among their employees if the administrator has not personally seen it or experienced it firsthand.
How to Reduce Employee Turnover in Your Company
There are a few key ways to improve your company’s employee retention and subsequently boost morale, increase productivity, and repair your public image. Companies should prioritize employee satisfaction, hire the most suitable people, recognize and reward employees.
Prioritize Employee Satisfaction
Often, employers will get so caught up in their company’s productivity and output that they’ll forget to make their employees’ happiness a priority. Though the level of satisfaction among your staff can be challenging to quantify, it’s worthy of dedicating some time and effort. Some common ways to encourage a happy team include:
- Small gestures of appreciation (meals, treats, cards, flowers)
- Recognition of a job well done
- Gratitude for their time and hard work
- Pay raises or promotions based on achievement and knowledge
Your staff is the bread and butter of your company, so it’s essential to incorporate these acts of encouragement regularly. In fact, frequent recognition of hard work within your team can even spark improved performance among other staff members.
Make Your Hiring Process More Selective
When figuring out how to reduce employee turnover, you may find that the problem lies in the quality of your new hires. Ensure that each new employee’s role in the company is clearly laid out so that you and your potential recruits can honestly determine whether the position is a good fit, their personality, and their skillset.
At the same time, do your best to explain and demonstrate team culture within your company so that your potential recruit can envision themselves within it. After all, your new hire will be contributing to the work environment, and you want to make sure their contributions will be welcome ones.
Create Opportunities for Growth
There are many reasons why team building is important and valuable. One is that an appropriately trained and encouraged team creates skilled employees that will only continue to improve. To promote this continued improvement and maintain a high employee retention rate, you must establish opportunities for your employees to level up.
Whether it’s the chance to travel on an important business trip, the opportunity to handle an account with a high-priority client, or even the occasion to move up in rank within the team, your top-performing employees deserve to have their hard work recognized. The best way to do this is to set attainable goals that they can work towards, reach and then reap the benefits.
Uplift Your Team Culture Using Recognition
Business owners know that team culture is everything when it comes to morale and employee retention. Learn indispensable employee engagement strategies and elevate your team culture with Inspirus Celebrates.