Retaining talented workers has a direct impact on your bottom line, but the impact of employee turnover goes far beyond the replacement costs. Many employees are planning to leave their current job as soon as the economy begins to recover as indicated by Right Management who found, “Employee turnover is expected to rise next year  … Sixty percent of employees intend to leave their current positions and an additional one-quarter are networking and updating their resumes.”
Research on the cost to employers of employee turnover often cites figures of one and a half times an employee’s salary, which includes administrative costs of termination, separation or severance pay and unemployment compensation. Replacement costs include advertising for the position, interviewing, testing, travel, moving expense and training costs.
In addition, think of the effect on the workforce as the team changes every time new players are introduced, and when people leave unexpectedly there is also a definite impact on company morale and productivity.
When new people join an organization a level of trust needs to be developed and this takes time. Stephen Covey wrote, “Trust is the one thing that changes everything … and affects the quality of every relationship, every communication, every work project, every business venture, [and] every effort in which we are engaged.”
The key is to keep your workforce stable. When you think of employee morale and motivation, it helps to understand why many people leave an organization. Gregory Smith in his article “Here Today Here To Stay: Helping Turn the Tide on Turnover and Retention,” stated his retention research found “Lack of appreciation was found to be the greatest dissatisfaction at work,” and others cite one’s relationship with their immediate supervisor.
The Great Places to Work Institute finds a lower turnover rate in companies with high trust levels. Amy Lyman of the Great Place to Work Institute stated the “Average voluntary turnover for the top 100 in 2010 was 7%, compared with the Bureau of Labor Statistics data for all companies was 16.7%.
With the diverse generations that now inhabit the workplace, organizations need to manage retention one person at a time because different generations have different motivations, goals and expectations. Retention levels are higher in organizations where the leadership is highly visible to the workforce. A key is to listen to your employees; when employees feel comfortable telling you their challenges, you are creating a culture where people want to stay.
There were several good points made in the article. Having grown up in a family where both parents were involved in a family business I feel strongly about loyalty—-loyalty of employee to their employer and conversely the employer taking note of their employees and treating right by them! I’m happy to say that I witnessed both in my parents’ business. Despite the fact that I did not join the family business, my strong work ethic was forged there. People that worked for my parents were like extended family–an occasional black sheep, different personalities, each with their own take on things—but they came together to work in respect for my parents. This respect (or possibly trust as stated in the article) came about due to the mutual respect and trust my parents showed to their employees. What went hand in hand with this business culture was an emphasis on customer satisfaction. If you are part of a good working environment it can’t help but influence how customers are treated—and the customers responded in kind. The same words apply—loyalty, respect and trust. So not only do you retain great employees but they in turn develop a strong customer following. I wish this business model would come back in vogue again—no matter the generation.
Thanks for your comment. I am researching a book by interviewing executives from “Great Places to Work” and the cultures resemble what your family created. The number one element in these organizations is trust and it influences everything. In addition, every organization I have interviewed has a common focus on excellent customer service. In fact, one organization puts their employees first and comments, If I treat my employees well and take care of them, they in turn will take care of the customers.