The assumption has almost always been that the lower your turnover rate, the better. But is it? On the surface, it would make sense. If your employees are sticking around (especially in a world where the average Millennial changes jobs every 1-3 years), you might think that means that they’re engaged and happy. (Plus, you’re not taking on the added expense of replacing an employee, which costs around 30-50% of their annual salary.) But what if they’re not?
After all, according to Gallup research, only 33% of the U.S. workforce is engaged, a statistic that has remained constant since it was first reported in 2014. What if parts of your workforce are only sticking around because they think they’ve hit their maximum potential or they don’t think another company will put up with some of their bad behavior? And while the outlook has significantly improved since the Great Recession of 2008, the tough job market may still be fresh in the minds of your employees, causing some to stay in a job that makes them unhappy because they think it’s their only option. Many also feel that turnover is necessary to flow in new people and ideas, identify those who are complacent, and keep employees engaged. So, as a leader, how should you approach turnover?
Simply put, there’s a fine line to walk and no magic number. But that doesn’t mean you should throw your hands in the air and not track or care about turnover rates. They tell an in-depth story about what’s going on in your organization and, to some extent, give you a pulse on how engaged your employees are. The key is to look beyond the percentage and to peel back the layers to not only identify how many people are leaving but why they’ve decided to move on, the type of employees you’re losing, and if any patterns or trends are arising.
So where does that leave you as a leader? All it means is that you can’t assume a high turnover rate means you’re doing a poor job and a low turnover rate means you’re doing great.
Here’s what you can do to have a better idea of how your employees are feeling:
- Check in with your employees regularly. This doesn’t mean a yearly performance review – in fact, research shows that Millennials would rather switch jobs than undergo a yearly performance review. What you can do is have an open-door policy and encourage management to communicate regularly with their teams (and put a process in place to make sure that happens). Maybe that means a monthly meeting at Starbucks to have a frank two-way discussion on how things are going and to identify ways to make improvements.
- Invest in your company culture. Studies show that 47% of people who are actively looking for new positions say company culture is the main reason for seeking alternate employment – so by creating an engaging work environment, you’ll not only keep those who were thinking of leaving for that reason, you’ll also attract those who left their previous job because they’re seeking a better company culture.
- Create opportunities for the workforce to get involved. Most employees want to be able to provide value and contribute to the company’s mission in their own unique way. So, by facilitating an open and accepting environment, your workforce will feel more included – and therefore more valued. Talk to employees about what they like and their unique “gift” or talents. This will help both them and the organization thrive.
- Give employees the opportunity to provide feedback. Those who feel that their voices are heard are more likely to feel engaged and invested in a company. Plus, how can you truly know how your employees feel unless you ask them? Click here for some tips for creating an effective employee engagement survey.
Looking for more? Check out our other retention posts on the Smart HR blog.