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How To Reduce Employee Turnover: 6 Key Tips

If your business has an employee turnover problem, you’re certainly not alone. According to the Bureau of Labor Statistics, more than 4.5 million American workers voluntarily left their jobs in November 2021, the most in at least two decades.

While the effects of the Great Resignation are widespread, many leaders fail to recognize the true costs of employee turnover. A consistently high attrition rate predicts low organizational performance – remaining team members are forced to handle larger work loads, and productivity suffers when talented employees are tasked with recruiting and interviewing. Conservatively, the cost of replacing an individual employee can range from one-half to two times their annual salary.

In order to reduce employee turnover, business leaders need accurate insights about the drivers of attrition. Successful strategies begin long before the employee makes the decision to leave.

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What causes employee turnover, and what is its impact on the organization?

Answering those questions requires an understanding of the employee experience. Basic statistics can show you how many employees have left your business and how much money you lost as a result, but raw numbers can’t tell you why they left. The simplest and most effective way to address employee turnover is to listen to your employees and take actions based on reliable data.

Here are six crucial tips for finding the types of questions that can provide actionable insights.

1. Recognize that some level of attrition is desirable.

When addressing a high attrition rate in a workforce, remember that “no attrition" probably isn’t an achievable objective. No successful company retains 100% of its staff in the long term (not even Perceptyx, though our voluntary attrition rate has remained quite low since our founding in 2003).

Goal attrition rates vary from one industry to the next, but some amount of voluntary employee turnover is healthy. Highly successful organizations are adept at forming relationships with their employees, including those who leave.

Those relationships can be valuable. Corporate alumni may recommend colleagues to their current employer (or vice versa) or advocate on behalf of the brand. And ex-employees might not stay ex-employees forever: Perceptyx data shows that many voluntary leavers would be willing to return to a previous employer, given the right offer. On average, employees said they would consider returning to 72% of the employers they had over the past five years given the right opportunity, and half said they have regretted leaving a former employer.

Returning employees arrive with institutional knowledge and new perspectives, which radically reduces the cost of hiring – but if the employer ignores alumni relationships, they also ignore the opportunity to bring back talent.

2. Identify problematic attrition.

How can you deal with a high attrition rate? First, establish the extent of the problem.

Exit surveys, when considered with other surveys throughout the employment lifecycle, can yield actionable insights for building strong alumni relationships and identifying drivers of attrition. Survey items can home in on aspects of the employee experience and answer key questions:

  • Was the employee able to balance their work and personal life?
  • Did managers set clear expectations and communicate effectively?
  • Did the employee agree to join another employer before deciding to leave the company?

Effective exit surveys can help managers draw a line between desirable and undesirable attrition, which is crucial when establishing goals. However, exit survey data is limited when analyzed without context. A successful strategy will also consider employee turnover statistics with survey responses from employees who stayed.

3. Develop a competitive compensation strategy.

What are the causes of high labor turnover? The obvious answer is compensation, but the reality is more complicated. Pay is certainly a driver of attrition, but while offering a large total compensation package may attract talented employees, it can’t necessarily keep them on-staff.

Though it may seem counterintuitive, compensation is a secondary driver of attrition at most organizations. For many people, changing employers is similar to switching to a new cell phone plan: It’s a hassle, and the financial rewards must be substantial to make the effort worthwhile. If an employer is offering competitive pay but suffering from high employee turnover rates, other barriers will need to be identified and addressed.

Even so, organizations need a consistent, transparent, and fair compensation strategy to keep talent engaged. If total compensation is consistently in line with market expectations – and equitable throughout your organization – you’re probably making appropriate adjustments. Surveys can guide your strategy by pinpointing whether total compensation is in line with employee expectations.

Without a well-established compensation philosophy, offering more money (or better incentives) can have unintended consequences. For example, if a manager extends an especially generous offer to keep a new hire on staff, long-term employees may see the offer as inequitable.

4. Develop a work culture that facilitates strong relationships.

Employee engagement is a powerful indicator of whether retention strategies are working. Perceptyx research identifies four barriers to engagement, which correlate strongly with high voluntary turnover rates:

  • The employee believes that they are not valued by the organization
  • Poor relationships with managers
  • A lack of teamwork
  • A perception of lack of opportunity for growth and development

The common thread: relationships. Businesses need to build connections between employees and their coworkers, managers, and the organization itself. We need to direct those relationships to be positive in nature and highly collaborative.

Managers sometimes avoid facilitating human-to-human relationships because they are afraid of possible negative consequences that can occur when employees are close. Humans, after all, are only human, and not every watercooler conversation will facilitate a more productive work environment. However, the benefits of strong relationships greatly outweigh any negatives: You’re creating a work environment that compels people to stay.

And when workers aren’t engaged, they can actively detract from your company culture. Perceptyx research performed during the Great Resignation indicates that only 25% of highly disengaged workers are willing to put forth extra effort, but 70% of those workers have no plans to leave their job within the next 12 months.

5. Give employees a clear vision of their future at your organization.

In our data, the organizational relationship – an employee’s perception of their place within the company – has emerged as a primary driver of both engagement and voluntary attrition. Only about 18% of low-engagement employees (or The Disconnected) feel a strong sense of personal accomplishment at work, compared with 92% of highly engaged employees.

Put simply, people want to do meaningful work and receive recognition for their effort. They want opportunities to grow their skills and make an impact in an inclusive environment. If an organization fails to fulfill those expectations, engagement will suffer and attrition rates will rise.

Leaders need to effectively communicate goals, responsibilities, and the potential for long-term success. These efforts should highlight the employee’s relationship within the future of the business – not just the future of the business as a whole.

6. Start the conversation, and be prepared to take action.

Surveys can indicate disparities between an employer’s efforts to build organizational relationships and the employee’s perceptions of those initiatives. Understanding your team’s concerns – both on an individual and group level – helps to create the conversations that establish a better culture, strong connections, and a positive vision of the future.

However, leaders must demonstrate that they’re listening to feedback. Involve employees in the action planning process, and make sure your overall listening strategy is appropriate for attaining your goal outcomes. If your listening strategy consists of annual census surveys and human resources information system (HRIS) data, but little follow-up action, you’re due for an improvement.

Start Taking Relevant Actions to Reduce Attrition

Forming a strategy to address attrition takes constant communication, data collection, analysis, and most importantly, action. A comprehensive employee listening solution that produces a two-way conversation can be instrumental in building the right approach.

By collecting responses across various listening channels, Perceptyx helps businesses identify the factors that fuel employee turnover. Our solutions enable real-time dialogue and instant analysis, providing the insights leaders need to empower and retain employees. Schedule a demo today to learn more.

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