The key to running a successful business is motivated and loyal employees. No matter how much effort you put into your company as a business owner, if your employees don’t perform as they should, it is going to harm the growth of your business.
In order for your employees to be productive and be happy at work, you have to establish a strong company culture in which employee well-being is prioritized. A positive work environment will ensure that your employees are motivated to work and will be committed to the success of the business.
As a business owner, you cannot overlook the importance of employee retention as high employee turnover is a sign of a poor working environment. This negatively affects employee performance which will continue to be poor until employee satisfaction is addressed. To prevent a high turnover rate, we created this expert guide to reduce employee turnover rate.
What is employee turnover?
Employee turnover or employee turnover rate refers to the number of employees who leave a company during a specific period of time. This includes employees who leave voluntarily (voluntary turnover) and employees who are laid off or fired (involuntary turnover).
Businesses should aim to have a low employee turnover as it correlates with a healthy work environment where people are happy. Companies with low employee turnover have good reputations within their industry and attract talent.
What causes employee turnover?
Different things can cause high employee turnover such as issues with the compensation structure, a lack of opportunities for promotion or career development, a weak company culture or problems related to training, management or benefits.
Here is a list of elements that can negatively affect employee turnover:
- Low wages
- Poor company benefits
- Job dissatisfaction
- Bad relationship with colleagues
- Organizational commitment
- Poor communication
- Company reputation
- Inflexible work environment
- Organizational justice
- Poor management
- Lack of feedback or recognition
- Poor work/life balance
- Bad hiring practices
- Diversity deficiencies
- Little to no opportunities for growth
- Toxic company culture
- No innovation
- Life events
- Transfers and promotions
- Organizational restructuring
What is an employee retention strategy?
An employee retention strategy is a plan or that companies develop in order to reduce employee turnover, optimize retention, boost employee morale, productivity and engagement. A retention strategy is specific to each organization as every business faces a set of different challenges.
Here are examples of effective employee retention strategies to minimize turnover:
- Develop the leadership skills of managers
- Improve the company culture
- Recognize employee contributions
- Invest in employee career development
- Evaluate and optimize your benefits package
- Provide a flexible work environment (remote work, hybrid work, etc.)
- Reevaluate compensation
- Support employee well-being
- Priorizite work/life balance
- Invest in training
- Optimize the recruiting process
- Improve onboarding and orientation
Why is it important to reduce employee turnover?
Businesses should make reducing employee turnover a priority as a high turnover is very costly. Companies have to spend a lot of resources fo recruit, hire and train replacements. Not to mention that turnover is a vicious cycle that affects employee morale, productivity and engagement.
A good example of how treating your employees well leads to high retention rates is Google. Comparably gives Google a retention rating of A+, highlighting their ability to keep employees on for a prolonged period of time (source). They are able to achieve this by offering good insurance packages, ample time off, wellness programs, as well as full catering available to employees when working. This creates a positive work environment where people feel valued.
7 tips to reduce high employee turnover
Now that you understand how important reducing employee turnover is, you have to develop strategies to reduce it. Here is a list of expert tips to improve employee retention and minimize employee turnover:
1. Hire the right people
Employee retention starts with the hiring process. In order for employees to stick around for a long time, they need to be a good match for your company. An individual who does not share the same values and ethos as your enterprise will simply not thrive in your business.
However, it can be difficult to find the time to optimize your recruitment strategy. Many companies prefer to hire an employment agency to improve employee retention and focus on the key areas of their business. At Spartanium, we offer recruitment services for companies in the insurance, accounting and legal fields.
When an employee is placed in your company, we offer a guarantee of the quality of the employee during 90 days. Our placement agency in Montreal has one of the largest database of workers in Quebec. Our team is qualified and provides businesses with talented and committed employees.
2. Encourage open communication
Having an environment where everyone feels comfortable voicing their opinions is essential if you want to create a healthy working environment that fosters employee engagement. When employee feedback is welcome, people feel better about sharing ideas and issues which can help companies innovate and resolve problems quicker.
3. Focus on work/life balance
If you overwork employees for an extended period of time, they are going to interest in your business. It is important for employees to achieve a work-life balance that gives them time to unwind and partake in the social activities that they enjoy.
The best way to provide employees with a good work-life balance is to give them a flexible work schedule. Since the pandemic, workers really enjoy remote working or hybrid working so you may also want to consider this to boost employee morale. At the end of the day, as long as your employees are getting their work done and on time, it does not necessarily matter when they are working.
4. Offer career plans
Since dissatisfaction with the lack of opportunities for growth is a decisive factor for an employee to leave, reinforcing company policies in this regard is essential. Addressing the advancement of your employees will show them that you are dedicated to their development. This is something especially important for millennials who represent a large part of the workforce.
5. Annual performance evaluations
Contrary to popular belief, performance reviews not only serve the interests of the human resources department and the company in general, they are also positively valued by employees. Feeling that their work counts and makes a difference, as well as being able to understand the expectations the company has about them is important for talent retention.
6. Wellness plans
Mental health support, energy breaks, yoga classes or discounts at health or sports centers are great ideas to improve the health of your staff. This not only increases loyalty to the company but also contributes to building a community among colleagues. Talent retention is a fundamental aspect to reduce the employee turnover rate.
7. Mentoring and coaching
While mentoring focuses on guidance and development, coaching offers more direct feedback. A coaching system helps employees identify areas that need improvement while communicating that the company is committed to their personal and professional development.