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8 Simple Ways to Reduce Employee Turnover In Frontline Businesses

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employee turnover

Are you tired of constantly losing valuable employees? Do you find yourself spending countless hours and resources on hiring and training, only to have them leave shortly after? 

There’s a hidden link between your frontline and your bottom line. And ignoring it could be costing your business more than you think. Download our eBook on the cost of frontline disconnect to learn more.

Employee turnover can be a major pain point for businesses, resulting in significant financial losses and a decline in team morale. Not to mention the potential damage it can do to your company’s reputation. 

But what are the root causes of this issue? And how can you effectively tackle it to retain your top talent? 

From the financial burden of recruitment and training to the intangible costs of decreased productivity and team cohesion, we’ll delve into the landscape of employee turnover, uncovering the hidden costs that come with it.

And we won’t leave you hanging. We’ll provide a list of actionable strategies that have been proven to effectively reduce employee turnover. From creating a positive work environment and fostering employee engagement to implementing competitive compensation and benefits packages, we’ll equip you with the tools you need to retain your employees and build a strong, loyal team. 

Ready to say goodbye to the never-ending cycle of hiring and training new employees, and say hello to a more stable and productive workforce? Let’s get started.

What Is Employee Turnover?

First, let’s quickly go over the definition of employee turnover.

Employee turnover refers to the rate at which employees leave a company and are replaced by new hires. 

The turnover rate is typically expressed as a percentage, calculated by dividing the number of employees who leave during a specific period by the average number of employees in that same period.

Now, let’s look at the “why” behind employee turnover.

Why Do Employees Leave?

Quitting a job is a personal decision for every employee, but there are many outside factors that influence that decision. A good place to start understanding what causes employee turnover today is the COVID-19 pandemic back in 2020. 

COVID-19 triggered a significant shift in the U.S. labor market, leading to a phenomenon now known as the Great Resignation. This mass exodus of employees from their jobs in 2021 brought to light some of the underlying reasons why people choose to leave their positions.

Here’s what the Pew Research Center found were some of the key reasons why Americans quit their jobs in 2021:

  • Low pay (63%)
  • Lack of opportunities for career advancement (63%)
  • Feeling disrespected (57%)
  • Childcare issues (48%)
  • Lack of flexibility for work hours (45%)
  • Inadequate benefits (43%)

Work hours played a role in the decision to leave for many employees, with 39% feeling they were working too many hours, while 30% cited working too few hours as a concern. Interestingly, 35% of respondents mentioned wanting to relocate to a different area as a reason for their job change.

COVID-19 also had an impact, with 31% of respondents stating that the pandemic influenced their decision to quit. Notably, those without a four-year college degree were more likely to cite the pandemic as a factor in their decision compared to those with a bachelor’s degree or higher.

Racial and ethnic differences also emerged, with non-White adults more likely to report reasons like a lack of flexibility, wanting to relocate, and working too few hours compared to their White counterparts.

Despite the challenges faced by those who left their jobs, many found better opportunities elsewhere. A majority of those who quit in 2021 and were employed in 2022 reported improvements in their current positions. More income, greater opportunities for advancement, improved work-life balance, and increased flexibility were among the benefits cited.

One key factor to consider during the Great Resignation is the variation in attrition rates across different industries. One study found that apparel retailers experienced attrition rates three times higher than airlines or health insurers. This trend transcends blue-collar and white-collar sectors, affecting both with equal intensity. Industries like fast food and specialty retail, which employ a high percentage of blue-collar workers, were hit hard. But management consulting, known for its white-collar workforce, also experienced high attrition rates.

The same study concluded that industry alone doesn’t explain everything. Even within the same sector, significant differences in attrition rates were observed. For instance, workers were more likely to leave Tesla than Ford and more likely to quit JetBlue than Southwest Airlines.

Reputation for a healthy corporate culture plays a significant role in retaining employees. Companies known for their positive work culture like Southwest Airlines, Johnson & Johnson, and LinkedIn experienced lower-than-average turnover during this period.

The most potent predictor of attrition was a toxic corporate culture, which was 10 times more influential than compensation in driving employees away. 

More specifically, the factors that contributed to toxic work culture included:

  • Failure to promote diversity
  • Disrespect
  • Unethical behavior

Job insecurity, high levels of innovation, failure to recognize performance, and a poor response to COVID-19 were also significant contributors to the Great Resignation.

The Great Resignation, fueled by a complex interplay of factors from industry dynamics to corporate culture and employee perceptions, ultimately reshaped the employment landscape we’re in today.

One Simple Formula to Calculate Employee Turnover Rates

There are a number of ways to calculate employee turnover, but to keep things simple, here is one:

A “good” employee turnover rate can vary depending on the industry, company size, and location. In general, a lower turnover rate is considered better because it indicates that employees are staying with the company for a longer period of time.

A “good” turnover rate is one that:

  • Aligns with your organization’s goals
  • Minimizes disruptions
  • Ensures a stable and engaged workforce

8 Proven Strategies to Reduce Employee Turnover

Let’s look at some specific ways organizations can tackle employee turnover:

1. Competitive Compensation and Benefits

In today’s job market, attracting and retaining top talent requires more than just providing a paycheck. A well-structured compensation and benefits package contributes to employees feeling fairly rewarded for their contributions. It not only motivates them to stay with the company but also reinforces their value within the organization. A good benefits package shows the company’s commitment to its employees’ well-being. When employees have evidence that their efforts are acknowledged and compensated, they are less likely to seek employment elsewhere.

According to SHRM, compensation budgets are increasing faster than they have been in the last 15 years. The consulting firm WTW found that salary increase budgets will grow by an average of 4.6% in 2023.

Benefits like health care and retirement plans, as well as work-life balance initiatives, enhance overall job satisfaction. They also act as recruitment tools by attracting new employees. Investing in competitive compensation and benefits not only reduces turnover but also boosts engagement, attracts new hires, and contributes to employee well-being and satisfaction.

2. Regular Feedback and Open Communication Channels

Giving employees consistent feedback

  • Provides valuable insight into performance
  • Clarifies expectations
  • Offers opportunities for growth

Open communication channels create an environment where employees feel heard. Transparency built through open communication creates trust and demonstrates that the organization values its employees’ input. Also, open communication allows employees to understand better the company’s broader vision and how their work contributes to it.

When employees feel their contributions are acknowledged and they have a clear path for improvement, they are more likely to remain motivated and committed to their roles.

3. Flexibility and Work-Life Balance

Post-pandemic, when remote work became a necessity, flexibility and work-life balance have become increasingly important factors in whether employees join and stay with an organization.

According to Buffer’s State of Remote Work 2023 report, 22% of respondents say that flexibility is the top benefit of remote work.

Offering flexible work arrangements like remote work options or flexible hours allows employees to better manage their personal and professional responsibilities, leading to better work-life balance. This flexibility can be a key factor in retaining employees, especially for those who are caregivers.

A healthy work-life balance also reduces burnout. When employees feel that their work doesn’t consume their entire life and remains sustainable, they are more likely to stay with the organization for the long term.

4. Diverse and Inclusive Work Environment

Diverse and inclusive workplaces empower employees from all backgrounds to bring their unique perspectives, experiences, and talents to the table. When employees feel valued and heard, they are more likely to remain committed to the organization. Workplaces with limited diversity may have increased turnover, as employees may feel marginalized or underrepresented.

Job seekers, particularly those from a younger demographic, are increasingly drawn to inclusive workplaces, so having a reputation for diversity can be a competitive advantage in recruitment.

Research has found that nearly a third of Gen Z employees (ages 16-24) will choose employers that prioritize diversity and inclusion in their workforce, compared to 11% of Gen X (ages 42-57) and 13% of millennials (ages 26-41).

5. Encourage Internal Mobility

Internal mobility offers employees opportunities for career growth and development within the organization they work for. When employees see a clear path for advancement, they are more likely to invest in their long-term future with the company.

Encouraging internal mobility leverages the existing knowledge and skills of your workforce. By allowing employees to move between departments or roles, you tap into their expertise, which can lead to faster innovation and problem-solving capabilities.

Internal mobility can also enhance employee engagement and job satisfaction. Building upon existing skills can increase motivation and create a stronger connection to the organization.

6. Continuous Learning Opportunities

Ongoing learning keeps employees motivated and invested in their roles. When individuals have access to skill development, training, and opportunities to acquire new knowledge, they’re more likely to see a future within the organization they work for.

According to the Linkedin Global Talent Trends 2023 Report, companies have a nearly 7% higher retention rate at the 3 year mark with employees who have learned skills on the job.

Learning new skills on the job increases employee confidence and competence. A workforce that’s continuously learning becomes more skilled and adaptable, contributing to the company’s overall performance and innovation. 

Offering learning opportunities demonstrates the company’s commitment to employee development and career progression. This commitment cultivates loyalty and trust, which are essential in retaining employees.

7. Holistic Well-being Programs

Well-being programs promote a healthier and more resilient workforce by prioritizing the physical, mental, and emotional health of employees. When employees have access to resources for mental health support and stress management, they are better equipped to handle the demands of their roles. This reduces burnout and the desire to leave the organization in search of a healthier work-life balance.

Holistic well-being programs also foster a positive workplace culture. They signal that the company cares about the holistic well-being of its employees, building trust and loyalty. Employees who feel physically and mentally well are more engaged, creative, and innovative, which positively impacts the company’s bottom line.

8. Exit Interviews and Continuous Improvement

Exit interviews provide insight into why employees leave, which can inform improvements in management practices, work conditions, or policies, and address the root causes of turnover. By conducting thorough exit interviews, organizations can identify patterns in employee departures and areas that require attention.

Continuous improvement involves an ongoing commitment to making the workplace better based on feedback, data, and evolving needs. Regularly asking for employee input enables organizations to adapt and refine their practices to meet employee expectations and preferences.

Both exit interviews and continuous improvement initiatives create a feedback loop for enhancing the employee experience. By addressing issues proactively and demonstrating commitment to employee satisfaction, organizations can reduce turnover, retain valuable employees, and maintain a more positive work environment.

Keeping Your Best on Board

Here’s why tackling employee turnover and having an employee retention program is so important to the success of an organization:

  • Cost Savings: Employee turnover comes with substantial costs in terms of recruitment, onboarding, and training.
  • Consistent Teams and Collaboration: Retaining team members fosters consistency, stability, and familiarity within teams.
  • Retaining Valuable Insights and Experience: Long-term employees accumulate valuable institutional knowledge and experience.
  • Reputation and Employer Branding: Companies known for retaining and valuing their staff tend to attract top talent more easily.
  • Smooth Operations: Experienced employees have the expertise to navigate challenges efficiently.

Ready to start investing in your workforce and reduce turnover by 40%? Learn how Beekeeper’s frontline success system can help.