The average cost of turnover to any organization is between $30,000 and $45,000 per employee, according to a study by the Society for Human Resources Management [SHRM]. This is not surprising since every organization has to bear the costs of hiring and training for six to nine months after employing a new recruit. The above figures don't include losses in terms of lower productivity of fresh hires and person-hours spent on training the new person.
The only way a business [small or large] can help minimize unnecessary expenses is by retaining the best talent and avoid the high costs of turnover.
The big question: How can you as an organization accomplish this?
It is worth noting that no organization can completely eliminate staff turnover or staff attrition. However, extra efforts can be exerted to minimize this by taking a few simple steps.
The "new normal" for both work and lifestyle dictate that providing work from home facilities is necessary. Therefore, providing work from home facilities is one of the best ways to retain top talent in your organization and reducing turnover costs.
In 2021, as employers look at rebounding from losses of last year and maximizing their profits, they're on the lookout for the best talent in the market. And some of these businesses could be eyeing that prized employee at your organization by making discreet offers through LinkedIn and other online resources.
If a competitor provides work from home facilities while you're unable to, your organization could be prone to high turnover and its ensuing high costs.
It's also worth remembering that people worldwide are increasingly taking work from home jobs to avoid stressful commutes between home and workplace. Therefore, your company must adapt to this "new normal" of work that's rapidly evolving.
Having employees with redundant or outdated skills is highly detrimental to your organization. And of course, the employee too. No one wants to feel like their skills are obsolete. Furthermore, your organization could suffer if some employees cannot adapt to newer technologies and upgrade their skills to operate the business efficiently.
Over the years, I've heard a few arguments that training employees is a waste of money. However, I beg to differ; Employee training is one of the best resources and ways to retain the best talent and avoid high turnover costs. Employees with the latest skills can deliver what your business needs to flourish.
Expressing appreciation promptly has helped several Quick Service Restaurants [QSRs], large organizations, financial institutions, and small businesses worldwide retain the best talent and avoid high turnover costs.
I've seen some QSRs offer an 'Employee of the Month' program. This helps them to appreciate a staffer for superb performance during a month.
Such timely appreciation of employees invariably leads to healthy competition within your organization. Other employees also vie for the accolade and exhibit their best talents to win these awards. Furthermore, employees feel they're appreciated for their efforts by the employer, which develops loyalty. Staff members that feel appreciated are less prone to leave. This is a simple yet very effective way to retain the best talent and avoid turnover costs.
Regardless of their academic qualifications, every employee looks forward to improving their lifestyle by earning more money and getting promotions. Unfortunately, countless employers believe that hiring someone externally to replace a top-performing employee that's leaving would provide a quick fix solution. That can be counterproductive.
Instead, the best thing would be internal promotions. When employees with the best talent see they have excellent career prospects within your organization through internal promotions and resultant salary hikes, they will be more than willing to stay. That's because the length or duration of service at an organization also matters in the job market. No employee would risk a job with bright prospects to leap for another one that's rife with uncertainties, even if the pay is marginally higher.
You could try some of these simple tips and tweaks to retain the best talent and avoid the high cost of turnover at your organization. As you can see, these don't cost much and won't adversely affect your business's profitability. At the same time, retaining the best talent is also essential nowadays to avoid bad hires. Studies reveal that bad hires or wrong hires can cost the employer as much as a million dollars in terms of lost productivity, staff attrition, and lawsuits, among others.