 Influences
on Employee Turnover
In the best of worlds, employees would love their jobs, like their coworkers,
work hard for their employers, get paid well for their work, have ample chances
for advancement, and flexible schedules so they could attend to personal or
family needs when necessary. And never leave.
But then there’s the real world. And in the real world, employees, do leave,
either because they want more money, hate the working conditions, hate their
coworkers, want a change, or because their spouse gets a dream job in another
state. So, what does all that turnover cost? And what employees are likely to have the
highest turnover? Who is likely to stay the longest?
Turnover rates and tendencies
A recent survey by the Society of Human Resources Management
(SHRM) indicates,
not surprisingly, that employee turnover is highly correlated to the state of
the economy. With the weak economy and record-high unemployment rates, SHRM
found in a survey conducted the week of July 8-15, 2003, that 41 percent of
organizations reported decreased turnover rates since 2001.
But the economy isn’t the only thing the correlates to turnover rates. In a
report on employee tenure, the Bureau of Labor Statistics found that in January
2002, the median time that wage-and-salary workers had been on the job was 3.7
years. The results, as reported in the Occupational Outlook Quarterly, came from
a supplement to the Current Population Survey, a monthly household survey of the
civilian noninstitutional population aged 16 and older.
There were significant variations in tenure, however. Workers in the 55 to 64
age range had a median tenure that was three and a half times that of workers 25
to 34 years old. Other interesting results: public employees had higher tenure
rates than those in the public sector. Officials and administrators in public
administration had the highest tenure: 11 years. Food service workers had the
lowest tenure – just 1 year.
Cost of turnover
It’s hard to put a figure on the cost of the loss of an employee’s skills,
procedural knowledge and customer knowledge. Such losses can be a big problem
for corporations, and devastating for small businesses with just a handful of
employees.
But the out-of-pocket costs can be calculated. They range from a couple of
thousand dollars to tens of thousands of dollars per lost employee. The
exact amount depends on skills the new employee will need to posses, what
training you’ll need to provide for the new employee, the cost of searching for
a replacement, and many other items. (You can calculate the cost of turnover for
your company by using the
online employee turnover calculator provided by The
Center for Community Economic Development, University of Wisconsin Extension.)
What matters to employees?
Small businesses often can’t pay the high salaries or benefits that corporations
can. So how can small businesses retain workers? Doing what corporations don’t
do well can help.
For instance:
- Recruit and hire older workers
- Offer flexible schedules
- Consider job sharing
- Ask for worker suggestions, and implement them when possible
- Provide training
- Give workers authority to make decisions
- Create a pleasant workplace
- Remind your employees they are important to you
- Care about them as people
What’s worked in your business?
What have your done to reduce turnover? How do you keep your employees motivated
and happy to work in your company? If you are an employee, what makes you stay
with your employer? If you have a story to tell,
let us know.
Recent Columns
About the author
Janet Attard is the founder of
the award-winning Business
Know-How small business web site and information resource. Janet is
also the author of The
Home Office And Small Business Answer Book and of Business
Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with
Limited Budgets.
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