Employee retention is a challenge that has faced business owners for as long as there have been businesses. What do my people want? What will make them stay? The costs associated with employee turnover are staggering. The Society for Human Resource Management (SHRM) recently reported that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $60,000 a year, that’s $30,000 to $45,000 in recruiting and training expenses.[1] Plus, the disruption to morale, the lost productivity, the unknown factors that a new member of the team brings. For every person that leaves, a company loses a piece of its potential future. People are hired for a reason; their presence is a part of a team that is constructed to bring a business forward. If one piece of the puzzle is missing, the business will undoubtably suffer more than just revenue.
Is employee turnover just part of the cost of doing business? Yes and no. Turnover will always happen in even the healthiest of companies; but the rates of turnover that are presently being documented move beyond what can be considered “normal” in a contemporary workplace. In a 2021 study by the Bureau of Labor Statistics, it was discovered that the average annual turnover rate in the United States is 57% across all industries, more than half of employees will leave their current positions within the next year.[2] That number is staggering. Is this pattern just or new normal or can something be done? Could this statistic possibly be reduced? Well, the good news is- yes! It can absolutely be reduced.
According to another recent study by Gallup, 52% of voluntarily exiting employees say their manager or organization could have done something to prevent them from leaving their job.[3] Translate that statistic: they would have stayed if they felt their manager, or their company, worked with them to rectify some sort of dissatisfaction they were feeling. Instead, those employees most likely felt that management didn’t care, or their voice wasn’t as important, and they chose to move on. If my company doesn’t care about me, why should I care about it? A lack of communication combined with poor management is costing companies millions. By just properly training and coaching management, channels are created for employees to communicate. Those two tweaks not only could improve retention, but it could also go a long way towards reducing toxicity and creating a positive environment, which in turn increases productivity.
Strong management and open communication create healthy workplaces. Seeing an employee as a whole person, with not just a cog in a wheel is another key component. In 2021, around 75% of U.S. employees stated they strongly agree, agree, or slightly agree that employee wellbeing programs offered by their employer are one of the reasons they stay at their job.[4] Communication, trusted leadership, feeling that the company has my best personal interests in mind- all these requests are very similar. People want to be seen. They want to be heard. The days of just filling a spot on a roster are long gone. The challenge is now for businesses to change with the times and adjust to what the modern, successful workplace looks like. Those companies that refuse will be left behind, but those companies that do realize this and adjust accordingly, those are the businesses that are experiencing growth. They are investing not just financially, but emotionally in their workforce. They are filling the roles that all the employees are flocking to. And their employees are staying.
[1] “To Have and to Hold”, February 23, 2019, SHRM.com.
[2] “Employee Tenure Summary for 2022”, September 22, 2022, bls.gov.
[3] “This Fixable Problem Costs U.S. Businesses $1 Trillion”, March 13, 2019, gallup.com.
[4] “Percentage of U.S. Employees Who Agreed With Select Statements About Wellbeing Programs Offered by their Employer from 2019 to 2021”, August 27, 2021, statista.com.