How increased employee turnover demands began
If there’s one thing last year taught HR leaders, professionals and practitioners alike, it’s that our employees are our most valuable asset. Period. Aside from the systems and processes that have been established, the bottom line is that it’s the workers behind the scenes that stimulate the push to move our businesses into the future and beyond. As such, employees are the vital lifeblood of every business. So why should we think about employee turnover now? Hold on…we’ll get to that!
Along with this honest acknowledgment is the reality that employees are human. They’re vulnerable, potentially fragile and most certainly sensitive to changes within the organization and especially the changes happening outside of work walls.
Then came the pandemic of 2020. This catastrophic global event flipped the world on its ear, hurling perpetual changes and challenges toward us with full velocity and little warning. Workers from all walks of life gazed fearfully into the face of a future looming with massive uncertainty, confusion and new obstacles galore.
Stepping up to meet the requirements of a new digital world
With the profound and unforeseen challenges caused by COVID, the world of HR was forever altered. We spent countless hours digging deeper for viable solutions that would not only return the employee experience to a semblance of what it once was but actually improve it overall.
No longer could antiquated processes, tools and technology be acceptable within the digital transformation we were all experiencing. Instead, we had to learn – sink-or-swim-style – how to adapt in this new digital world of remote work.
HR had to up the ante to efficiently operate, engage and even thrive in a digital remote world. Corporations and leaders realized the immense importance of connecting with their team. Checking in from a distance became the norm, minus the comfort and convenience of office proximity.
Employee engagement quickly became a top priority for organizations spanning across industries, segments, and businesses, as attrition rates vary by industry and can range from 10-15% in industries like healthcare and finance to as high as 20-25% in industries like hospitality and retail.
What comes next?
As we cautiously emerge from the arduous confines of the pandemic, employee engagement remains a critical factor that demands attention. But it’s much more than just employee engagement; it’s the added factor of employee retention as the uncertainty ebbs away and employees return to that foreign feeling of “normalcy.”
Workers who may have held out in undesirable roles during the uncertain pandemic may take this opportunity to explore employment opportunities elsewhere. Employees who need or want greater flexibility with their job may now go out and find it. For employers, Bonus.ly reports a resounding 87% of HR leaders think employee retention will be a critical or high priority for the next five years.
So where does that leave your organization?
Employee retention in the grand scheme of things
There’s definitely good news on the horizon! This crazy period of fear and the unknown is slowly winding down. Now, it’s literally a matter of time before employees, equipped with a renewed confidence, demand the ideal workplace, coupled with optimal team working dynamics. For HR leaders at every organization, this poses three serious questions they’ll need to consider. And they’ll need to start thinking about these things right now:
- How will I retain talent as the world opens up?
- How worried should I be about employee turnover?
- How do we prevent regrettable turnover?
What is employee turnover?
Also referred to as “employee churn, “regrettable turnover,” and “regrettable attrition,” employee turnover is the percentage of workers who leave a company during a given timeframe, typically monthly or annually. There are two types of employee turnover:
- Voluntary – Some employee churn is organic or voluntary, meaning that it occurs naturally and is actually fundamental for ongoing business development. For example, some employees may opt to leave if they feel they’re no longer a good fit or if they find a better offer at another organization. Other examples of voluntary turnover can include employee retirement, disengagement or a departure from the workforce. It’s estimated that approximately 60%-70% of all employee churn is voluntary.
- Involuntary – The other side of the coin is involuntary turnover. This type of employee employee churn is employer-driven in nature and encompasses the spectrum of layoffs, performance terminations and general workforce reductions.
A recently published Work Institute article reports the latest “voluntary quit (turnover) rates are nearly twice the amount of employees quit their jobs in July 2020 than those who quit in April 2020.” This is undeniable proof that in spite of the state of the world today, it’s the American workers who control the job market.
In fact, the article’s author, Danny Nelms, boldly declared the spike in voluntary turnover was on the shoulders of employers who “were still not doing enough to create conditions where employees would stay. Whether it was career development issues, career issues or manager behavior, organizations were not doing what it takes to get employees to stay and reduce voluntary turnover.” Nelms goes on to report a staggering statistic: 2020 voluntary turnover costs surpassed $630 billion.
How is employee turnover related to retention?
Directly related to turnover is employee retention. It’s defined as the number of employees a company retains during a set period of time. According to the Work Institute’s 2020 Employee Retention Report, “the total cost of employee turnover for businesses is high, even by conservative estimates, taking a toll on company profits.” The simple truth is that when an organization retains their employees, they’ll see higher ROI compared to an investment in talent acquisition on the front end.
What are the real costs of employee turnover?
On average, SHRM.org estimates organizations can pay six to nine months of a worker’s salary to replace them. To put things into perspective, employee engagement firm Sparkbay broke down the employee replacement costs by job level:
- Entry-level – 30% – 40% of annual salary
- Mid-level – 150% of annual salary
- Highly skilled – up to 400% of annual salary
Keep in mind that the cost of employee turnover – or employee churn – is different based on the industry, job role and company. However, there are several overlapping effects that impact every employee and every employer. To learn more about the cost of employee churn and its ripple effects, download our free infographic!
Why is employee retention so critical now?
“If it ain’t broke, don’t fix it.” What a humorous old precept. Too bad it doesn’t apply to employee retention in 2021. The reason retention is top-of-mind for leaders across an organization? Because turnover rates are growing at an alarming rate. In the past 10 years alone, the national turnover rate has increased by the astounding rate of over 88%! And based on research by Software Advice HR Analyst Sierra Rogers, 1/3 of new employees quit within a year of starting a job.
Forbes contributor William Vanderbloemen predicts what he calls “The Great Covid Job Churn,” a tidal-wave trend of unparalleled employee turnover. He attributes this repositioning to four main causes:
- Initially, workers wanted to wait for the return to normalcy before making the move to another organization or a new career.
- Because of the drastic changes moving from a brick-and-mortar office into our homes entailed, many people realized remote work was the best option for them.
- The emotional impact of COVID allowed people to realize the importance of family and friends. The reaction is more people than ever want to be closer to home and their loved ones.
- The pandemic impacted the structure and requirements of many jobs. As a result, many employees left their jobs in search of opportunities that were more similar to their original roles.
Add to these daunting facts that, in today’s workplace, the ever-increasing demands from employers and inflated employee expectations have all but eliminated the existence of lifelong employees. Employers beware: when you’re not meeting the needs of your employees – especially now – they’re not going to sit around and twiddle their thumbs. Don’t fool yourself either: the way things stand today, they’ll bolt without giving it a second thought.
How to increase employee retention
While there’s no silver bullet to keep the big, bad employee turnover wolf from growling at your talent door, you can depend on the employee journey experts at Click to have the answers. To secure your greatest assets from accepting a job at another company, you must begin retaining at the very moment they accept your job offer. But the real secret is that you never stop.
To win the war on talent, you must be dedicated to actively retaining your new hires from Day 0 to 90 days, then six months and finally, throughout their tenure. It boils down to being committed to maximizing the investment you’ve made in the members on your team, throughout their entire journey.
Taking the critical next steps
We’re a quarter of the way through 2021. Now is your organization’s opportunity to target a reduced employee turnover rate through active, intentional exercises. It all begins with great onboarding software and a stellar onboarding process. And it never truly ends.
Click is here as your consultant, and we’ll help you automate the process while you delight your new hires. When you’re ready to focus on people and let the process run itself, we’re just a click away.