More than half of the U.S. working population is employed by a small business. However, employee turnover keeps many of these businesses from lasting for the long run. How can your firm reduce employee turnover? First, understand the direct and indirect costs of losing an employee.
Exact expenses vary by industry and job position, but here are estimates from the Center for American Progress:
- For employees making less than $30,000 a year, employee turnover costs 16% of their annual salary.
- For employees making $30,000 to $75,000 a year, employee turnover costs 20% of their annual salary. (About 75% of all U.S. workers fall in the $50,000 salary range.)
- For employees making more than $75,000 a year, employee turnover costs up to 213% of their annual salary. (This high-end mark refers to the high-earning, hard-to-replace CEOs.)
Whether it’s 16% to 213%, the range of costs to your business is exorbitant! These expenses are incurred from advertising, recruiting, interviewing, onboarding, and training new hires. They’re also incurred from lost productivity while a position is vacant and while a new hire gets adjusted to their position.
Plus, consider the cost of lost productivity by other employees. If too many employees leave, other employees take notice — which leads to a decrease in morale, engagement, and motivation.
To avoid the pitfalls of high employee turnover, your business should build a clear employee retention strategy. We listed six tips below to help you minimize employee turnover.
1. Focus on Job Growth
In comparison to older generations, Millennials prioritize personal and career growth over job security and income. And no matter what generation your employees come from, none will stick around if they don’t see the chance of mobility in your company. Ask yourself these questions:
- Have you discussed short and long-term professional goals with individual employees?
- When a specialized position crops up, do you hire out or look for capable employees to fill the role?
- Do you provide any coaching or mentoring to provide constructive feedback to employees? (Fact: 79% of Millennials want their boss to serve more as a coach or mentor.)
- Do you offer in-house training or tuition reimbursement for relevant job skills or certifications?
When you give employees a clear path for advancement, they can build a tangible list of goals for their future at your company.
2. Give Employees A Purpose
Create a mission statement and vision for your small business. If you already have a mission statement and vision, revisit it. Your central focus should be impact: What can your company do for the community it serves, and what can the individual employee do for your company?
This company vision also includes a list of clear expectations for employees. Particularly in the small business arena, employees have a wide range of responsibilities — some of which go beyond the traditional job role. When you bring employees on, tell them exactly what their job entails.
Employees want to feel that what they do matters. When you articulate a company vision, along with very specific expectations for employee conduct and job roles, employees can better prioritize their short and long-term work goals.
3. Get Consistent Feedback
During hiring interviews, you tell applicants what you want. During “exit” interviews, you ask why employees leave. But what about the time in between, when employees are actually working for you?
Known as “stay” interviews or check-ins, these occasional meetings allow you or your managers to gauge the level of employee satisfaction and engagement. Check-ins are your chance to ask if employees’ needs are being met, while you still have the chance to address them.
You wouldn’t sell a product without knowing what your target audience wants. Same goes for your firm’s approach to employee retention. Find out what your employees consider most important, and incorporate these needs into your company vision.
4. Show Employees You Care
According to a study by Intelligence Group, 88% of Millennials prefer a collaborative culture over a competitive one. They want to make meaningful connections and a meaningful impact in their professional lives.
The “culture of care” sounds a bit soft for business jargon, but it touches on a key concept: that employees want to feel wanted. An occasional bonus or raise — who can say no to that? But as the mantra goes, Money can’t buy happiness. And it certainly can’t buy employee retention.
Instead of throwing money at employees, incorporate more creative incentives to keep them happy. Which brings us to our next suggestion …
5. Provide Small Perks
Think about the snacks and drinks you get on an airline. These munchies aren’t especially tasty or unique. You wouldn’t buy them if you had better options. But you like these snacks anyway: they’re free, and they make you feel appreciated.
Offering freebies at work — like snacks, coffee, or Friday breakfast — gives your employees a similar sense of satisfaction.
Other ideas for retaining valuable employees: offering paid family leave, earned sick days, and flexibility in workplace and work schedules. And, of course, quality health insurance coverage — the final, most important tip on our list.
6. Offer A Health Benefits Package
If you have two to 100 full-time equivalent (FTE) employees, the Affordable Care Act considers you a small business owner.
However, ACA mandates vary based on the size of your business. If you have 50 to 100 employees, and you do not provide health insurance coverage, you’ll pay a tax penalty. If you have fewer than 50 FTE employees, you are not legally obligated to provide group coverage. You won’t pay a penalty if you decide not to offer health insurance to employees.
Still, no matter the size of your small business, offering health benefits gives your firm a competitive advantage. These plans can be as unique and cost-conscious as your business. For instance, you can start with a small package (i.e. medical policies only). Then, with a three to five-year plan, you can grow your offerings to include medical, dental, and vision coverage.
To find a benefits package that fits your budget, talk to a licensed health insurance agent at Regency West. We’ll help you find a plan that fits your budget and meets the needs of your growing company. Get in touch with us today!
After all, your employees are the heart and soul of your small business. When you provide perks, health benefits, and room for growth, employee turnover will be a much smaller cost to worry about.