Be proactive! 5 ways small business owners can avoid employee turnover
The estimated cost to replace a departing employee is 2.5 times their salary, so showing employees you value them as individuals can make a positive impact on employee retention.
One trillion dollars. According to Gallup, that is how much employee turnover costs American businesses on an annual basis. The business owning client might want to know what this means at the ground level. According to this 2019 report, the cost of replacing a departing employee can be 2.5 times their annual salary. The problem is real. According to 2017 data from the Bureau of Labor Statistics, the turnover rate is 26.3%. How can business owners be proactive?
Gallup is a data gathering organization. They do plenty of studies. In another study, referenced in 2021, Gallup found 43% of employees talked to others about their dissatisfaction and 36% were job hunting one or two months before they left.
This means many business owners have dissatisfied employees. What can they do to proactively address this problem?
- Be wired into the grapevine. If 43% of unhappy employees told their friends at work they were unhappy, word gets around. If you are active on LinkedIn, you have probably noticed people have a green circle around their profile photo containing the words “Open to Work!” Most businesses tend to have employee reviews at scheduled during the year. According to Gallup, these are too few and far between. Listening for clues indicating some employees are unhappy gives you the opportunity to get in front of the problem.
- Start by listening. Here is another surprising Gallup statistic: 62% of employees surveyed are less likely to suffer burnout simply if their manager takes the time to listen to their concerns. It delivers the message the employee has a say in what is going on. The employee might think there is nothing that can be done. If a manager feels that way, that might think “why bother talking if I can’t change anything.” If you own an accounting firm and the April 15th deadline is approaching, this might sound familiar. Managers may have more latitude than they realize. They can help employees prioritize, moving some tasks further down the list. The employee might not know how to do that or think they don’t have the authority. The manager can see the big picture, trying to redistribute tasks across the team to reduce the stress on an individual employee. At the very least, simply by listening, you have shown your concern.
- Can you find a creative solution? Imagine you are the franchise owner and manager for a fast-food outlet. Business booms at lunchtime every day. You wish you could hire more people because you are short-staffed. Some of your team are feeling overwhelmed. It might be the person taking orders at the drive-through because English is not their first language. It might be the person taking payments because they aren’t good at math. The solution might be to move the cashier and order taker to cooking stations and bring some of the cooking station staff into customer contact roles. You would not have been able to offer this solution if you had not taken the time to listen to the concerns of individual employees.
- The career track vs. dead end job. People do not take entry level jobs because they want to do the lowest paying job in the organization forever. According to Forbes, 56% of employees surveyed believed promoting from within improves employee morale. They also reported managers promoted internally were 10% more likely to have highly productive teams when compared to managers hired from outside. Employees who want to advance need to know there are opportunities within the company. If there are not, they will likely move elsewhere. Give them a career path.
- Employee recognition is important. Does your supermarket have a designated parking space for the Employee of the Month? Have you noticed Costco posts pictures of the Employees of the Month? Does your trade association recognize the top business owner for the region? Do you take your team out for dinner to celebrate the completion of a project or good quarterly results? People want to feel valued, not simply like replaceable parts in a machine.
There are many aspects of your business that are beyond your control. No one could have anticipated the pandemic and planned a strategy in advance. By connecting with your employees and showing you value them as individuals, you can make a positive impact on employee retention.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.