Hybrid or remote work environments fueled by cloud-based tech aren’t enough to keep a revolving door closed. Organizations that don’t keep up with employee experience demands could see doubled employee turnover rates, low team engagement, and disappointing performance gaps.
Not surprisingly, the needs and wants of employees and recruits are also changing just as quickly. With the state of modern HR, one truth stands out—when the gap between employer offerings and worker expectations becomes too broad, employee turnover follows suit.
Employee turnover happens for a host of reasons, but voluntary turnover rates are accelerating, causing more managers and HR professionals to pause and change course. In today’s market, employers must explore how and why turnover happens if they hope to retain the strongest workers.
Let’s take a closer look at the impact employee turnover has on existing business structures and learn how to reduce turnover rates with practical strategies.
The impact of employee turnover on business metrics
Although the reasons for employee turnover are often personal, ripple effects and consequences extend far beyond the individual worker who leaves.
Businesses that struggle to retain employees are more likely to experience issues with productivity, low morale for existing team members, and lackluster financial or revenue performance. That’s because turnover is pricey—up to two times the existing employee’s annual salary in associated rehiring costs.
Employee retention is clearly worth the up-front investment. In fact, the benefits of improving employee retention rates run far and wide:
- Substantial savings in time, money, and resources on HR-related hiring costs
- Fewer responsibility gaps between job vacancies and new hires
- More corporate loyalty from existing employees who enjoy the work and want to stay
- Better corporate culture (internally) and brand image (externally)
- Greater chance of attracting top talent for in-demand roles and openings
These advantages sound appealing, but it takes diligence and commitment to establish an environment that actually encourages employees to stick around. Fortunately, tools like employee turnover software offer real-time analysis and behind-the-scenes employee sentiment.
12 strategies to reduce employee turnover
Every business has the opportunity to give employees a well-rounded and productive experience. But whether an organization follows a retention roadmap depends on its level of commitment to employee well-being and empowerment in the first place.
Let’s assume that you’re ready to reduce employee turnover and create a culture worthy of coveted five-star Glassdoor reviews. Here are 12 best practices you can implement now to improve the inner workings of your teams and keep them engaged in meaningful work.
1. Perfect the hiring process
Employee retention starts on Day 1 of the recruitment process. That’s because hiring the right talent from the start is the only way to achieve perfect employee-role alignment.
Strong job fit happens when the best candidate lands in the right role at the ideal time. Sound too good to be true? It doesn’t have to be. Maintaining transparency through the initial screening, interview, candidate scoring, and onboarding processes is the ticket to retention.
Many teams overhaul existing recruitment strategies by using proven recruiting upgrades that revamp the pre-hire process for top candidates.
- Promote user convenience. Ensure that a candidate’s interaction with your hiring process is clear and straightforward, outlining every step. Implement the right tools to make it stress-free for them, and rely on intuitive people analytics software to get better insights internally.
- Share your corporate brand vision. Communicate your guiding principles and corporate values up-front. Look for an alignment of ethics and values when evaluating certain candidates for open positions.
- Incentivize employee referrals. Make better hires by using recommendations or direct referrals from employees who already feel at home within the organization. Take it one step further and incentivize qualified referrals with a bonus structure when candidates start and remain in a position for a specified time (e.g., 90 days).
- Use an Applicant Tracking System (ATS) to make smarter hiring decisions. Enhanced applicant profiles help hiring managers get visibility on which candidates are most likely to enjoy the role and naturally fit in on a team.
2. Allocate resources and roles wisely
It might be tempting to hire the best talent in your pipeline even if you don’t have the perfect open role for them. Isn’t it smart to build a team of qualified people, even if their new role falls slightly beyond their scope? Not exactly.
Finding suitable roles and projects is crucial for responsible hiring practices. More importantly, this effort is what reduces turnover or churn down the line. Up to 51% of modern workers report a lack of personal belonging at work, a direct effect of misplaced roles and hiring.
Optimizing your workforce based on known skills improves employee sentiment and reduces “bench time.” The result is hiring managers who have the ability to eliminate frustrating hiring gaps without having to sacrifice the right choices.
3. Build strong teams and relationships
Most of us have participated in a corporate “ice breaker” activity at some point. The goal is to help people form personal connections with other employees and to promote collaboration.
While these attempts at fun can feel silly, strong camaraderie helps people feel more engaged. Statistics from TeamStage’s 2023 workplace analysis show that 75% of workers believe in the power of teamwork for corporate success. In the age of remote work environments, there’s even been a shocking 2,500% increase in the number of teamwork-related activities that remote organizations use to forge connections.
Strengthening at-work relationships has huge results, both in the present and future. 47% of employees are more willing to remain in their current role when they’re surrounded by supportive teammates. So whether you’re integrating collaboration tools (like Slack or Google Drive) or inviting everyone out for a team happy hour, these activities have proven value.
4. Offer competitive compensation and benefits
Market-driven compensation and benefits are essential for any well-rounded employee retention plan. As you build people-first companies, you simply can’t ignore the power of fair and equal pay.
These factors are so important in today’s marketplace that a growing number of states and jurisdictions are passing laws that regulate pay transparency and salary disclosure. In other words, it’s becoming easier for employees to see whether they are (or are not) being compensated competitively for their performance.
Conduct regular compensation reviews and employee updates as part of your management protocol. This includes routine research both before and after hiring.
- Proactively research market-based pay bands based on specific roles or duties.
- Transparently post salary-specific information in new job postings.
- Fairly negotiate with well-qualified candidates who are seeking competitive rates.
- Regularly evaluate employee performance and raise pay based on merit achievement or specific qualifications (i.e. time period of employment).
5. Implement employee recognition and reward programs
Showing appreciation for your high-performers isn’t just about offering praise—these small acts are also deeply connected to employee well-being. When leaders and managers acknowledge employee achievements and team contributions, they’re highlighting the values and principles that help high-performing teams achieve new goals.
In a recent workplace survey of 800 participants, over 70% of employees shared that their productivity would grow if they were recognized or acknowledged more frequently. And while it may seem like these workers are holding out for a bit of praise, this expectation actually has roots in human psychology. We all like to know we’re doing a great job, and simple recognition motivates us to perform even better.
Recognition and rewards programs don’t have to blow out your People budget, and can be as unique as your workplace. From verbal praise, monetary rewards and raises, to privileged workplace perks (extra PTO or catered lunches), there’s no limit to the way you can encourage employees to execute their best work.
6. Foster a healthy work-life balance
Most of us know that while work is important, it’s not all there is to a life well-lived. Gen Z new hires eagerly prioritize work-life separation, and employers should take note of how this mental boundary influences turnover rates.
An unhealthy work-life balance is more likely to contribute to burnout, stress, and job turnover. And unfortunately, workers in the United States struggle most of all. According to Insider, American employees are noticing the flexible and generous leave policies in countries like France, Australia, and Great Britain. As a result, employees are looking for greener pastures when the work-life benefits don’t pan out.
Look for tangible ways to boost work-life satisfaction while maintaining realistic requirements. If you’re in charge of new policies, consider how flexible work schedules, remote work options, and additional initiatives (such as paid gym memberships or generous family leave for qualifying events) can increase employee retention.
7. Measure and improve employee engagement
In today’s complex world of work, employee engagement still ranks as a high predictor of long-term employee retention. But employers have their work cut out for them, since employee engagement in the US has declined every year since 2020.
Of course, there are plenty of good reasons for this trend (and a global pandemic is one of the main ones). Even so, tracking engagement and implementing targeted improvements is the only way to let employees know that you’re committed to helping them stay strong, even in the midst of challenges.
With an employee experience platform like Erudit, you’ll gain access to real-time employee engagement metrics that go beyond traditional survey methods. Spot major trends and red flags early to proactively intervene using practical and personal engagement strategies.
8. Prioritize employee happiness and well-being
HR managers and workforce researchers have long understood the intrinsic connection between employee happiness and turnover rates. After all, dissatisfaction is a major factor in a phenomenon like the Great Resignation.
Lever’s 2022 Great Resignation Report shockingly shows that many Gen Z workers intend to stay in a current job role for a year or less. With such a flimsy level of commitment, companies are pressed to create happy environments that drive retention rather than the toxic cultures repelling A-players.
Creating a positive and supportive work environment depends on several factors, including:
- Clear corporate vision and value statements
- Executive-level buy-in that trickles down to all employees
- Transparent screening processes that ask the right questions
- Proactive responses to scenarios or people that inhibit happy work
- Regular evaluation of employee wellness programs
9. Provide Opportunities for Growth and Development
Offering professional development and career growth opportunities keeps the engagement wheels turning. Employees become stagnant (or bored) without it, so show you value their growth in your organization and wherever they go next.
Millennials and Gen Z workers are on the hunt for these growth opportunities more than ever—so much so that 74% are likely to quit if those chances aren’t available.
Development programs depend on key factors like mentorship, on-the-job training, and continuing education opportunities outside of work. Additionally, leaders who represent and model lifelong learning are more likely to pass those traits, goals, and opportunities on to their respective employees.
10. Optimize performance reviews and feedback
Performance reviews can elicit many raw feelings and emotions, from dread and fear to excitement or eager anticipation. An effective performance review process lays the groundwork for healthy employee retention because it validates what an employee is doing well, while illustrating ways to improve and grow.
To boost retention, employee feedback should always remain fair, constructive, and meaningful. Otherwise, employees could feel singled out for their mistakes and judged incorrectly for their motivations. The best way to avoid confusion and isolation is to design a people-first process that’s predictable, honest, and helpful.
During the review process, allow employees to also share feedback or responses with the manager in charge of the review. This ensures that the scenario is a two-way conversation and mutually beneficial.
11. Promote inclusivity and diversity
Diversity, equity, and inclusion (DE&I) initiatives are some of the most modern and innovative ways to promote employee fairness and improve retention. Unfortunately, workers are increasingly disappointed when corporations fail to stand up against systemic racism and social injustice, and the majority are unwilling to work for “out of touch” companies.
In today’s world, companies need to put verifiable data on display. In other words, it’s not just enough to say that a corporation plans to hire more female leaders or BIPOC executives. Companies actually need to take meaningful steps to accomplish these goals.
An inclusive company culture might begin with an external, third-party audit process to gauge the current level of diversity and inclusion in the workforce. From there, leaders should align on industry standards and set a strategic plan in motion. Nominate key leaders who can keep the pulse on how these changes drive or contribute to employee engagement and retention.
12. Cultivate a culture of respect and trust
Creating a workplace based on trust and respect doesn’t have to be a pipe dream—even for large, globally dispersed organizations. Fostering a respectful and trust-based environment starts with an employee’s initial interaction in the hiring process. No matter where the employee goes from there, those sentiments should follow.
In many ways, the mantle for establishing trust in the workplace belongs to the leaders who oversee the big picture. But with employees at “high-trust companies” reporting 74% less stress on the job, decision-makers must take note.
Reducing employee turnover depends on workplace factors like objective fairness, employee privacy protections, accountability, and sensible reporting structure. To encourage honesty and promote ingenuity, leaders with support and empathy skills will win.
Use AI solutions to predict and prevent employee turnover
Innovative companies need practical solutions that reach employees where they are—no guesswork or labor-intensive surveys required. With AI-powered platforms like Erudit, you can easily predict turnover risks with real-time data from your people, then create action plans to address it.
If your organization wants turnover reduction strategies that positively impact the lives of real humans, you need behavioral analysis that’s true, reliable, and informative. AI helps you understand team relationships better and create people-first work cultures that attract and retain the very best players.
Ready to intuitively reduce employee turnover? Erudit - AI-powered people software offers a better way to approach modern people management.