Long gone are the days of climbing the corporate ladder. Millennials, in particular, are notorious for being ready to jump ship, especially if it means higher pay, a better title, or new connections.
The US Bureau of Labor Statistics recently reported that, on average, 3 million employees have left their jobs voluntarily every month this year. This career-jumping trend can help Millennials raise their salaries but can cost employers big time—especially those running small and medium-sized businesses.
Business owners have every incentive to take employee retention seriously. If you haven’t looked at this issue recently, let’s look at what it could be costing you.
No exact number can quantify the loss of an employee, as some business models rely less on consistency amongst their team. Studies show that the cost of losing an employee can cost tens of thousands of dollars at a minimum. In the worst case scenario, that cost can represent 1.5 to 2 times the employee’s annual salary.
Where do the expenses add up? Not only will you lose productivity when a well-trained employee leaves, but your current staff may also be less productive. You’ll need to spend time on the hiring and training process with new employees, which can be costly. Another cost to consider is the lost productivity you’ll encounter during the initial months in which a new employee is getting fully up to speed. On average, employees receive 47.6 hours of training per year, which gives you an idea of how much more it would cost to train a new employee.
To personalize these numbers to your business, check out this handy Cost of Employee Turnover Calculator. The calculator takes into account how many employees you have, their average salaries, and your rate of attrition (loss of employees) each year.
Before you can focus on retaining your employees, it’s important we look at why employees might leave. These reasons vary on an individual level, but employers have seen a few major themes.
The biggest theme is probably not what you think: 89% of employers believe that their employees leave for a job that is offering more money. In reality, only 12% of employees actually report leaving a job for a higher salary. Even more surprising? 71% of employees say they would take a pay cut if it meant they found a better job.
These numbers are great news for employers. That means that even on a tight budget, you can work toward retaining more employees by offering them non-monetary things they want. For example, flexible schedules are something you may be able to offer your staff without raising their salaries. 37% of employees would leave their job if a new job allowed them to work remotely part of the time. And 82% of employees admitted they would be more loyal if their jobs were more flexible.
All this survey data suggests that if you want to win the loyalty and gratitude of your employees, you should consider offering them some flexibility at work. Every office and its needs are different, but consider how a little flexibility can help you keep employees happy.
Offering extra flexibility to employees can have the additional benefit of helping employees stave off burnout. Consider this not-so-shocking stat: a 2017 survey found that half of human resources leaders blame up to 50% of workplace turnover on employee burnout.
There are many causes of burnout, and chances are you can’t solve all of them. But perhaps a few of these top reasons for burnout (from a 2017 study by Kronos Incorporated) will resonate with your business.
Allowing your employees flexibility and making a few other accommodations for employee well-being could help you eliminate or reduce this common complaint.
In general, if you can’t afford the most competitive salaries, empathy may go a long way toward helping you retain your best employees. 90% of employees report they are more likely to stay with an organization if it empathizes with their needs, even in high-income fields like tech, health care, and financial services. Those employees reported they would be willing to take less pay if they worked for a more empathetic employer.
Even if you retain employees, you could be losing money if you aren’t managing and supporting them properly. A 2017 study found that disengaged employees can cost companies between $450 and $550 billion a year. Most employees surveyed felt that engagement initiatives should come from leadership. Meaning, owners or managers at a small business need to undertake this problem. Engaged employees are retained employees, after all. Teams who have high engagement rates see a 41% reduction in absenteeism and 59% less turnover. According to Gallup research, those teams also show 21% greater profitability.
One way to keep employees engaged is to offer education or training programs to motivate employees who may feel stagnant in their career. Consider setting quarterly and annual goals for them to work toward. Be transparent about growth opportunities and financial rewards. Secrecy will not be your friend if an employee is feeling disengaged.
Finally, the easiest way to retain employees might be the magic words: please and thank you. Expressing your appreciation can mean a lot to your team, especially if your employees are putting in extra hours and otherwise going above and beyond the basic call of duty to meet important company goals.
Reward your top performers, let them know you care and appreciate their hard work, and you’ll have an easier time hanging on to them.