Employee turnover can have a negative impact on your profit margin. Here’s where you’re getting it wrong when it comes to employee retention and how you can get it right.
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Turnover is the most expensive cost for a company because of its negative impact on sales, earnings, employee morale, and consumers. For every person that departs, you should factor in double their loss of productivity as you find, hire, and train replacements. This does not even include the loss of key employees who were excellent achievers in essential roles or on significant client accounts.
With Gen Z infiltrating the labor market in large numbers, employees are no longer the only ones under pressure to preserve their employment; companies must also seek to keep employees loyal and dedicated. This might be attributed to the "great resignation," a continuing trend of people quitting their employment for various reasons.
Talent is now a scarce resource, so employers now have to develop effective strategies to boost employee retention in their organization. But before that, it would probably help to identify where you’re getting it wrong.
Underestimating the importance of employee development - Employees nowadays do not desire a salary as the only reward, they want more. During interviews, you might ask them questions like “What will you bring to the table if you’re hired”, now employees want to know what you bring apart from salary. The average job needs a person to work 40 - 50 hours per week, so it's no wonder that people nowadays expect more than simply a paycheck.
Employees who do not receive the necessary growth resources frequently search for alternative employment possibilities. Thus, staff development should be a top concern if you keep your best performers.
This benefits the individual and your company because greater training leads to better productivity, resulting in more money for your company. Employees desire to work in surroundings that promote their development and learning.
No reward system - Employees need to feel acknowledged, and they should be rewarded when they reach milestones. Small acts of appreciation show your employees that you see and appreciate them. You don't have to pressure yourself to pay out large rewards; nonetheless, small gestures may go a long way. There are various methods to thank star employees, whether it is a gift card, small gift items, or bonuses - this gesture will also push other staff members to do better.
Staff members aren't involved in the development process - Nobody likes a dictator! Who wants to work in a company with a “know-it-all” leader? Employees should have a voice in the company’s decision-making process - be it little or big decisions. They should also have a say in creating an employee retention strategy plan. Every employer wants employees who work as hard as they do like it’s their company, which is why you must treat them as partners.
You may also hold live events to talk about your employee retention initiatives and obtain personal advice.
Toxic work culture - This has to be the leading cause of employee turnover in today's workplace. It's as simple as that: employees cannot flourish in toxic environments. Work is already stressful enough; adding to it by creating a deplorable working environment would only make things worse - how can anybody be productive in such a setting?
Take a close look at some of today's most successful businesses, and you'll see that many of them have employees who likely started with the company when it was in its infancy. The staff probably work 9-5, five days a week - dealing with toxic HRs, rules, and colleagues day in day out is mentally draining, and today’s workforce is no longer here for it!
The true reasons employees leave are not well understood - How can leaders hope to reduce unwelcome turnover if you don't know why employees quit and what to do about it? Employee exit interviews conducted in-house have not shown to be a credible source of information on why workers quit. It's no secret that only a tiny fraction of employees complete exit surveys, and even fewer offer honest feedback.
A better approach is to conduct one-on-one interviews if possible and create an unpretentious atmosphere for the employee, to be honest. Such conversations can even lead to the employee reconsidering their exit.
Not sure where to start?
Smart executives manage staff retention as carefully as they control the bottom line. They recognize the financial effect, identify the core causes of attrition, and address retention difficulties through realistic and focused initiatives as part of their overall personnel management strategy.
Without question, one of the most cost-effective strategies to increase your profit margin and develop brand reputation is to keep your best employees.
Develop an effective employee retention strategy
Conduct one-on-one meetings with employees, particularly those who have sent in notice of resignation
Set up a budget-friendly reward system
Give praise when due
Create a healthy working environment
Need more tips? Here are more tips on how you can improve your employee retention.