Looking to cut costs? Here’s a less-obvious way to do so: reduce your employee turnover rate. It is estimated that the cost of replacing an employee is approximately one third of that employee’s annual salary. In other words, if you’re paying an employee $35,000 per year, it will cost you just under $12,000 to hire and train a replacement. Obviously the moral of that story for business owners is this: keeping employee turnover as low as possible can dramatically improve your bottom line. Keep reading for some suggestions on how to lower your turnover rate and keep it low:
Hire carefully. The best way to keep turnover low is to make each hiring decision carefully. Interview candidates thoroughly and try to hire candidates who you expect to be happy with your company for years to come. Be sure to do your due diligence—calling a candidate’s previous employers is often a helpful way to identify potential problems before it is too late.
Keep employees engaged. One of the top reasons that employees leave a job is that they feel unappreciated and unimportant. Do your best to keep each employee engaged. Seek their input from time to time and be sure to offer positive reinforcement often. Whether we admit it or not, the desire to be praised is present in all of us. By complementing your employees and making it clear that they are important, you are greatly reducing the chances that they’ll decide to leave.
Don’t burn them out. It’s tempting to keep asking for more from your employees, especially the really good ones. But overworking them is a bad long-term decision. Even if they’re not complaining, be very careful not to overload any employee. Surveys have shown that employees today desire a healthy balance of their work life and their personal life, and not allowing such a balance is a sure way to drive good employees out the door.
Give them opportunities to grow. Your best employees are driven and ambitious. That can actually pose a problem from a managerial standpoint if you don’t recognize their drive. If an employee has mastered his or her current job, find them a new challenge. This doesn’t have to mean moving them to a different department or rewriting their job description—simply adding more responsibility can be enough to keep them happy and engaged. The bottom line is that your best employees expect to grow as time passes. They’ll expect more responsibility, fresh challenge and higher compensation. Develop a long term plan to keep these employees happy and you can be sure they’ll be with you for the long haul.