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How to Reduce Employee Turnover: 15 Tactics for Retention

Cassandra Rose, SPHR, SHRM-SCP

Many com­pa­nies want to reduce employ­ee turnover. In fact, 87% of employ­ers agree that improv­ing reten­tion and reduc­ing turnover are crit­i­cal pri­or­i­ties. How­ev­er, it’s not always a straight­for­ward task.

Let’s take a hard look at turnover in the work­place, includ­ing impacts, employ­ee turnover rates and more. Then, we’ll get into how to reduce turnover with 15 proven tac­tics for increas­ing retention.

Voluntary vs. Involuntary Turnover

It’s impor­tant to know there are two types of turnover: vol­un­tary turnover and invol­un­tary turnover. Both cost com­pa­nies mon­ey and time, but they have very dif­fer­ent caus­es and solutions.

Voluntary Turnover

There are a vari­ety of rea­sons for vol­un­tary turnover. SHRM lists the fol­low­ing as the most com­mon rea­sons peo­ple quit:

  • Career Devel­op­ment (22.2%)
  • Work-Life Bal­ance (12.0%)
  • Man­ag­er Behav­ior (11.3%)
  • Relo­ca­tion (10.2%)
  • Com­pen­sa­tion and Ben­e­fits (9.6%)
  • Well-Being (8.4%)
  • Job Char­ac­ter­is­tics (8.1%)
  • Retire­ment (6.3%)
  • Work Envi­ron­ment (5.2 %)

Invol­un­tary Turnover is respon­si­ble for the remain­ing 6.7%.

Involuntary Turnover

Invol­un­tary turnovers include ter­mi­na­tions and lay­offs. There are sev­er­al rea­sons for invol­un­tary turnover, includ­ing unsat­is­fac­to­ry per­for­mance, cul­ture fit issues, ter­minable offens­es, com­pa­ny bank­rupt­cy and more.

Average Turnover Rate by Industry

Some trades are more sus­cep­ti­ble to turnover than oth­ers. Here are the indus­tries with the high­est aver­age turnover rate (based on the Bureau of Labor Sta­tis­tics 2019 Report).

Aver­age Turnover Rate by Indus­try In 2019 (sort­ed from high­est to lowest):

  • Arts, enter­tain­ment and recre­ation (79.9%)
  • Leisure and hos­pi­tal­i­ty (78.8%)
  • Accom­mo­da­tion and food ser­vices (78.6%)
  • Con­struc­tion (64.8%)
  • Pro­fes­sion­al and busi­ness ser­vices (63.3%)
  • Trade, trans­porta­tion and util­i­ties (49.4%)
  • Min­ing and Log­ging (47%)
  • Oth­er ser­vices (42.8%)
  • Infor­ma­tion (38.4%)
  • Edu­ca­tion and health ser­vices (33.3%)
  • Man­u­fac­tur­ing (31.3%)
  • Finan­cial activ­i­ties (28.7%)
  • Gov­ern­ment (18.7%)

No mat­ter the indus­try or turnover type, the impacts of high employ­ee turnover rates can be disastrous.

Harmful Impacts of Employee Turnover

High turnover rates can be cost­ly. Poor employ­ee reten­tion neg­a­tive­ly impacts a com­pa­ny in myr­i­ad ways, and one such way is the strain put on recruiters to con­stant­ly re-fill posi­tions vacat­ed by turnover. Not only is the added work­load prob­lem­at­ic, but a tar­nished employ­er brand due to high turnover makes recruit­ing exceed­ing­ly difficult.

No one wants to work for a com­pa­ny that keeps los­ing its employ­ees. High turnover sig­nals to prospec­tive tal­ent (and the world) that employ­ees are not being treat­ed well. How­ev­er, there’s more to the prob­lem than pub­lic per­cep­tion and attract­ing new talent.

Research from the Soci­ety for Human Resource Man­age­ment shows that every time an employ­ee leaves, it costs a com­pa­ny about one-third of that employee’s annu­al income.

In hard num­bers, it costs around $15,000 every time a com­pa­ny los­es an employ­ee who makes a $45,000 salary.

It’s not mere­ly hard costs. There’s also a loss in pro­duc­tiv­i­ty. Every time a com­pa­ny los­es an employ­ee who knows how to do their job, they have to spend sig­nif­i­cant time find­ing and train­ing a replace­ment. These pro­duc­tiv­i­ty loss­es are much hard­er to quan­ti­fy, but they can be dev­as­tat­ing to a company’s bot­tom line.

Each time a busi­ness los­es an employ­ee, it must replace, retrain and graft the new employ­ee into the company’s cul­ture. This con­stant dis­rup­tion can severe­ly impact com­pa­ny morale. If employ­ees rou­tine­ly see peo­ple com­ing and going, they’re less like­ly to get close to new hires and engage, less like­ly to trust in the com­pa­ny and its lead­ers, lead­ing to more turnover and less productivity.

It should come as no sur­prise that com­pa­nies strive to improve reten­tion and avoid these many neg­a­tive impacts. Here are 15 solu­tions proven to decrease employ­ee turnover.

15 Tactics to Reduce Employee Turnover

These tac­tics are based on exten­sive employ­ee turnover analy­sis. If you’re won­der­ing how to decrease employ­ee turnover or how to pre­vent employ­ee turnover alto­geth­er, start here.

1. Hire the Right Talent From the Start

Low turnover starts with the hir­ing process. Com­pa­nies must look for peo­ple who aren’t just skilled but who also fit the cul­ture as well. If new employ­ees don’t share in the company’s val­ues, they won’t last long.

Beyond that, if prospec­tive peo­ple don’t have the hard (or soft) skills they need for their job, they’re going to get frus­trat­ed and find employ­ment else­where — or worse, they’ll have to be fired because they can’t do the job they were hired to do. Busi­ness­es can avoid the headache by attract­ing, recruit­ing and hir­ing the right peo­ple from the beginning.

2. Don’t Underthink the Onboarding Process

If peo­ple aren’t onboard­ed and ade­quate­ly trained, they’re being set up for fail­ure. Expec­ta­tions about the com­pa­ny and posi­tion should be set dur­ing the onboard­ing process. How­ev­er, if a company’s onboard­ing process isn’t well-thought-out, new employ­ees will strug­gle to thrive in their roles.

Accord­ing to Glassdoor’s research, a pos­i­tive onboard­ing expe­ri­ence can increase reten­tion rates by as much as 82%. So, busi­ness­es that want to reduce employ­ee turnover should make sure their onboard­ing process is ironclad.

3. Pay Generously and Provide Great Benefits

Pay­ing attrac­tive salaries and offer­ing com­pet­i­tive ben­e­fits pack­ages are some of the pri­ma­ry meth­ods for pre­vent­ing turnover. If a com­pa­ny doesn’t pay its peo­ple the same rate (or bet­ter) as some­one else can for the same job, then it should come as no sur­prise when their employ­ees seek oppor­tu­ni­ties elsewhere.

When it comes to employ­ee hap­pi­ness, how­ev­er, cash isn’t always king. In fact, 80%+ of employ­ees would pre­fer more ben­e­fits to extra pay. This is why many busi­ness­es focus on offer­ing com­pet­i­tive ben­e­fits pack­ages, includ­ing the basics like health, dis­abil­i­ty, life and retirement.

4. Offer Job Flexibility

Almost 80% of work­ers want a cus­tomiz­able work envi­ron­ment. Job flex­i­bil­i­ty includes every­thing from allow­ing ample time off to flex­i­ble work hours to remote work oppor­tu­ni­ties and more.

Employ­ees today want to be able to work how they want and when they want, so peo­ple are look­ing for com­pa­nies that offer them the free­dom and auton­o­my to work in a way that suits their lifestyle. Com­pa­nies should con­sid­er allow­ing as much flex­i­bil­i­ty as pos­si­ble to increase retention.

5. Allow a Work-From-Home (WFH) Option

Stud­ies have shown that hav­ing a WFH option can result in a 25% low­er turnover rate. For many busi­ness­es, if a WFH option is a pos­si­bil­i­ty, it’s worth con­sid­er­ing. Even just hav­ing one remote day per week can improve employ­ee happiness.

6. Recognize and Reward Great Work

70% of employ­ees agree that their morale and moti­va­tion would be sig­nif­i­cant­ly improved if man­agers sim­ply said ​“thank you” more often. Appre­ci­a­tion for a job-well-done is incred­i­bly impor­tant, espe­cial­ly to millennials.

Almost 50% of peo­ple sur­veyed said they would leave a com­pa­ny if they didn’t feel appre­ci­at­ed for their work. Busi­ness­es should strive to cul­ti­vate an envi­ron­ment of grat­i­tude, mak­ing sure their man­agers and super­vi­sors rec­og­nize and reward great effort. Com­pa­nies can fur­ther acknowl­edge their people’s efforts with things like pub­lic praise or lifestyle ben­e­fits — our spe­cial­ty.

7. Hire Enough People

Over­worked employ­ees are unhap­py employ­ees. There are some stud­ies that indi­cate burnout can be respon­si­ble for up to 50% of annu­al turnover. Com­pa­nies with high reten­tion rates always hire enough peo­ple so their peo­ple don’t have to over­work, lead­ing to burnout at worse, poor per­for­mance at best.

How­ev­er, it’s also impor­tant not to over-hire. Too many employ­ees can make peo­ple feel over­shad­owed or unclear about their role with­in the orga­ni­za­tion. Com­pa­nies must iden­ti­fy the sweet spot, so employ­ees have ample oppor­tu­ni­ty to shine with­out being over­whelmed by their responsibilities.

8. Create an Engaging Environment

An aston­ish­ing 43% of employ­ees are dis­en­gaged and bored at work, and those bored employ­ees are like­ly to leave for more excit­ing oppor­tu­ni­ties. Com­pa­nies must keep their peo­ple engaged to increase retention.

The best way to do this is by ade­quate­ly uti­liz­ing their people’s strengths. If peo­ple aren’t using their tal­ents, they’re much more like­ly to find a job that pro­vides them the oppor­tu­ni­ty to show off their skills and reach their high­est poten­tial. Com­pa­nies should also cul­ti­vate a col­lab­o­ra­tive envi­ron­ment that encour­ages engage­ment among their team. Oth­er­wise, they might face los­ing employ­ees to orga­ni­za­tions that are more will­ing to empha­size engagement.

9. Include Development Opportunities

Anoth­er way to retain employ­ees lies in pro­vid­ing devel­op­ment oppor­tu­ni­ties. Stud­ies show 46% of peo­ple report being unsat­is­fied at work because they aren’t giv­en enough oppor­tu­ni­ties to learn new skills. More­over, 70% of employ­ees express inter­est in leav­ing their cur­rent com­pa­ny for a com­pa­ny that invests in their learn­ing and devel­op­ment. Some com­pa­nies are pay­ing tuition, while oth­ers offer on-the-job devel­op­ment. Both of these strate­gies can be effec­tive means to sup­port employ­ees in devel­op­ing and enhanc­ing their skills.

10. Offer Advancement Opportunities

Pro­vid­ing clear career paths is anoth­er way to reduce employ­ee turnover. 82% of employ­ees say they’ll leave a job if there isn’t an oppor­tu­ni­ty for advancement.

Com­pa­nies should con­sid­er paving a career path for employ­ees who want to take advan­tage of the oppor­tu­ni­ty. They can even encour­age them to take that path with devel­op­ment and on-the-job train­ing. By invest­ing in their employ­ees’ futures, com­pa­nies help make their employ­ees feel appreciated.

11. Show Respect

A study by George­town Uni­ver­si­ty showed employ­ees world­wide rank respect as the most impor­tant fac­tor of lead­er­ship. How­ev­er, what most busi­ness­es (and lead­ers) don’t real­ize is that there are two types of respect that are impor­tant to peo­ple: owed respect and earned respect.

Owed respect is giv­en to all peo­ple, regard­less of rank or work; it’s uni­ver­sal­ly giv­en. Earned respect is giv­en to indi­vid­u­als based on per­for­mance and behav­ior. While owed respect is impor­tant, a lack of earned respect could lead to employ­ees leav­ing the com­pa­ny, either (1) vol­un­tar­i­ly because they don’t feel their work is val­ued or (2) invol­un­tar­i­ly as they are fired for poor per­for­mance. After all, why work hard if you are ​‘giv­en’ respect no mat­ter what lev­el of effort you give?

It’s also impor­tant to acknowl­edge that earned and owed respect goes both ways. While employ­ees should give owed respect to super­vi­sors, super­vi­sors need to show both owed and earned respect to their peo­ple, ensur­ing they feel want­ed, val­ued and appreciated.

12. Encourage Workplace Friendships

Research shows that peo­ple who are friends with their cowork­ers are hap­pi­er. Peo­ple who have close friends at work are sev­en times more like­ly to be engaged, pro­duc­tive and sat­is­fied than those who don’t. The major­i­ty of peo­ple who have six or more work friends say they ​“love their company.”

Instead of being focused pure­ly on pro­duc­tiv­i­ty, com­pa­nies should encour­age employ­ees to invest in rela­tion­ships with each oth­er — whether they work in per­son or remote­ly. Com­pa­nies can encour­age remote employ­ees to uti­lize mes­sag­ing soft­ware such as Slack for more casu­al com­mu­ni­ca­tion, or set up a rou­tine vir­tu­al event that can be held once a week where employ­ees can ​‘hang out.’ No mat­ter the method, mean­ing­ful and last­ing friend­ships are essen­tial to reten­tion, even in a remote environment.

13. Cultivate a Culture of Trust

No one likes being micro­man­aged. Employ­ees thrive when they feel that their lead­ers trust them and give them space to work autonomous­ly. Build­ing this type of cul­ture is dif­fi­cult and takes patience. Employ­ees must feel the free­dom to fail; oth­er­wise, they can’t grow and can’t take own­er­ship of their work.

Employ­ees need to know they can trust their super­vi­sors and vice ver­sa. This is espe­cial­ly true for mil­len­ni­als, who are twen­ty-two times more like­ly to stay with a com­pa­ny with a cul­ture full of trust.

14. Ask for and Listen to Feedback About Management

One Gallup poll found that 50% of employ­ees left their com­pa­ny to get away from a man­ag­er. It’s no secret that bad man­agers can poi­son a work envi­ron­ment and demo­ti­vate tal­ent­ed employees.

Com­pa­nies should anony­mous­ly sur­vey their peo­ple regard­ing their super­vi­sors and take the feed­back seri­ous­ly. If com­pa­nies ask for feed­back and don’t make any changes, employ­ees will lose faith in their lead­ers. This breach of trust could be cat­a­stroph­ic to reten­tion efforts.

15. Offer Fringe Benefits

A secret weapon to employ­ee reten­tion is mak­ing employ­ees feel cared for and sup­port­ed. One effec­tive way to do that is by offer­ing Fringe ben­e­fits. Fringe ben­e­fits allow employ­ees to choose the ben­e­fits that make the most sig­nif­i­cant impact in their lives.

Fringe ben­e­fits are great tools to sup­port employ­ees in a tru­ly ben­e­fi­cial way. Too many com­pa­nies offer one-size-fits-all ben­e­fits, like mono­grammed mugs for every birth­day. While some peo­ple might appre­ci­ate a mug, oth­ers might pre­fer a more per­son­al­ized ben­e­fit, such as a cof­fee sub­scrip­tion or gro­cery deliv­ery. Offer­ing flex­i­ble lifestyle ben­e­fits helps keep employ­ees engaged and allows com­pa­nies to pro­vide them with ben­e­fits that are tru­ly valu­able to them.

Keep Employees Happy With Fringe

In real­i­ty, there will always be some employ­ee turnover. But, what’s a healthy employ­ee turnover rate? As dis­cussed, the aver­age vol­un­tary turnover rate by indus­try varies dra­mat­i­cal­ly, but the aver­age rate across all sec­tors sits between 12 – 15%.

Top com­pa­nies have their sights set on improv­ing this met­ric on a dai­ly basis. Using the above tac­tics, com­pa­nies will enjoy low employ­ee turnover, reduced costs and a hap­pi­er workforce.

When it comes to reduc­ing employ­ee turnover, the truth is that there’s no one right answer. Com­pa­nies should take time to sur­vey peo­ple as they leave to find out what isn’t work­ing, and then take time to fix those issues using these 15 tac­tics for retention.

While data and ana­lyt­ics are immense­ly help­ful in busi­ness, those that wish to keep their peo­ple must remem­ber that it’s the peo­ple that tru­ly mat­ter. When employ­ees feel cared about and appre­ci­at­ed, they sim­ply don’t want to leave.

Learn more about how Fringe Ben­e­fits work to help com­pa­nies retain employees.

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