How to Reduce Employee Turnover Rate

StrategyDriven Talent Management Article | How to Reduce Employee Turnover RateEmployee turnover rate refers to the number or percentage of employees who leave an organization and have to be replaced by new workers. Employee turnover is a common issue affecting both big and small firms. The problem with employee turnover is that it costs a lot of money and time to replace an employee.

According to a report by the Society for Human Resource Management (SHRM), the average cost of replacing a single employee can be as high as $4,425. The cost of replacing an employee may include the onboarding and training expenses, severance benefits, and fees for processing technical details and documents. The figure also includes any time lost during the recruitment and onboarding process. So, how can you reduce or prevent employee turnover and avoid losing valuable time and resources?

Hire the Right People

The very first step towards avoiding a high turnover rate is hiring the right people to begin with. Create thorough hiring, recruitment, and onboarding process that sieves through the job applicants to find the most suitable candidates to work in your company.

Although skills and qualifications are important, selecting the right staff goes beyond examining academic and professional achievements. Scrutinize candidates on soft skills that would come in handy for the job position. Also, ask about the candidates’ career paths and goals to see if they align with what your company has to offer. These are excellent criteria to measure whether a candidate will be happy and satisfied with their position in the business.

Create A Flexible Work Environment

The 9-to-5 workplace regimen seems like an outdated and traditional workplace arrangement nowadays. Many employees are now looking for more flexible workplaces where they can balance their work and personal life more easily and conveniently. In fact, most employees value workplace flexibility more than other job descriptions.

Flexibility defines things like working hours, collaborations, workload, deadlines, and rules about absenteeism and reporting to work.  With modern IT solutions, you can have employees working from home, on a contract or freelancing basis, or even during odd hours. In such a case, however, you have to implement work from home policy guidelines to ensure accountability. Remember, the goal is to create a relaxed atmosphere without compromising productivity.

Offer Competitive Salaries and Benefits

One of the main reasons why people go to work is to earn money. Offering competitive salaries and benefits can help your business attract exceptional talent and retain employees. Money is a great incentive that you can use to lure employees into dedicating their time and effort to meeting the company’s goals.

You don’ even have to raise your salaries and benefits by thousands of dollars. Just take a look at what other employers in the same industry are paying their staff and raise your offering by a noticeable margin – and that should be enough to discourage competitors from poaching your employees.

Praise and Reward Exceptional Employees

Besides compensations, benefits, and salaries, you should also look into recognizing and rewarding exceptional work and employees. Recognizing your workers’ efforts and rewarding their hard work accordingly makes them feel valuable and important to the company. This gradually develops into building trust and long-lasting relationships between the employees and the employer. Plus, a fair reward and recognition system helps motivate morale and determination among the workers, which leads to higher employee satisfaction and productivity.

Many employers fail to see the importance of their employees, probably because they think they’re dispensable. However, your employees are most certainly one of the essential assets that your business has. Employees are the lifeblood of any organization that needs human input or labor, which is why they must be valued and appreciated. And although employees can be replaced, it’s a costly process, and a high turnover rate can hurt your operational costs and productivity significantly. So, work on ways of retaining your employees to avoid expensive surprises along the way.

Diversity and Inclusion – Return on Investment, part 1: Employee Turnover Reduction

The cost of employee turnover is staggering and yet goes largely unrecognized. There is no financial statement line item, no general ledger entry, and no budget explicitly set aside for this expense that can cost an evenly modestly sized company well over a million dollars each year. And a significant portion of voluntary attrition is directly related to the abusive work environment many employees indicate exists within the marketplace today. Thus, improvements in workplace civility can directly improve the organization’s bottom line.

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3 not-so-obvious reasons to use employee scheduling software in your small business

StrategyDriven Talent Management Article | Employee Turnover | ScheduleMakes a bigger dent than you might think

Turnover rates in the restaurant industry are among the highest in any industry. In 2017 the employee turnover rate in the US restaurant industry edged over 70%. The estimated turnover rate for front-line staff like servers and waiters came in even worse at 110%.

The Center for Hospitality Research at Cornell University estimated the average cost to a restaurant of a turned-over employee is $5864. This works out to employee turnover costing an average full-service restaurant $146,000 every year. In a low margin business like a restaurant this can’t afford to go unchecked.

The cost of employee turnover goes beyond the recruiting, hiring and training of a replacement. This accounts for around 50% of the total cost. The balance is made up of a host of hidden costs that accompany employee turnover that don’t necessarily show up on the balance sheet.

Let’s delve into these hidden costs and what restaurant can do to mitigate them.

Loss of Institutional Knowledge

There’s a famous saying “it takes a village to raise a child,” and this same idea applies to business.

Every time you lose an employee whether it be a waitress, server or cook, you lose important knowledge regardless of whether that employee was working for your business for a year or ten years. When an employee leaves, they take the history and knowledge they accumulated at your company with them as well.

To make matters worse, you need to pay to re-train the replacement employee, and sometimes you can’t teach all the knowledge that was lost. Although it’s difficult to measure the cost of knowledge, you can be assured that time and energy will definitely be wasted with every employee turnover.

Demoralized Staff

It should go without saying that employee turnover strikes at the heart of the morale of your entire workforce.

When an employee leaves, other employees must pick up the slack to account for this void while you search for a replacement. This creates for some unhappy people. Employees can begin to feel resentful if they are taking on more responsibilities with no pay raise or benefits. They might even start considering leaving themselves.

Thus, losing one employee could easily turn into losing a few more throughout the year. It can lead to something like a domino effect where your productivity declines long after the initial employee leaves.

The health of a company is closely tied to the employee turnover rate — so stay keen on keeping your employee morale high if turnovers ever do occur.

Distracted Management

Your assistant manager and shift manager will have to dedicate a good portion of their time to replacing lost employees. These new responsibilities could easily come at the expense of other crucial functions in your company.

Effectively, you will be paying your employees top-dollar salaries for recruiting employees when they could instead be focusing on actual business strategies and expansion. Your business suffers as its primary responsibilities are stalled while your management searches for an employee replacement.

A business usually relies on its best people to recruit new employees. However, with them now busy finding and training new employees, your entire business suffers. The ones with the best business practices and the most know-how in management will distracted looking for an employee replacement. This is always a net drain on your business.

Loss of Credibility

In an environment of excessive employee turnover, management can easily get hit with a serious loss to their credibility.

For example, if any media begins to report on losses to your employee staff, then it could easily cause a snowball effect. Bad publicity over employee turnover and management could easily cause a downward spiral you would be smart to avoid.

A loss of credibility could affect public perceptions of your business, but this could also trickle into a real decline in sales.

For example, if a lost employee affects customer satisfaction, you can begin to see serious consequences: the company will begin to lose its most important customers. With high turnovers, customers could easily get frustrated and begin to turn away from your business.


It should be clear now that there are plenty of hidden costs associated with employee turnover, which begs the question: What can you do to stop it?

Create an Inviting and Fulfilling Work Environment

You can lessen demoralization of your staff when an employee leaves by demonstrating that they are a crucial part of your business. This begins with your work environment and how you conduct yourself as a business. Employees will be far less likely to follow suit and leave if they feel they are respected at work. By encouraging a community environment for your staff where they feel welcome, you can retain employees and keep them loyal. Of course, how you choose to go about creating a fulfilling work environment is dependent on the ins and outs of your company. There is no one-size-fits-all solution.

Ask yourself: Would I want to work in this environment as an employee myself? Put yourself in the shoes of your staff and work from there. Make them feel appreciated and let them know they are important to the workings of your business.

Stay Up-to-Date on Compensation and Benefits

A business that stalls on compensating its workers is a recipe for disaster, even if it happens just once. If employees cannot be certain they’ll be paid on time, they’re more likely going to head to the door if such negligence continues.

An efficient business strategy, however, is one that keeps track of how employees are developing and their rising worth, paying them accordingly for better work. This keeps employees satisfied and makes them feel as though they are adding real value to the company (and being rewarded for it!).

Engage Your Employees

You should never siphon off your employees to one section of your business and only interact with them when discussing compensation. Don’t ever limit your employee engagement to just surveys and pay: build a culture of engagement from the top of the company all the way to the bottom.

Everyone needs to be on the same page for a business to be its most successful. If you engage with your employees beyond just what’s absolutely necessary, you’ll be more in tune with the work they’re producing — and your employees will be definitely be appreciative of it.

With these helpful words of advice, you can start limiting the chances of employee turnover and create a vibrant, productive work environment for your business. All of this begins with recognizing your employees as crucial to your business. So, try cultivating a work culture of generosity and gratitude in your own business: you’ll be surprised how far it goes in retaining a productive workforce.