Employees are more likely to leave their job in today’s economy than ever before. According to data released by the U.S. Bureau of Labor Statistics, 4.3 million Americans quit their jobs in August 2021. This record-breaking number accounts for the highest percentage ever reported by the BLS Job Openings and Labor Turnover Survey.
Millennials, in particular, are open to new opportunities that may arise in the employment landscape. A recent Gallup report revealed that 21 percent of millennials say they have changed jobs within the past year.
With high employee turnover rates affecting nearly every industry, many businesses are struggling to find new talent and minimize losses. A high rate of turnover has also impacted productivity in the workplace. Learn what causes high employee turnover and how businesses can improve retention.
What Causes Employee Turnover?
Employee turnover can have a negative impact on businesses, tarnishing the company’s reputation and leading to a lack of morale. Here are some of the most common reasons why people leave their job:
- Lack of Progression – Employees generally want to see an upward progression in their career and when this does not happen, they may look to other companies to improve their status and income.
- Being Overworked – When employees feel overwhelmed with responsibilities, it can cause frustration. Employees do not want to have to choose between their personal life and work life.
- Lack of Recognition – Employees want to feel respected and that their accomplishments are being noticed. When this does not happen, it can lead to hard feelings.
- Micromanaging – Overmanaged employees may experience frustration due to a lack of decision-making and freedom in the workplace. Micromanagement is a common cause of employee turnover.
- Poor Employee Choice – When employers do not conduct enough research before hiring, it can lead to poor employee selection. Employees who feel over or underqualified for a position may look for work elsewhere.
How Much Does Employee Turnover Cost?
Employee turnover costs can be significant. Businesses must account for advertisements for open job positions, the time it takes to interview candidates, fees related to drug screenings and background checks, and expenses associated with administering preemployment assessment tests.
Employers spend an average of 33 percent of an employee’s annual salary to replace a single employee, according to Employee Benefits News. This means it costs approximately $10,000 to replace an employee that earns $30,000 a year, $18,000 to replace a manager making $54,000 per year and $46,000 to replace an executive earning $138,000 per year.
In addition to salaried staff, it can be expensive to replace hourly workers. According to Investopedia, an employee earning $8 per hour can cost a business approximately $3,500 when they quit. The cost of training a new employee can also be costly, resulting in an average expense of $1,886 and 47.6 hours per year training hourly employees.
What Are Some Other Consequences Of Turnover?
A high rate of turnover in the workplace may also have other consequences for businesses. In addition to the costs of replacing employees, employers must consider the potential damage to the business’s reputation. Companies that experience a high rate of turnover are less likely to attract top talent.
When the rate of turnover within a business is high, more pressure is placed on the remaining employees. Workers may experience burnout or resentment as they struggle to handle work from people who have left the company. High turnover can affect nearly every aspect of a business, including customer service and quality.
How Can Businesses Reduce Employee Turnover?
There are many ways that businesses can reduce employee turnover and avoid the consequences that come with a high turnover rate.
- Hire the Right People – Ensure that new hires are experienced, understand their role clearly, and are likely to enhance the company culture.
- Keep Benefits Current – Employees expect a fair wage and benefits. Keep compensation and employee benefits competitive.
- Encourage Gratitude – Encourage workers to engage with one another with acts of appreciation or collaboration when the situation arises. Management should do the same for their employees when workers exhibit commendable behaviors.
- Provide Flexibility – Modern employees know the importance of maintaining a comfortable work/life balance. Offer employees flexibility around work locations and hours.
- Offer Growth Opportunities – Workers value growth opportunities and are more likely to remain with a company if they anticipate the ability to move up the career ladder.
- Prioritize Company Happiness – Employee happiness is a direct indicator of job satisfaction. When businesses invest in employees, they are rewarded with greater productivity and engagement.
Call New City Insurance To Learn More
New City Insurance is an experienced benefits consulting firm that specializes in compliance, insurance, and technology services. For more information or to schedule a consultation with an employee benefits consulting firm, contact us today.