12 ways to Reduce Employee Turnover

12 ways to Reduce Employee Turnover

Written by Brian Steffan

Employee turnover has a significant impact on your organization's trajectory, but if you're having trouble with it, you're not alone. Even the best companies struggle with turnover.

This post examines employee turnover: what it is, its causes, and its costs to a business. We will also talk about solutions to reduce it.  

Voluntary vs. involuntary turnover

From a broad perspective, there are two categories of employee turnover: voluntary and involuntary.

Voluntary turnover occurs when an employee chooses to leave an organization of their own volition. Voluntary turnover can be due to relocation, retirement, family illness, a more enticing job offer, an interpersonal conflict, or a micromanager who's constantly blocking an employee's progress.

Involuntary turnover occurs when an employee who would otherwise continue to work for an organization is released. Involuntary turnover can be due to unsatisfactory performance, layoffs, poor culture fit, committing a terminable offense, or absenteeism.

Healthy vs. unhealthy turnover 

Keeping voluntary and involuntary turnover in mind, you might expect an organization's optimal turnover rate to be zero. However, some turnover can be healthy.

When a great employee reaches retirement age after serving your organization for many years, their turnover will make room for a talented successor to advance their career. Another employee might contribute significantly to your organization and move to another company before frustration or stagnation sets in. These are both natural and healthy forms of turnover.

There are many legitimate cases when employee turnover is the best outcome for both employees and employers. However, it's essential to identify what healthy turnover means for your organization.

Turnover by industry

Average turnover rates are industry-specific. The hospitality industry, for example, experiences higher turnover than most industries. That's not because the hospitality industry is terrible; it's simply an outlier in the realm of employee turnover due to the work's nature.

Cost of turnover

Employee turnover can be costly, yet many companies fail to recognize it as a priority. What's worse, the departure of just one or two top-performers can trigger a subsequent spiral of turnover.

When it's left unchecked, the cost of employee turnover can add up quickly. Organizations foot the bill for direct exit costs whenever a separation occurs, whether it's voluntary or involuntary. Organizations also cover the less apparent costs around recruitment, productivity, training, knowledge, and morale.

Once you understand the considerable impact employee turnover can have on your business, it's time to consider how you can decrease turnover when it hits unhealthy levels.

Ways to improve employee turnover

According to an industry survey, 87 percent of respondents said: "improved retention" was a key priority. There's a good chance you feel the same.

Fortunately, we've compiled a list of 11 steps that any leader or manager can take to improve a business's turnover.

1. Analyze turnover

It's hard to change what you're not measuring. It's essential to collect the data carefully, understanding that all turnover isn't equal and that how you measure employee turnover makes a difference.

There are many reasons why employees leave a firm, and it's important not to lump all employee turnover into the same category.

Are you proactively soliciting feedback from employees before they leave?

Quitting a job is a big decision, and it's not one that most people take lightly. When employees do leave, how confident are you in your knowledge of why they left?

Remember that gathering qualitative data through engagement surveys and exit interviews is essential. If you're squeamish about hearing hard truths regarding your company culture now, know that there's a good chance you'll read about it on Glassdoor if you wait.

2. Ingrain transparency

Transparency is crucial—not just for employee retention purposes but for a healthy organization in general.

There's a bond of trust between employees and those who employ them, and few things strengthen that bond better than transparency. Defaulting transparency doesn't mean you need to share confidential acquisition plans or make everyone's salary public. It's a simple mental model to follow.

Instead of saying, "Do I have to share this information with the team?" try, "Do I have to keep this information from the team?" Suppose you can't come up with a solid reason to keep something a secret. In that case, you need to question the validity of keeping it behind closed doors, especially when the alternative offers so many benefits.

It's that simple. You don't have to give up on the concept of proprietary or classified information to embrace transparency—you need to question the motivations behind keeping information under lock and key. It's helpful in a practical sense as well. Free-flowing information can help employees contribute and collaborate more effectively.

3. Set accurate expectations

Are you attracting great candidates only to see them leave after three months? It might have something to do with the way you're describing the job you're promoting.

If a new employee enters a role thinking they're going to be doing one thing only to find they're doing something else, you can't blame them for being unsatisfied.

On the flip side, promoting extreme and unrealistic expectations can discourage qualified candidates from applying. If you expect workweeks to be 60 to 80 hours, that shouldn't come as a surprise to your new hire. Honesty in advertising is essential, but hiring also offers an excellent opportunity to reassess your company values and your company culture's quality.

Here's an example: If you're planning on having a new software engineer dig through and maintain their predecessor's crusty old code, be upfront about it. Let them know the deal in advance, and you'll get a friendly self-selected group of applicants who might actually like maintaining old codebases.

4. Look for soft skills

This doesn't mean hire someone who's "nice" even if they have no idea how to do the job. The skills to get the job done are what gamblers call "table stakes," or in other words, the minimum prerequisites to be a fully functional member of the team.

Hard skills are much easier to train than soft ones and given two applicants with a similar skill set. You'll nearly always benefit more from hiring an employee with more vital soft skills.

For example, emotional intelligence is a crucial skill for any employee to develop, but this is especially true for management positions.

Psychological safety is another critical soft skill to developing a working environment where creativity flows freely, and the best solutions are discovered. Although you can't simply mandate psychological safety into existence, you can still do a lot to help build it into your organizational culture, and remember not to hire A-holes.

5. Emphasize onboarding

Ramping up is challenging for everyone. It doesn't matter how good you are at your chosen profession; there's always a considerable amount to learn when you start a new job. The more accessible and more streamlined you can make that process, the better.

For most people, it's incredibly frustrating to be asked to solve a problem with little context and no tools—and it's even more challenging without help. Most employees want to know what success looks like in your organization, and if you don't show them, the best tool they have is guesswork.

Success in hiring and onboarding is more likely when educating new team members on the firm's core values, mission and incentivizing behavior by recognizing achievements, both big and small, that align with those values.

Hiring and onboarding take the whole team, and the bonds among one another are the kind of retention driver you can't buy at any price. The more opportunities to build those bonds you provide during the onboarding process, the more likely they are to form and strengthen.

A seamless onboarding process can make a massive difference in all of these areas. It doesn't have to be perfect, but the more deliberate and thoughtful you can be designing it, the better.

6. Communicate clearly

Clear communication is paramount for the success of any team. Without it, things can fall apart quickly. If you've ever sat through a sports blooper reel, you know what I mean.

Collaboration is challenging when communication isn't prioritized, even more so with interdepartmental collaboration. Identifying and breaking down departmental silos can have a dramatic impact on organization performance.

Communication is vital in developing organizational alignment. Sharing goals and values clearly across all departments will help the entire team understand their contributions to the larger picture.

Feedback is crucial, both giving and receiving it. If an employee feels like they're talking to a brick wall every time they try to provide (or ask for) feedback, they're eventually going to give up. Combat this by encouraging dialogue.

Think about it this way—if you're communicating regularly, but the dialogue within that communication is toxic, it's not going to benefit anyone. You're drawing nearer to a turnover event with every word. On the other hand, if you're never covering crucial issues, you're not getting the whole picture.

It takes effort to cultivate an environment that supports frequent, effective, and productive communication, but that investment pays big dividends.

However, it's not just about knowing the tactical details of what's going on. Good communication is your opportunity to gain the additional insight you need to stay ahead of turnover.

How do you build an environment with healthy communication? People often feel they can't really express themselves for fear of embarrassment or reprisal—even with open door policies. Instead, managers and employers need to create a genuine rapport with employees actively.

The key to sparking these crucial conversations is to bake them into everyday life in your organization. Carve out time for open communication at a regular cadence, and prioritize it so that you're not constantly rescheduling over it.

One-on-one meetings are an excellent format for productive communication between managers and the people they lead if you're interested in implementing them or improving the ones you already have.

7. Encourage growth

Professional development and growth opportunities are necessary to keep great talent on staff.

A drive to constantly grow and improve is part of what makes a great employee. If you stifle that motivation for growth, you'll eventually end up with a stagnant employee or a resignation letter.

Offer as many opportunities as you can for learning and skill-building. You won't only satisfy a top-performing employee's hunger for growth—the whole organization will benefit from the additional skills they develop.

Advancement opportunities are equally important—just like a plant will outgrow its pot or become root-bound, a high-level performer will eventually seek out a transplant to keep from getting stuck forever in an environment they've outgrown. According to Gallup, 87% of millennials say that professional or career growth and development opportunities are essential in a job, compared to 69% of non-millennials.

Nobody wants to stay in a dead-end job. Learning opportunities are a great way to help your team grow and thrive. As an added benefit, the results of that learning will benefit the organization.

Don't think of employee professional development as subsidizing training costs for their next employer. Instead, think of it as an investment in human capital. You have the power to influence your returns on this investment directly.

When there's no room for a top performer to move forward, they're liable to find another path. It's not fair to expect them not to. Advancement opportunities can make or break retention. If an employee is genuinely ready to take the next step in their career path, find ways you can help them advance internally.

8. Foster camaraderie

The people you work with and the relationships you build can be a powerful employee retention factors.

Colleagues were cited as the top reason respondents love their job. When asking respondents what made them want to give their all, the answer wasn't money or prestige. It was peers. 70% of people state work friendships as the most crucial element to happy working life.

How do you provide an environment that supports the founding and strengthening of those friendships? Start with culture.

No matter how much effort you expend or how well-designed the work environment, culture should be the foundation in fostering camaraderie. Begin by developing a culture of mutual respect and appreciation because it's nearly impossible to build excellent working relationships within a toxic organizational culture.

Also, make sure there are physical areas and a cultural atmosphere that support collaboration.

The emotional environment you develop is critical. Each team member should feels a sense of psychological safety, That their ideas will be heard, contemplated, and never ridiculed. Employees should feel comfortable in their environment, not like they're "breaking the rules" by interacting with coworkers.

9. Help employees find purpose

Purposeful work is a significant factor in retention—especially in today's highly competitive talent landscape.

When asked about their primary concern during their first job, 57% of younger (under 35) said they wanted something to be part of something enjoyable or made a difference in society. Researchers have also found that workers would be willing to accept a 25% pay cut if it meant their work was more meaningful.

Here's the critical factor many people miss: there are no "purpose professions." Sure, there are some careers whose purpose is more precise and more present, but it's possible to find meaning in any career. Sometimes all it takes is someone else highlighting the importance of what you do.

Whether you're the executive director of a non-profit organization or a sushi master like Jiro Ono, your work is purposeful, and it's meaningful to others. Being able to help employees to see the purpose in their work is a massive competitive advantage.

Start by showing employees exactly how their work impacts their team and why their contributions matter. Next, share how their effects reverberate across the organization and achieve organizational goals. Finally, take a step back and illustrate how their efforts positively impact the world around them.

10. Prioritize wellness

Employees who are healthy in mind and body, have the necessary bandwidth to produce more and better work. It's that simple.

Think about it from a psychological perspective—Maslow's Hierarchy of Needs is a great way to illustrate the importance of physical and mental wellbeing, not just as human beings, but specifically in a work context.

As leaders, it's our job to help employees achieve self-actualization—that highest level in the hierarchy where a person fully realizes their potential and operates in a manner that fulfills it.

When an employee's basic physiological needs aren't being fulfilled, they can't reach higher performance levels because their attention will always be, at least to some degree, focused on fulfilling their most basic needs.

If an employee is sick at work but should be in the doctor's office, they're not going to be operating at their full potential. It's also putting the fulfillment of physiological for other employees at risk.

Mental health is a huge factor impacting employee wellness and organizational performance, one that's too often ignored by employers. Only one in five say their company offers a work-life balance. According to the WHO, stress costs US enterprises over 300 billion dollars.

Although you may work in what is considered a 'stressful' industry, and stress is never entirely avoidable, there are always tools to provide relief from that stress and soften the impact it has.

How can you support wellbeing within your team? Start by banishing overwork—whether it's happening through managerial pressure or individual pressure to succeed. Avoiding overwork is one of the core competencies of a good manager, and it can have a significant effect on several areas of employee wellness.

If they're thinking, "I can't take a sick day because it'll cut into my vacation," or "I have to come in because if I don't, nothing will get done and everything will fall apart," it's time to re-think your approach to employee wellness.

Help employees manage stress through thoughtful project management and give them the tools they need when stress is unavoidable. 

11. Remote vs. Non-Remote

In this time of COVID and beyond, 98% of firms made their staff remote, hugely successful. When it is safe, many firms will bring their employees back to in-office work. This could pose a massive issue for many who have become accustomed to working from home, and the thought of commuting, dressing for work, and the additional cost will make them reconsider working for the firm. The firm that allows its people to remain remote or work a hybrid combination of remote and in-office will retain their happy and productive employees.

12. Recognize contributions

This is HUGE! A job well done deserves praise, and it's not just a feel-good thing to do but research shows that recognition is a compelling element of the working relationship. It also drives more success for the individual and the organization.

If an employee repeatedly goes the extra mile and isn't recognized for it, don't expect them to continue putting in that extra effort. If none of their work is recognized or visibly appreciated, there's a good chance you're going to be putting another job posting up before long.

Employees need to know that their work has meaning and impact, and recognizing their contributions is an excellent opportunity to illuminate the purpose behind that work.

Pay is fungible, but recognition, appreciation, and purposeful work aren't. Suppose you're new to the concept of employee recognition or would like to improve your current strategy. Showing appreciation for an employee's unique contributions is a great way to keep them engaged and inspired to continue. 

Frequency is a significant factor in the effectiveness of employee recognition. If recognition is given once or even a few times each year, most contributions are likely not recognized.

Specificity is another essential aspect. It's not enough to tell someone "good job." More specific recognition is more impactful, both to the receiver and the organization as a whole.

It's even more impactful when that recognition lines up with company values, reinforcing organizational goals. This helps employees understand what types of contributions to their team are successful.