10 Strategies to Reduce Employee Turnover and Retain Key Talent in 2023
10 Strategies to Reduce Employee Turnover and Retain Key Talent in 2023
50.5 million! That’s the number of people who quit their jobs in the US in 2022.
As the quitting spree continues in 2023, the job market is becoming saturated with candidates. However, hiring new employees isn’t as easy or affordable as it once was.
According to the latest industry reports, the average cost to hire a non-executive employee was $4,225 in 2021, up from $4,129 in 2019.
For the executive-level employee, the cost climbs to a staggering $14,936. Due to the rising costs of hiring new staff, employers need to find ways to foster retention.
The best way to keep your top-performing workers is to determine your employee turnover, identify what is causing it, and devise ways to reduce the churn. In this guide, we share 10 strategies to reduce employee turnover and retain key talents in 2023.
What Is Employee Turnover?
Employee turnover, also known as churn rate, refers to the number of workers who leave a company during a given period. This includes both voluntary turnover (e.g., a worker resigns, transfers, or retires) and involuntary turnover (e.g., a worker is fired or laid off).
Although employees will always leave a company, keeping the turnover rate minimal is critical. According to Gallup, a 10% turnover rate is healthy, so aim not to exceed this number.
What Are the Effects of High Turnover Rates?
Low employee turnover positively impacts a company, while a high turnover isn’t good for business. A low turnover rate signifies employee satisfaction, which helps to attract top talent.
A high turnover, on the other hand, is the exact opposite. It may signal a serious problem with the company and limit its ability to attract top talent.
For example, if a company has toxic culture, pays its employees poorly (below the industry average), or has been trending for the wrong reasons, employees will likely leave the company, leading to high turnover rates. High turnover can impact a company in many ways, including.
A high turnover can result in lower employee morale.
This may stem from overworked employees who have increased workloads due to staff shortages. Continuation of this kind of work environment results in low productivity, making it difficult for the company to achieve its monthly and yearly goals.
High employee turnover has a direct impact on company revenue and profitability.
As mentioned, the average cost of hiring an employee is around $4,000. Additionally, if the severance package is paid, that’s a business expense with no corresponding ROI. All these costs negatively impact a company’s bottom line.
High turnover rates impact employer branding.
If employees leave due to toxic managers, poor compensation, or being overworked, it tells potential candidates that the company doesn’t care for its employees. And once a company’s image has been tainted, it losses not only its employees but customers too.
10 Strategies to Reduce Employee Turnover
Without further ado, here are the top strategies your company can employ to reduce the turnover rate and retain key talents.
1. Hire the Right People
The interview is where it all begins! Almost every HR professional agrees that hiring the right people is the best way to reduce employee turnover.
While hiring candidates with the right skills, experience, and attitude is critical, ensuring their personality and work style fit your company culture is equally important. It’s important to convey the company’s culture and expectations during the interview.
2. Focus on Onboarding
After you’ve hired the right people, you’ll need to train them accordingly. Experts agree that the first few weeks on the job may determine whether they’ll become long-term employees or leave soon after finding “greener pastures.”
Invest time and resources in ensuring they get a proper induction and that they’re well supported throughout the orientation period. If they feel wanted and valued from day one, they will likely become loyal employees and stick around long-term.
3. Conduct Exit Interviews
To combat employee turnover, you’ll first need to know the cause to address the problem from the root. Remove the guesswork from the equation by conducting exit interviews.
These interviews help managers and HR staff understand why employees are leaving the organization. Reasons might include low pay, poor management, toxic culture, or lack of growth opportunities. Once you understand the reasons for the high turnover, you can address the issues and implement policies and strategies that will make the company more competitive.
4. Offer Competitive Pay and Benefits
Studies show a direct link between higher pay and increased retention rates.
Harvard Business Review found that a 10% increase in base pay led to a 1.5% increase in the likelihood that employees will stay in their current company. This is backed by another Princeton University study that found that increasing salary boosts employee happiness, which directly leads to loyalty and retention.
People want to be compensated well. And if you don’t pay your employees well, they will find a company that will.
5. Closely Monitor Toxic Employees
If you want to improve productivity and retention, get rid of toxic employees.
Toxic employees are overly critical, blame others, and often gossip, spreading negative vibes about the company to their colleagues.
The saying, “one bad apple spoils the bunch,” holds true when it comes to boosting employee morale and retention. Likewise, if you don’t monitor or kick out toxic employees, they can push high performers out of the organization.
6. Reward and recognize Employees
Happy employees are productive employees.
Studies have shown that happy employees are up to 20% more productive than unhappy employees. And nothing makes employees happier than being recognized by their superiors.
When your employees deliver exceptional performance, meet their targets, or achieve a milestone in your business, recognize their efforts and give them the congratulations they deserve. It gives them a sense of belonging, motivating them to work harder and remain loyal to your company.
7. Offer Job Flexibility
Allowing job flexibility can improve employee work-life balance.
Not only does job flexibility attracts new talent, but it also improves loyalty and retention. In fact, those allowed to work from home say they’re likely to stay in their current job for the next five years—they’re 13% more likely to stick around than in-office workers.
8. Encourage Employee Engagement
Keeping an eye on employee engagement is critical because higher engagement results in lower turnover rates. Today’s workforce feels more engaged when involved in decision-making.
In addition to involving them in decision-making, encourage interaction in the workplace and outside the office environment. By creating events within the workplace, employees can get to know each other on a personal level, creating bonds that will foster teamwork and loyalty.
9. Provide Opportunities for Growth
Employees desire an employer who can invest in their professional growth.
In fact, a recent Pew survey cited a lack of growth opportunities as one of the top reasons for increased turnover. If you don’t provide growth opportunities to your employees, they will look for companies that offer these opportunities.
Today’s candidates aren’t just after the fattest pay checks. They’re more interested in companies that can help them achieve professional growth.
10. Organize Team Building Activities
Organizations with a high focus on boosting retention must value interpersonal relationships, which can easily be strengthened through team-building activities. According to GoRemotely, extremely connected teams see a 21% increase in profitability.
Moreover, if employees forge meaningful relationships with their colleagues, they are more likely to stick around long-term.
That’s it! The top employee retention strategies for 2022.
These are just a few ways to reduce employee turnover, but there are many other retention strategies you can apply based on the nature of your business.
While you can’t completely eliminate employee turnover, there are steps you can take to minimize it and improve employee experience, such as recognising effort, offering work flexibility, and providing opportunities for growth.