You already know excessive employee turnover is a bad thing. But what you may not realize is just how much it can actually cost you.
According to the National Federation of Independent Business, the cost of employee turnover can be anywhere from 150-200% of your employee’s salary. This hefty price tag can be attributed to a loss of engagement and productivity of those “left behind”, as well as the expenses associated with hiring and training a new employee.
Needless to say, it’s important to make sure you are doing everything you can to retain top talent. Xerox’s 2017 Compensation Planning Survey report recently revealed that, over the next 12 months, the majority (53 percent) of employers agree their No.1 priority will be employee retention.
To keep your best and brightest, should you just pay them more? Since 2012, the average pay raise has been a lowly 3 percent – and that doesn’t look like it will be changing anytime soon. So how do employers plan to improve retention rates without giving significant salary raises?
Retention via compensation communication
As employers turn their attention away from cost control and focus more on engagement, more unique and creative retention strategies are beginning to surface. For example, being more honest and transparent about compensation philosophies and total rewards can actually help reduce unwanted turnover.
According to the Xerox survey:
- 64 percent of participants communicate their pay philosophy and strategy with workers.
- Nearly 70 percent share information about total rewards value.
- Almost 60 percent keep employees informed on business performance, as well as how it influences compensation.
Articulating to employees why compensation structures are the way they are can help give them a more comprehensive understanding – not only of how their role contributes to company’s value, but how their pay is affected as a result.
Additional strategies for improving retention
There are many ways to improve retention that have nothing to do with compensation. Taking advantage of these solutions can help maximize productivity and engagement levels and, in turn, limit turnover.
- Build trust: Establishing trust with employees is an essential component of a healthy workplace culture. If your team members don’t feel like you have their best interests at heart, they are less likely to feel committed to you as an employer – and the company as a whole. Some simple ways you can improve trust with workers include following through on things you say you are going to do and keeping employees in the loop about what’s going on with the organization, even if it is not always positive.
- Provide growth and development opportunities: Employees are going to be more inclined to stay with your company if they are able to see opportunities to advance their careers. Sitting down with them to discuss their career path goals and establishing clear plans for helping them reach them can go a long way to retaining top talent.
- Recognize early and often: It’s important for employees to feel like the work they do has meaning and that they are valued and appreciated by their employer. Regularly offering employee recognition is a type of reward within itself. And it can be as easy as verbally praising them for a job well done on a project they recently worked on or sending a hand written thank you note.
Effective employee retention should be a priority for every organization, especially when it comes to top performers. Taking necessary measures to ensure a worker is satisfied in his or her role lessens the chance of that individual looking for employment opportunities elsewhere, and makes it less likely that the employer will have to deal with the costly fallout of this happening. The reward for the organization is retention of valuable resources and happier employees.