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Employees are the backbone of any successful business. Replacing an employee can be a painful experience, especially for small businesses and entrepreneurs that have small teams. Employee turnover can result in the loss of valuable knowledge and expertise, damage customer relationships and cost thousands of dollars to find and train a replacement. The cost to hire and train a single mid-level manager is nearly $30,000. Each year, employee turnover costs U.S. businesses about $1 trillion. Here are some ways businesses can reduce turnover rates and improve employee retention.
1. Start with compensation and benefits
Employees expect to be compensated well for the work they perform. Companies that fail to remain competitive will struggle to retain their top talent. Although wages and bonuses are important factors in compensation, businesses should also explore opportunities to enhance other forms of compensation such as health insurance, life insurance, vacation policies and 401k contributions. Even non-monetary perks such as having an on-site gym or time off for volunteer activities can boost employee satisfaction and retention.
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2. Employee recognition and praise
Employees want to be recognized for their contributions. Business owners should take the time to reward and recognize the members of their team who are bringing their best. Different forms of recognition are effective, from sending a personalized note thanking them for their work on a special project or giving a gift card for helping another department. Public praise can also be effective such as giving out awards during a company meeting.
3. Provide career development opportunities
Career development is a critical part of employee retention. Employees who consistently feel challenged will be more likely to stay with a company. Find ways to give your top performers stretch assignments and promotions. Training such as educational courses and mentorship programs can provide an opportunity to enhance your existing staff while preparing them for their next opportunity.
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4. Provide the right resources and tools
Employers are responsible for making sure that their employees have everything they need to be successful in their jobs. Skimping on these resources can leave employees feeling underappreciated, burned out and frustrated. Resources come in many forms, from hiring the appropriate number of employees to support the work to updating technology and improving processes.
5. Promote healthy work-life balance
Work-life balance is extremely important to most employees and can impact turnover. According to the Pew Research Center, 45% of employees left their jobs because of not enough flexibility in their work schedule, and 39% left because they were working too many hours. Giving employees the ability to balance work and their home lives reduces stress and allows them to take care of personal issues that would otherwise distract them from their work.
Businesses can help support healthier work-life balance by permitting employees to work remotely (either full-time or part-time), create flexible work schedules and have more sick or personal time available.
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6. Hire the right people the first time
Although this might seem like common sense, this is easier said than done. Rapid changes in the economy and workforce can leave companies desperate to fill open positions. It might be tempting to just hire any halfway qualified candidate. Unfortunately, this can increase turnover for both new and existing employees. New employees may leave quickly when they aren’t able to keep up with the demands of the job. Existing employees may also become burned out from constantly training new hires over and over.
Instead, try to hold out for the best possible candidate for your open position. Also, being clear about expectations upfront can help reduce the number of employees who accept the position only to quit shortly after because the job wasn’t what they were expecting.
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7. Get feedback from your team
Employees leave companies for a wide variety of reasons. One of the best ways to reduce turnover is by getting feedback directly from employees on how they feel about working for the company. Too many companies gather this type of information in exit interviews. Unfortunately, this doesn’t help because the employee has already chosen to leave. Instead, conduct stay interviews with top performers to find out what would keep them from looking outside the company for new opportunities. Anonymous employee satisfaction surveys can also provide a wealth of information to help business owners make retention decisions.
