18 Actionable Tips for Reducing Employee Turnover at Your Business
Good help is hard to find—and even harder to lose. As a small business owner, employee turnover doesn’t just eat into your time, but also your bottom line.
Take a look at the math. After accounting for how long it takes to train a replacement employee and slowdowns in productivity, losing an hourly employee costs businesses 16 percent of what that employee would have earned in their first year. If your staff makes minimum wage, that means losing a single full-time employee could cost your business almost $2,500.
You can’t stop employees from quitting. Even your best workers leave after the summer to go back to school or move away. But that doesn’t mean you can’t give them more reasons to stay. Start using these tips to build employee loyalty and engagement before employee turnover takes a turn on your profits.
1. Change your application process
First things first: it’s easy to look for someone or something to blame when an employee quits unexpectedly. After all, you put a lot of work into hiring and training them. So what went wrong?
Go back to where it all started, with the job application process. Check out your application form and think about why your recent employees quit. Then compare those reasons to their application answers and your interview questions.
You might find you aren’t screening applicants as thoroughly as you thought, relying too much on your own employees’ referrals, or simply not asking the right questions to find the right hires–meaning your application process is in need of an update.
2. Integrate new hires quickly
More than half of all employees who quit voluntarily do so within their first year. One of the top reasons? Lack of engagement. While your instinct may be to get new employees working behind the register as soon as possible, it’s important for them to feel plugged into their job from the first day. Getting them comfortable with their roles and responsibilities before the actual work begins can go a long way in reducing employee turnover. The next time you hire a new employee, make sure they receive:
- a clear agenda or schedule of their first day
- an overview of your business values
- Insight into how they contribute to the business’s overall mission
- the chance to ask questions
- opportunities to meet and interact with their coworkers
3. Start a buddy system
The biggest factor in employee happiness? Having a friend at work. Up to 70 percent of employees said that work friends were “the most crucial element” to a good work life. While pairing your new hires with more seasoned employees may not make them automatic BFFs, it will ensure they know at least one friendly face and have someone on hand to answer questions and supervise their work.
In addition to training, “buddies” can give updates or do quick write-ups at the end of the day about new hires’ performance. You’ll be able to stay one step ahead of any big issues, like gaps in training, and give your experienced employees a change of pace.
4. Compensate competitively
You aren’t the only one concerned about your bottom line. Nearly 90 percent of working Americans are worried about finances. With the average minimum wage worker making around $20,000 a year as costs of living climb even higher, paying minimum wage won’t always be enough to attract the most qualified job applicants or convince your best employees to stay.
If you’re losing employees to higher-paying competitors or are not even sure where you fall in comparison, check out Payscale and Glassdoor for average pay ranges based on role, industry, and location. And remember: compensation includes more than just hourly pay. You may not be able to give everyone a raise, but you may be able to add in benefits like extra paid time off or more flexible work options.
5. Reevaluate pay at least once a year
A lot can happen in a year. Once you know where you stand as far as employee compensation, set a reminder to check back in annually. More than 1 in 3 employees will look for a new job if they don’t receive a raise, and almost half already expect a raise in the next year. As soon as your business hits peak demand, chances are your top performers will too. If you aren’t compensating them competitively, someone else will.
6. Build a mission statement that gets employee buy-in
In today’s workforce, employees are looking for more than just any way to pay the bills. They want to make a difference and have a greater societal impact, particularly millennials. While 50 percent of millennial employees say pay is the most important factor in a job, 50 percent are also willing to take a pay cut for a job that matches their own values.
Take some time to write a mission statement for your business and ask your current employees to contribute. What do they find fulfilling about their roles personally? What impact are they seeing or hearing from customers each day? Combining their experiences into your business values gives employees a sense of ownership in their work and the business’s overall success–leading to more engagement, more motivation, and better performance.
7. Set clear expectations for each role
Employees want to be clued into a bigger purpose, but also know the day-to-day expectations for their roles. If your employees think making “X” number of sales equals success when you see that same number as a sign they’re falling behind, unequal expectations can lead to conflict and resentment. Instead, discuss goals and responsibilities during the hiring process. Make sure they’re comfortable with the pace and unique expectations for their role before they even start.
8. Find new ways to challenge employees
Poor employee engagement doesn’t happen all at once. Boredom can sneak in over time, especially if your employees are performing the same tasks day after day with little variation. If you sense employees losing interest or notice they’re inputting minimum effort, it’s time to mix things up. Ask for their help on a new project, cross-train them in a different role, or put them in charge of training a new team member.
9. Let them do what they’re passionate about
Your employees probably have skills they aren’t using in their current roles. As part of keeping them engaged, find out what they enjoy doing outside of work. It may be that your best barista is also in school for graphic design or one of your servers runs a food blog.
Ask them to give your menu a facelift or create some new graphics for your social media accounts. Put them in charge of creating a blog for your business. Not only will they be contributing at work, but they’ll also be able to do something they’re passionate about at the same time.
10. Launch an employee satisfaction survey
If you aren’t sure how employees feel about their roles, ask them to fill out an anonymous survey. Send out an email survey or pass out paper surveys at the beginning of a shift and let employees fill them in during downtime. Ask questions about how engaged they feel at work, what they enjoy doing, what they believe is working well, and what could be better. Then take some time to sort through their answers afterward. Keep an eye out for any trends and overall levels of engagement.
11. Hold exit interviews
Want to know why your employees are leaving? Just ask. It may sound too easy to be true, but exit interviews can be a great means of closure for both you and your employees. Put together a standard list of questions to ask on their last day. Include things like what the employee enjoyed most about their experience, what they enjoyed least, what they believe could be improved, and any advice they have for other incoming employees. Just like your employee feedback survey, you’ll likely start to see trends in the answers you collect.
12. Deal with “toxic employees” as soon as possible
One thing you may uncover in your exit interviews is that your employees’ comments all relate back to the same issue, or even the same person. Don’t be surprised–up to 50 percent of employees quit their job because of a bad manager or supervisor. Known as “toxic employees,” these bad supervisors (or fellow employees) can wreak havoc on team morale and your entire business. They may be bringing in great sales or have crucial skills, but are effectively chasing away everyone else you hire.
If you can’t get rid of your toxic employee, try to limit their impact on the rest of your team as much as possible. As a small business owner, this isn’t always practical (or possible) for smaller staff. If that’s the case, then it may be time to make the hard decision between one bad apple and the rest of the barrel.
13. Start an official employee recognition program
Having an official “employee of the month” may not be your first priority as a small business owner. It’s only a nice certificate or an extra sticker on a badge, right? Turns out, that certificate can go a long way for your employee turnover numbers. Employees who are recognized are more loyal and engaged, and less likely to quit in the next year.
The size of your staff may not mean you have a new employee of the month every month, but it’s still important to recognize their hard work and tell them they’re appreciated, whether through a formal program or an informal celebration. Make it easy by setting a calendar reminder for important dates and work anniversaries, and get your team in the habit of recognizing each other’s contributions.
14. Follow through on your commitments
This one is simple: don’t promise if you can’t deliver. During the hiring process, it can be easy to promise employees more as your business grows–more success, more customers, more pay, more responsibility, the list goes on.
Even if you want these things for your employees someday, they may not be a reality now. In that case, don’t lead employees on with the hope of an impossible promotion or a raise. Don’t hire employees at minimum wage with the promise of increasing their pay after a specific period, and then fail to do so. You’ll end up with resentful employees and a reputation that’ll be hard to overcome when things do start looking up.
15. Prioritize work/life balance
Building a business doesn’t leave much time for sleep, but don’t forget that your employees’ performance directly impacts your success. They’re often the public face of your work, interacting with customers and doing the day-to-day tasks to keep things running smoothly. You can’t afford to burn them out.
If you keep asking more from employees than they’re physically able to give or expect them to sacrifice more than they expected or want to, they won’t stick around for long. Do your best to avoid scheduling long shifts back to back or asking them to work regular overtime. Be flexible when they request time off. Your business may be your life, but the people working for you have their own lives outside of work as well.
16. Get your team together outside of work
High employee turnover can do a number on team morale, no matter if your team is made up of five people or twenty-five. Give your team a break by hosting regular events outside of work. It’ll give your employees an opportunity to relax, but also a chance to get to know their fellow teammates “in real life” and maybe even become friends–equalling more engagement and lower turnover.
17. Create a feedback culture
Taken by surprise when your last employee quit? Not a good sign. The moment you realize an employee is unhappy shouldn’t be when they turn in their resignation, especially not on a small team.
Good workplace communication means that you feel comfortable showing employees where they can do better and your employees feel safe enough to speak up when something isn’t working for them. After all, everyone needs feedback to improve (even Bill Gates).
Use one of your feedback surveys or exit interviews as a launchpad for ongoing conversations about performance and engagement. Get employees used to sharing constructive feedback and receiving it during set check-ins every few weeks. You’ll always have a sense of where your team is at and be able to stay ahead of any upcoming issues.
18. Have fun
Running a small business and managing employees is hard work. But while you’re hustling, don’t forget to enjoy it. Be sure to take some time to add a little fun back into the work day when you can. Celebrate how far you and your staff have come along the way. Get to know your employees and learn more about their lives, not just how their work is going. After all, employee turnover doesn’t last forever–with a few changes, you’ll figure out the right combination for both your team and your business to succeed.18 Actionable Tips for Reducing Employee Turnover at Your Business Sam Campbell