3 Ways to Reduce Employee Turnover

by / ⠀Entrepreneurship Startup Advice / February 14, 2022
As the overall cost of people quitting can be so high, let’s look at three specific steps you can take to reduce your employee turnover rate.

The employee turnover rate of your business is more than just a single number.

High employee turnover brings with it a multitude of additional costs. Not only does your unemployment tax rate increase, but you have job advertising expenses, training costs, and overworked remaining employees. Turnover rates are an indication of a company’s stability and overall workplace satisfaction.

The general approach to preventing turnover is, of course, to not hire bad employees and to keep good ones happy. It’s a simple enough concept, but it’s not very actionable.

Instead, let’s look at three specific steps you can take to reduce your employee turnover rate.

1. Use a short-term project as a test run.

One option that’s not really on the table for lowering employee turnover is keeping bad employees around.

Sure, it might make the numbers work, but retaining underperforming workers can harm workplace morale. And if that happens, you’ll still have your unsatisfactory employees on board while your best workers start looking elsewhere.

To get a better idea of a candidate’s suitability before hiring them as a full employee, you can test them out first.

Giving applicants a single, short-term assignment would likely qualify them for contractor status. If you are satisfied with their performance, you can convert them from a contractor into a full-time employee.

Doing a test run can weed out those who fail to complete their assignment at all or do so to an unsatisfactory level.

You can also use this method to compare several potential job candidates to determine which one best meets your needs. Being able to see their actual work is almost always preferable to making a gut decision based on personality.

Employee retention is important, but it can’t be a priority if you don’t hire high-quality people in the first place.

2. Provide a clear path for the future.

As a general rule, humans tend to find motivation by setting goals and seeing progress toward them.

If someone knows they have no chance of advancement no matter how exceptionally they perform, motivation to excel is nonexistent. By giving all your employees the chance to achieve greater responsibility or salary, you reduce the likelihood that they’ll seek opportunities elsewhere.

Ideally, it’s best to mark out paths for advancement early on. Waiting until the first annual review to make sure you and your employees are on the same page regarding their futures is far too late.

With employees staying at jobs for shorter periods of time, you need to provide them with a clear timeline and corresponding expectations upfront. Plan to map out potential career trajectories when negotiating hiring terms. If you don’t, employees can develop their own timeline of when they expect to advance and leave if it’s not fulfilled.

Nailing down your employees’ advancement timeline isn’t enough, though. Supervisors and senior management need to place a strong emphasis on everyone following through on expectations.

Use performance evaluations to address those expectations. Has the employee held up their end of the bargain? Perhaps an employee is underperforming. However, they are not yet aware of it. They might be expecting a raise they haven’t earned.

Likewise, if an employee is performing at or above expectations and not seeing expected advancement, they are owed an explanation. Having a good reason for the delay (e.g., underperforming revenue) but not communicating it leads to disgruntled workers and turnover.

Few things will have employees walking out the door faster than feeling they’ve been lied to.

3. Find out what your employees value.

You might try your best to be a generous employer and provide workplace benefits that will keep your employees happy.

Maybe you subsidize gym memberships or provide profit-sharing bonuses twice a year. There are numerous ways you can show your people you care about them.

Unfortunately, what you think they want and what they actually want might be two very different things.

A high-end espresso machine in the office is a nice gesture, but it has limited value if most employees don’t drink coffee.

Instead of trying to anticipate or guess what your employees value, it’s far easier and more effective to simply ask them. You can address this during employee reviews or send out an email survey asking for feedback. With a designated amount of funds to spend on office morale, you want to use it where it will have an impact.

Would your workers prefer higher bonuses, more paid time off, or employer HSA contributions? Would their well-being be most improved by ergonomic desks, gym equipment in the office, or bringing in a massage therapist?

You might be very surprised by the perks your employees would appreciate the most.

Asking for feedback can also make your employees feel valued just from your expressing interest in their preferences.

When an employee has their specific needs addressed, it can make them more appreciative of the things they receive. This is true even if what they’re given costs less than something you might have chosen without their input.

The bottom line is clear. Employees enjoy greater attachment to their workplace when employers treat them like people. Viewing your employees as robots without individual preferences or decision-making power won’t keep you competitive. To attract and retain the best talent long-term, your work culture can’t be an afterthought.

Best Practices for Best Employers

You will always have situations where an employee doesn’t work out as intended. You will need to let them go.

It’s also entirely possible that one of your best workers will find an opportunity elsewhere that you can’t match. But if you have employees cycling in and out on a regular basis, you might reconsider your employment practices.

Once you incorporate improvements to your processes and culture, the quality and retention of your team are sure to follow.

About The Author

Kimberly Zhang

Editor in Chief of Under30CEO. I have a passion for helping educate the next generation of leaders.