You hear hiring is a big challenge for small business. But according to the statistics, employee turnover is an even bigger problem.
How important is Employee Turnover? Intuition might suggest that it’s harder to hire someone than to keep them.
But according to new research of more than 600 US businesses with 50-500 employees, 63.3% of companies say retaining employees is actually harder than hiring them.
This means, in spite of our tight job market—or maybe because of it—businesses see a greater struggle to keep the employees they already have, than to find new ones.
Tight job markets are characterized by low unemployment rates and tapped talent pools. This makes finding qualified workers hard. But more importantly, this turns the market into an “employee’s market,” where it’s easy for employees to find a new job, among the piddling of qualified applicants per job listing.
Perhaps it’s natural, then, that employers are struggling to keep workers and an overwhelming majority (81%) of businesses agree employee turnover is a “costly problem.”
If businesses can’t maintain basic staffing needs, it impacts their ability to service their customers.
Delays to customer products or services was the #1 impact of losing employees (24.5%) according to survey respondents, followed by loss of productivity (21.1%) and then the issue of the costs to re-hire and onboard employees (17.2%).
Smaller businesses can’t afford to under-service their customers.
The consequence of under-servicing clients or customers at small or mid-businesses is far more severe than larger companies. This is because the loss of each customer represents a greater proportion of their customer base and thereby revenue.
If you only have a handful of clients, and you lose one, well…
It’s not as if business leaders are ignoring the turnover problem.
- 53.2% of survey respondents have increased employee recognition,
- 51.4% provide salary increases or raises, and
- 41.3% provide benefits all in the name of boosting retention rates.
But still, nearly 1/3 of employers expect their average employee tenure to be less than a year.
Companies, especially in today’s economy, need better retention if they’re going to grow, scale, and become more profitable year over year.
How to retain employees, longer
To boost employee retention rates, employers must create a place of work that people enjoy day in and day out.
To do this, consider the kinds of workers you want to attract, what those types of people are incentivized by, and marry that to what your business can provide. There are myriad ways to provide employee perks, better working conditions or incentives to staffers. For instance, you could offer scaling salaries based on tenure, shares in the company, or earned flexible work arrangements.
These are just a few.
For more, check out The Turnover Prevention Checklist. This list includes 15 real-world examples of how businesses have used the tactic to boost retention, as well as a quick “how-to” guide on how to put each tactic into action in your business.
It’s a win-win for you and your staff.