High employee turnover in a small business can have far-reaching and potentially costly effects. The cost of replacing an employee can range from 16% to 213% of an employee's annual salary, depending on the position and level of experience (Society for Human Resource Management, 2018). Additionally, high employee turnover rates can lead to decreased productivity, reduced morale, and lower customer satisfaction levels (Entrepreneur, 2018)
If you're concerned about employee turnover in your small business, this guide offers practical advice on identifying the causes and developing an effective retention strategy.
Identify the Causes of High Turnover
Analysing data from your small business is the first step towards effectively managing employee turnover. Establishing and tracking key indicators of your staff's commitment can help you understand why employees are leaving, recognise potential problems with employee satisfaction, and identify measures to be taken to ensure a healthy and productive workplace.
To track key indicators, you can examine whether there is difficulty in recruiting employees or any unexpected changes in an individual's performance. Additionally, you can look at data such as the average length of employee longevity and the rate at which new hires are retained.
Analysing these data points can help pinpoint whether recruitment strategies need to be improved to attract suitable candidates or if the onboarding process has any issues that should be addressed. Understanding the reasons behind employee turnover is essential for developing retention strategies to ensure your small business successfully retains its employees.
Invest in Your People With Training and Development Programs
Welcome new hires onboard with a business-wide training program to ensure everyone knows your company's purpose and culture.
Additionally, offering professional development classes or seminars can help employees sharpen their skills and understand the path to career success. Providing professional development opportunities can increase employee satisfaction and reduce turnover, with up to 90% of employees reporting they would stay with a company longer if offered professional development opportunities (LinkedIn, 2019)
Training and career development support can also give them the tools they need to become valuable team members and stay with you longer. Creating a learning environment can motivate employees, develop stronger relationships, and reduce turnover rates. When designing your training program, it's essential to keep in mind the different learning styles and preferences of each employee. While some may learn from videos or written materials, others may better understand through hands-on experience. Ensure that you provide various learning opportunities so everyone can benefit from your training initiative. It is also helpful to offer flexible scheduling for your training, as some employees may not be able to attend during regular business hours. By investing in development resources for all team members, you will show them how much you value their contributions and give them the motivation they need to stay with the company.
Improve Your Hiring Processes and Practices
The hiring process can be a significant factor in employee turnover. A thorough, thoughtful hiring procedure helps ensure you fill your positions with the best employees who also fit into the culture of your small business. To streamline the process and reduce turnover, identify necessary skill sets when creating job postings, use various recruitment strategies to target multiple demographics, and stay up-to-date on best practices when interviewing candidates.
Following good hiring processes and practices will help you find suitable employees more quickly and set them up for success in the long run. Another way to reduce employee turnover is to offer competitive salaries and benefits. Show your employees that you value them by investing in their well-being, whether with health insurance, dental care or other perks such as flexible hours or paid time off. Employee recognition programs can also help motivate your team and show their efforts are appreciated.
Finally, providing opportunities for professional development through supplemented training, continuing education, and mentorship programs demonstrates a commitment from management to the growth of employees — something which can be invaluable in decreasing turnover.