How long is the average worker’s term of employment at your company? How often do you need to find, hire, and train someone new for a position? To some degree, this is just a normal part of business. Sometimes people retire, are let go, or move on to explore other opportunities elsewhere. The problem is, employee turnover carries a number of costs with it. The more you can reduce it in your company, the better and more productive things will be for everyone.
The Value of Long Term Employees
Generally speaking, an employee’s value increases over time. The longer they’re with your company, the more efficiently and effectively they’re able to do their jobs. Let’s put it in simple terms. Say that Employee A works in sales. When they’re first hired, it takes them an average of one month to nurture a lead and convert them to a sale. Over time, as they get to know their job, the product, the company, and their prospects better, they’re able to convert leads to sales in an average of two weeks instead. That means twice as many sales.
They may also become more skilled at things like up-selling, increasing the overall value of each sale. Plus, they’ve likely developed a rapport with certain customers and can use it to bring in repeat business. And they likely have other skills as well, such as helping to acclimate new employees to the company culture. The longer Employee A stays with your company, the more valuable they are to you.
The Cost of Employee Turnover
Then one day, Employee A leaves to take a job at another company, and you bring in someone to replace them. Employee B is intelligent, talented, and qualified. But it takes them an average of one month to convert leads to sales, rather than two weeks. They aren’t as skilled at upselling. And they haven’t had a chance to build up a rapport with any customers yet, which makes repeat business more difficult. All of this has a negative impact on the company and its productivity.
There are a number of factors that go into calculating the cost of employee turnover. First there’s what it costs to hire them. This can include posting job listings, hiring a recruiter, and more. And the longer it takes to find someone, the more it costs as well. Every day you spend with no one handling the former employee’s duties is costing you money. Then once you do find someone, they need to be trained and onboarded. Their learning curve while in training means lower productivity, which also costs you.
It’s estimated that hiring and onboarding a new employee can cost tens of thousands of dollars or more—even up to twice what the employee makes per year! And that’s just for one employee. If you have to hire, say, 15-20 new employees per year, it can end up costing millions.
Increasing Employee Retention
So how do you reduce employee turnover and keep your workers around longer? There are a number of ways you can do it. Offer them competitive wages and the opportunity for growth and advancement. Provide a generous benefits package. But that’s really only a small part of what gets someone to stay at their job.
If you really want to increase employee retention, you have to create a working environment that they actually enjoy being in and don’t want to leave. There are a number of software platforms and applications that can help make various aspects of employees’ jobs easier and improve the overall working environment.
Providing easy access to electronic pay stubs makes it easier for employees to keep track of when and how much they get paid each period, as well as over time, without inundating them with a huge amount of paper.
You can also start an incentive program that gives the seasoned employees opportunities to pad their paycheck as they increase their productivity. And just as importantly, show them just how much they’re making from that and other benefits they’ve accrued over the years. There are online benefits comparison tools you can make available to your employees, to show them clearly how much they’re making above and beyond their base salary. As they see that amount increase over time, it will give them a goal to reach, and a reason to stay.
These are just a few of the things you can do to increase employee retention and reduce turnover. Your employees are your company’s most valuable asset. If you treat them well and invest a little bit of time and money into them, they’ll be around for years to come and return on that investment many times over.