How many times have you been in a situation where you had to decide whether to replace your staff or use staff retention strategies?
It’s no surprise that in a business, one of your employees has left you and you had the need to replace them, it has happened at least once or more.
Most importantly, the question that you need to ask yourself is, how much is this costing you? Every time an employee leaves you and you replace them, you are incurring a cost, after all, every decision that you make in your business does come to money.
It is simple to calculate:
Let me give you an example to make things clear for you:
In a business,
The number of employees that were changed over 5 years was 3
The average number of employees that is currently in the business is 4
As a result,
Employee Turnover Rate = 15%
The results derived from the example above are considered above the average staff turnover rate in Australia, which is not so good.
What does that cost you?
Many kinds of research have proved that there is a cost incurred when businesses turn over staff, according to the Work Institute’s staff retention report in 2017 said that the cost to replace a worker is 33% of the worker’s salary in direct costs, so for a $50,000 salary that’s over $16,500.
If you are using employment agencies then this cost could be higher – it could cost you $10,000 or more for an employment agency.
Other blog articles on this topic have proved to have higher costs of 50%, 100% and 150% of the worker’s salary.
In our example let’s assume $26,500 costs to turn over a single person, at a 15% turnover rate in a four-person team it costs you around $16,000 per year – and that’s a lot.
If you could get this down just to the average turnover rate that would save you $5,000 plus a year – that’s a lot of money, so what if we re-invested this money into staff retention.
Why Invest in Staff Retention?
If you work on actively retaining your team the investment has direct business impacts, according to a Forbes article those people who work on staff retention state a
- 21% greater profitability
- Their teams are 4.6 times more likely to perform their best work,
And a Gallup study found that engaged employees have a 41% lower absenteeism.
Combined with the cost of recruitment and investing just a small amount in team engagement will result in huge improvements.
How to Retain Your Team For Longer
Here are my top six tips for reducing staff turnover and improving staff engagement.
1. Show Appreciation
Most of the time, the staff don’t feel appreciated, and that’s because owners don’t purposefully show appreciation enough, causing them to either slack off at work or show interest elsewhere.
To show appreciation you need to remember that there are five different ways to show appreciation, and for each person it is different. For example, telling one person you appreciate their work might not work with the next person who would prefer a small gift.
2. Start Listening
Often as the “boss”, we feel we need to tell our staff what to do, but the most beneficial results are when we listen to them- and we are not doing it enough.
Our staff expect us to listen to their ideas, suggestions and enthusiasm when they work for our business. Showing your staff that you are listening to them and taking their word seriously will help you build a good relationship with your team and allow them to approach you with innovative and great ideas.
3. Normalize Clear values and Behavioural Standards
Having a clear understanding of “this is how we do “it” here” will ensure that everyone knows what is expected. And, when someone does break the rules they are gently reminded that “this is not how it’s done here”.
In one of the articles- What’s the importance of a diverse workforce? Who should you have in the team? You will understand that each business operates differently, and you as the boss must ensure that your staff are following the values and behavioural standards that you set to follow in your organisation. This way your staff know exactly where to stand in line when it comes to conducting business.
4. Salary Reviews
Continually review your pay rates and update them – before you are asked. This way, your staff knows that you care about their well-being. Keeping an eye on and reviewing salaries according to staff performance and market rates will give your staff the right motivation to continue working efficiently with you. And yes, this must be reflected in your prices!
5. Time Together Outside of Working
This doesn’t mean weekend and nighttime activities, it means meeting together that isn’t part of work, like going to the pub for lunch on Friday.
Also, it will be good to know your team and their interests rather than always focusing on getting work done.
Helping people improve their skills will improve their quality, productivity or the type of work they can do for you, increasing the value they provide. There is nothing better than providing your staff with the right training to help them improve in their work, and for the employee, it shows you care about making them more employable – you are investing in them.
The right type of training is a form of incentive for your staff.
To conclude, these are my top 6 tips to engage with your staff and keep them with you for a long term. If you haven’t tried any of these, now is the time to step up and think about it. Your staff can either cost you a lot or help you make a good profit.
Before I leave it to you, I have one last question for you- Do you won’t cost your business every time you replace staff or do you want to retain your staff and benefit from them?