According to a study from the Work Institute, a shocking 42 million US employees left their jobs voluntarily in 2019—27% of the workforce. This was an increase of over 2 million in 2018, which saw 40 million voluntary departures and an increase of over 88% since 2010. 

Over one-third (37.9%) of interviewees exited their organization within 365 days or less.  Two out of three employees who leave in the first year do so in the first six months.

20 out of 100 employees quit for career development reasons in 2019. Career development has been the #1 category for ten straight years.

2021 Bureau of Labor Statistics report turnover rate in 2020 was 57.3%.  Utah 23%.

Manager behavior as a contributor to turnover is a red flag – and it’s getting worse.  Manager behavior concerns are described as unprofessionalism, lack of support, poor treatment of employees, generally poor behavior, poor communications, lack of manager competence, and lack of manager fairness.

COST OF TURNOVER?

The Society for Human Resource Management reported that on average it costs a company 6-9 months of an employee’s salary to replace him or her.  For an employee making $40,000 per year, that comes out to $20,000 to $30,000 in recruiting and training costs.

 In Utah’s tight labor market, turnover will be an even greater challenge as employees will leave quickly if they feel they can get a better situation. Better safety.  Better benefits.  Better communication.  Better company culture.

So, what is the real cost of losing an employee?

In an insightful article on employee retention, Josh Bersin of Bersin by Deloitte breaks down key factors that contribute to the costs of losing an employee.

These factors include:

• The cost of hiring a new employee including the advertising, interviewing, screening, and hiring.
• The cost of onboarding a new person, including training and management time.
• Lost productivity—it may take a new employee one to two years to reach the productivity of an existing person.
• Lost engagement—other employees who see high turnover tend to disengage and lose productivity.
• Customer service and errors—for example, new employees take longer and are often less adept at solving problems.
• Training cost—for example, over two to three years, a business likely invests 10 to 20 percent of an employee’s salary or more in training.
• Cultural impact—whenever someone leaves, others take time to ask why.

One of the reasons the real cost of employee turnover is an unknown is that most companies don’t have systems in place to track exit costs, including recruiting, interviewing, hiring, orientation and training, lost productivity, potential customer dissatisfaction, reduced or lost business, administrative costs, and lost expertise. 

What does turnover cost in your organization?

Your company’s average annual salary: __________________

Multiply by 30%* =______________

Multiply by the number of employees that quit or left last year ________

= __________________Total Turnover cost

*The Work Institute estimates conservatively that turnover costs about 30% of an employee’s annual salary. 

THREE WAYS TO BUILD A COMPANY CULTURE THAT WILL REDUCE YOUR TURNOVER COSTS – AND BEGIN TO CONVERT YOUR HR MANAGEMENT SYSTEMS FROM AN EXPENSE CENTER TO A PROFIT CENTER!

“BEST PRACTICES” HR – BUILD A STRONG COMPANY CULTURE

• CULTURE OF EMPLOYEE SAFETY:
• Employee Manual – kept current and OSHA compliant
• Separate Company Safety Manual – Kept current and OSHA compliant: Regular safety training building on what supervisors (additional training as needed) are currently doing and covering targeted safety.
• Make certain training is regular, repeated, content documented and signed off:  then records all digitally stored and backed up in preparation for inspections, workers compensation claims, etc.
• As employees become more and more assured that your company is committed to a culture of employee safety, turnover is reduced. Profit increased.
• CULTURE OF EMPLOYEE HEALTH AND WELFARE

• • Health Plan – Even if you can’t participate in paying some towards a health plan, even offering one is a good start. By pooling your employees with a larger group PEO (Professional Employer Organization) like Solution Services you can save up to 20% on health plans.

• Dental: Paid by employee

• Vision: Paid by employee

• Life insurance:  $15,000 per employee, $2000 per spouse, $1000 per dependent.  Ask about our no cost life insurance.

• Employee Mental health.  EAP:  Employee Assistance Program: Post-pandemic, attention to employee mental health is a rising HR trend in 2021.  24/7 counseling available for anxiety, depression, mental health, family, marriage, addictions, etc.  Ask about our no cost EAP.

• 401K Retirement:  Again by pooling your employees with ours we can save you $3000-$5000 in setting up your own 401K and all 401K fees are included in our HR services eliminating fees you may be paying currently.

As employees become more convinced they are valued and appreciated with a “fortune 500” level benefit package, retention levels will go up – reducing turnover costs. Increasing your profit. And, your company will not be training for the competition.

• A CULTURE OF INCLUSION AND COMMUNICATIONS

• “Communications.”  Establish a system of information and communication:  How are your employees relaying information to each other both verbally and nonverbally?  If rudeness, lies, stonewalling, gossip, bullying and other forms of negative communication are tolerated, company culture will suffer. Good employees will leave. Create and maintain an employee manual that is in compliance with Federal and State employment laws.

•  As an outsourced HR firm we facilitate improved communications by providing a buffer between employees and owners in difficult situations. Employees, managers and owners have a “third party” HR department they can go to with concerns. Providing liability protection to all. With manager behavior contributing to turnover it is important to have ongoing supervisor training and development. 

• Develop job descriptions and hold employees accountable to fulfilling them.  Teach supervisors how to give feedback, and reward them for doing it regularly and honestly. Deal with conflict.  Competent people want to work with other competent people in organizations that value and support their talents, and they will leave environments that don’t meet these standards.

• Focus on fairness.  Employees who come to work on time and produce as expected don’t like it when their coworkers are allowed to slack off with impunity.  

• Employee Surveys: Properly survey existing and former employees.  What is required for them to stay?  Why did they really leave? What are their likes and dislikes.  Ask open-ended questions and hen listen to their responses.  Periodically check with staff and get their feedback about workplace conditions. Help employees feel included, respected and trusted. Then act on the opinions of employees. Failure to act will cause a loss in credibility and increase turnover.  Foster an atmosphere of respect. 

Managing turnover is a process, not an event.  Ultimately managing turnover is about mindfully creating a workplace culture that supports and rewards high performers and efficiently and fairly weeds out poor performers who compromise company goals and culture.

Having Solution Services as a “best practices” HR department begins to communicate to employees that your company is committed to a workplace and company culture that invests in employee’s safety, health and welfare, inclusion and communications.  Retention increases.  Profit increases!