It’s well-known that high unemployment rates discourage employees from voluntarily leaving their jobs—even if they’re unhappy—because of the uncertainty in how long it will take to secure a new position. However, the unemployment rate has been steadily dropping for several years, now (in early 2015) reaching lows last seen before the recession. The number of unemployed applicants per available job is also back to lows not seen in yearsi.
All of this is great news for jobseekers, but what does it mean for employers? Employers now have more reason to be concerned that turnover rates will begin to rise again. Employees who are dissatisfied have little reason to stay when they reasonably think they can get a new job quickly. The Department of Labor (DOL) confirms this is already happening: In November 2014, the number of people who are voluntarily quitting reached its highest level since 2008ii.
Many employers fear that the voluntary turnover rate will now climb higher than in years past, due to the fact that there is pent-up frustration from the recession and a large number of people who have wanted to leave but have not done so in recent years due to the economy.
Reducing Turnover in a Growing Economy
This situation makes employee retention efforts more important than ever. The unemployment rate is down, job openings are up, and the economy is growing. Dissatisfied employees have been waiting for this time to leave. What can employers do to not risk extreme productivity losses associated with higher-than-normal turnover rates?
Here are several tips for turnover reduction:
- Assess employee engagement and satisfaction. Ask employees how they feel and what needs to be improved. But remember, just asking won’t cut it; the key is to follow through on the insights gained and make improvements quickly.
- Reassess compensation and benefit levels. The market is changing. Compensation is coming back up. Many organizations are giving bigger raises than they have in the past few years. Any employer that is not keeping up with these trends may face a higher risk of turnover. This may mean implementing new benefits, increasing pay, or giving employees more flexibility.
- Invest in employee development. Employees need to feel valued and feel as though they have a future with the organization. One way to accomplish both of these goals is to establish employee development programs that give employees the necessary skills to progress within the organization. Cross-training may also be an option to provide more opportunities to employees. This benefits both the employee and employer.
- Implement appropriate recognition programs. Employees want recognition for doing their job well. However, not every employee will be receptive to the same type of recognition. Some want monetary recognition, such as bonuses or other incentive pay. Others want formal recognition, such as awards and perks. Others prefer to be recognized through receiving coveted assignments, shifts, or projects. The key is that the employer will need to implement a mix of recognition programs that best fit their star employees if they want to keep those employees for the long term.
- Focus on managers who have high turnover rates. Find out what’s happening in those departments or locations with high turnover. Determine what can be improved. Sometimes it comes down to specific people who cause problems. It can help to compare problem departments with similar departments or locations that have low turnover rates. Sometimes employee surveys can help in this area.
- Assess your hiring practices. Reducing turnover often boils down to getting the right fit from the beginning. While many employers have become pickier during the recession (due to the large number of applicants to choose from), that doesn’t mean the focus is always on the issues that truly matter. Cultural fit often matters as much as or more than a specific number of years of experience or a specific level of education. Skills can often be taught, while good cultural fit is hard to create if it doesn’t exist.
- Get information when employees leave. While it can be argued that an employee who is leaving doesn’t have incentive to give the employer much real, in-depth information (and, in fact, may not provide their true opinions in order to keep from burning bridges), conducting exit interviews can still be beneficial. They can uncover unknown problems and trends.
- Review employee workload and work/life balance. During the recession, many employers opted not to replace workers who left or were let go. This meant that employees who stayed were required to take on more and more responsibilities—often without a pay increase to offset the extra burden. If this situation remains, these burnt-out employees will likely be looking for greener pastures. Also, if they’re high-quality enough to be able to take on a great number of responsibilities, it will be a loss for the employer when they leave. Some employers are finding that when employees like this leave, they must hire two or more people to replace them—which could have been avoided by a more equitable distribution of responsibilities.
- Ensure employees are getting frequent feedback. Whether it’s through a formal performance appraisal program or through informal feedback sessions, letting employees know how they’re doing is a critical task for managers and HR alike. Employees who don’t get regular feedback may be unnecessarily frustrated. This feedback session is also a two-way street; it’s an opportunity to discover what the employee wants and needs and what his or her professional goals are. When employees feel heard, they’re more likely to stay. When they know what’s expected of them, they’re more likely to meet those expectations. This also provides an opportunity to ensure the employee is in the right role.
- Don’t ignore problem employees. Problem employees aren’t just a headache for the manager—they can cause a problem with turnover, too. The problem is worse than it seems because those who leave are often the very employees you want to keep. If there is a problem employee, ensure that managers are handling the situation and ensure that steps are taken—up to and including termination if necessary and warranted—to curb the issue. When employees see others misbehaving without consequence, it drops morale and productivity, and it even encourages others to misbehave since there appears to be no consequence.
This list is really just the tip of the iceberg. There are many programs that can be implemented to reduce turnover, depending on the problems you’re facing. The key is to be proactive and listen to what your employees are saying—and then act on what they need. Taking action now can reduce high turnover later.
**This article does not constitute legal advice. Always consult legal counsel with specific questions.**
i Here’s a link to the Bureau of Labor Statistics Report on this topic, from December 2014: http://www.bls.gov/web/jolts/jlt_labstatgraphs.pdf
ii http://www.bls.gov/news.release/jolts.htm “There were 4.9 million total separations in December, little changed from November. This was the highest level of separations since October 2008.”
About Bridget Miller:
Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.