One of the biggest challenges for companies today is reducing employee turnover to a minimum. Employee turnover is a highly costly and unpredictable occurrence, disruptive for the team and business growth. For that reason, companies are trying to figure out how they could avoid this as much as possible. Besides building a solid company culture that allows employees to grow and personally develop while working in a pleasant environment, it is essential to establish hiring processes that will make your organization extremely precise at finding the right match for the position.
How Are Good Recruitment Practices Affecting Your Employee Turnover ROI?
More specifically, research shows that losing an employee can cost 1.5-2 times the employee salary depending on their seniority. Even more so, based on the same study, the cost of employee turnover on technical positions can jump up to 110-150% of their salary!
How to Calculate Employee Turnover ROI for Your Company?
To calculate how good of a fit your new hires are and their chances of staying longer at your company, you should consider two metrics: the number of regrettable turnovers and the average cost of those departures. Once you have those numbers, you can finally calculate the annual cost of turnover!
Regrettable turnover is when a company loses an employee valuable for the organization and whose departure harms the organization or their team. Instead of putting all leaves into the equation, regrettable turnover represents a more accurate way of measuring turnover to determine an organization's health.
Here is how to calculate regrettable turnover:
Number of regrettable departures (RD) = number of employees x annual turnover percentage
Afterward, calculate the average cost of those departures:
The average cost of those departures (C) = cost of hiring + cost of onboarding and training + cost of learning and development + cost of time with the unfilled role
Finally, calculate the annual cost of turnover:
RD x C = Annual cost of turnover
How Does This Look in Practice?
According to Monster, the average turnover rate for 2020 was 15% across industries. So, if you have 100 employees, 15 employees will voluntarily leave the company (ND) at the end of the year. If your company is losing employees at technical positions, you will lose 100-150% of their salary by losing them, which can be translated into an average of $50,000.
In this case, your annual turnover cost jumps to 750 000$!
Even though each specific loss doesn't necessarily seem so drastic, the numbers are pretty extreme when put on paper. So, how can you reduce your turnover rates?
Main Ingredients for Reducing Turnover:
1. Focus on screening candidates
Candidate screening is one of the most tiresome and time-consuming parts of hiring. However, doing an excellent job at screening all applicants is essential for hiring success. With the help of an automated resume screening process, you can become faster and more successful at screening your candidates.
Advanced screening technology makes sure that you don't overlook any CV or any exciting candidate! Ultimately, the research has shown that being successful at screening valuable candidates and not wasting your time with those that won't be a good match for the company can save your company up to 20% in turnover rates!
2. Make your hiring a team effort
Making your hiring more collaborative and having multiple perspectives in place when hiring a new employee has shown to be a successful strategy for reducing turnover. When only one person in the company hires a new employee, there is a higher chance of human mistakes, misjudgment, or simply overlooking some details. Like everything else, the rule remains the same in hiring - two heads are wiser than one!
But, collaborative hiring is easier said than done. Frequently coordinating with teammates and finding time in busy schedules don't leave much space for collaboration. With collaborative hiring platforms, teams can share candidates' profiles, leave notes and comments about candidates, make more informed decisions, and perform faster hiring.
3. Recruiting for a cultural fit
As Katie Buton nicely said in her article for Harvard Business Review, culture fit is the glue that holds a company together. This sentence perfectly depicts how much a culture fit matters when we talk about turnover rates. But instead of just saying that culture matters, it is essential to take those words seriously. To hire for culture fit, a company first needs to define, implement and articulate its goals, values, and behaviors.
Cultural fit is the likelihood that someone will reflect and (or) be able to adapt to the core beliefs, attitudes, and behaviors that make up your organization. At the end of the day, it's pretty simple, if your employees reflect the same values as your company, they will be more likely to stay working at your company for a longer period.
How can you make sure you're hiring for a culture fit? Read the list of Culture Fit Interview Questions to recruit candidates who will perfectly fit within your organization!
4. Implement employee recognition programs
Despite a seemingly increased interest in employees' wellbeing and recognition programs, recent TJinsite research revealed that more than 35% of the employees consider lack of recognition the biggest hindrance to their productivity.
Additionally, a study by CareerBuilder found that 50% of employees would stay if they were tangibly recognized. Naturally, different tangible benefits drive each employee. In our recent survey, 84 participants were asked what type of recognition would they prefer to get from their employers. And the responses were quite diverse. Just above 10% percent of them would be satisfied with public or private recognition for their work, around 40% of them preferred monetary awards and the other 35% promotion.
This goes to show that tangible benefits have a higher impact on employees' satisfaction levels and that conducting your internal research would be the way to go before defining the form of your employee recognition program. Once you have your recognition program in place, you will soon start collecting the fruits of your labor!
If you lack good ideas for implementing a good employee recognition program, check out our list of 20 Ideas for Employee Recognition Programs!
5. Remember the Silver Medalists from the past!
One of the most overlooked and most valuable candidate pools is silver medalists pool. Everyone who ever worked on hiring employees at least once had a situation where there were multiple qualified candidates after the last round of assessment. Still, in the end, only one of them could get hired. Other great candidates who satisfied almost all of your requirements ended up being forgotten, their CVs got lost with time, and they ended up never being contacted again.
Being able to dive into a pool of such candidates will help you quickly find candidates who possess the desirable traits. There is a higher chance of them being a good culture fit since you previously had some interactions with them.
Ultimately, silver medalists can be your answer to the faster hiring of high-quality candidates who will stay longer with the company!
Do's and don'ts for Reducing Turnover!
1. Boost your employer brand!
There is a good saying in the world of HR: "Recruitment marketing is like asking someone on a date, and employer branding is the reason they say yes! "
Just like employer branding helps you hire great candidates, it is also the reason your employee comes to work every day without questioning if they should leave. Building a strong, recognizable, and truthful employer brand representative of your values is definitely a DO in retaining your staff!
2. Practice what you preach!
Many companies see employer branding and communicating values as a trend rather than a genuine initiative coming from the company's core. Well, our advice is: DON'T be one of those. If you say you value employees, freedom, and independence, don't micromanage all of their efforts and give them the possibility to work flexible hours. Ultimately, employees will respect your more for practicing what you preach!
3. Don't be cheap!
Being clever at investing in your staff is always a good idea. First of all, everyone needs an adequate reimbursement for their work. If you pay your employees, not only will they like the financial stability, but they will feel more appreciated for the work they do.
Ultimately, sometimes they'll need an extra tool or pay a visit to a conference to get better at doing their job. Do your best to invest in such occasions, you'll see - the returns are immense!
4. Be consistent!
Consistency is the key to longevity. Once your employees know what they can expect from you and that everyone is getting the same treatment, their satisfaction with their position will increase.
Consistency here refers to everything from paychecks, benefits, feedback, or daily working arrangements. Creating an unstable environment is definitely a big DON'T!
5. Listen to your employees!
And finally, there is nothing better for an employee than to feel heard. Maybe they have a great idea for the next project or a comment about a colleague being challenging to work with. When people feel appreciated and that their opinion matters, they are more likely to stay at the company!
Reduce Turnover With the Help of TalentLyft!
TalentLyft is a tool that helps companies find, attract and hire the best talent. With TalentLyft, companies are experiencing higher levels of retention and satisfaction with their employees. Sign up for our free trial or request a demo and make your hiring struggles gone!