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How to Effectively Manage Employee Turnover in Your Organization

Tue, 2 Jan 2024

How to Effectively Manage Employee Turnover in Your Organization

How to Effectively Manage Employee Turnover in Your Organization

Navigating the rough seas of employee turnover can be a daunting task.

You're not alone if you're grappling with this challenge. It's a common hurdle for many organisations, big or small.

High turnover rates can stir up a storm of costs and productivity losses. But don't worry, there's a silver lining. With the right strategies, you can turn the tide.

This article will provide you with practical techniques to manage employee turnover, from boosting engagement to fostering a positive workplace culture. You'll learn how to keep your top talent anchored, making your organisation a ship that no one wants to jump from.

Let's read on!

Understanding Employee Turnover

Employee turnover refers to the number or percentage of workers who leave an organisation and are then replaced by new employees.

You've got to understand that a certain level of employee turnover is inevitable in any organisation. Some employees will leave no matter how nurturing your workplace culture or how competitive your compensation package is.

They might find better opportunities, move to different cities, or switch careers entirely. It's part of the business lifecycle.

However, it's crucial to differentiate between healthy turnover and a persistent problem, which we will explain further in the next section.

The True Cost of High Turnover

How much, exactly, does high turnover cost your organisation? It's a hefty price, often underestimated.

During a two-year period, around 36% of employees in Malaysia were estimated to leave their organisations.

Additionally, reports from Malaysian media indicated a high turnover rate, leading to up to 150,000 employees losing their jobs due to the financial crisis and lockdown caused by COVID-19.

The estimated cost of employee turnover can range from 90 to 200% of the position's annual salary, not including the costs related to the new employee's learning period.

That's not even factoring in indirect costs like decreased productivity, overtime for remaining staff, and potential customer service issues.

High turnover rates can indicate deeper organisational issues, such as poor management, a lack of career advancement opportunities, or a toxic work environment.

These problems aren't merely inconvenient; they're costly, literally.

Recruitment, training, and lost productivity expenses can add up quickly. Other expenses related to advertising job vacancies, conducting interviews, and onboarding new staff members would also be added.

Also, indirect costs are to be considered, such as lost productivity during the transition period and potential disruptions to customer service or team dynamics.

Operationally, high turnover can harm an organisation's efficiency and morale.

When employees leave, their knowledge and skills go with them, resulting in a temporary knowledge gap until new hires are fully trained.

Strategies for Retaining Top Talent & Reducing Employee Turnover

Develop a Positive Work Environment

First, you must understand what motivates your top performers.

Is it the opportunity for advancement? Recognition? Work-life balance? Once you've identified these factors, you can tailor your retention strategies.

Creating a conducive and positive work environment means employees thrive where they are valued and respected, and their contributions are acknowledged. A positive work environment boosts employee morale and productivity, ultimately leading to job satisfaction.

57% of employees left their jobs due to poor management, according to a report by the DDI Frontline Leader Project.

This strategy requires management to foster open communication, promote teamwork, and value diversity, as employees who feel overwhelmed by their work demands are more likely to leave.

Providing flexible working hours and remote working options can significantly enhance work-life balance, reducing turnover rates in your organisation.

Provide Competitive Compensation and Benefits

Retaining top talent goes beyond the paycheck; it includes offering competitive benefits.

These benefits may include health insurance, retirement plans, paid time off, and professional development opportunities. It's essential to regularly review and upgrade these benefits to match or surpass what competitors offer.

The compensation package should also reflect the employee's role, skills, and contribution to the company. Regularly reviewing your compensation structure and ensuring it aligns with industry standards can help your organisation retain its top talent.

Offer Opportunities for Growth and Development

Top talents are always looking for opportunities to grow and develop their skills.

Offering such opportunities helps retain them and ensures they are up-to-date with the latest trends and skills in their field. This could be in the form of training programs, workshops, or even sponsorships for further studies.

The organisation should also provide a clear career progression path. This gives employees a sense of direction and something to work towards.

Employees are less likely to look for jobs elsewhere if they see a future within their current company.

Recognise and Appreciate Employee Efforts

Recognising employees for their hard work and contributions to the company can boost their morale and increase their job satisfaction. This recognition can be in public acknowledgements, awards, or even a simple thank-you note.

A recent joint report by Gallup and Workhuman revealed that implementing a culture of recognition can lead to significant cost savings for a company with 10,000 employees, potentially reaching up to US$16.1 million (RM75.3 million) in annual turnover costs.

Apart from acknowledging their efforts, showing appreciation makes employees feel valued and important to the company. This can be through bonuses, gift cards, or any other reward that matches their effort.

Remember, employees who feel valued are less likely to leave.

Foster Strong Leadership

Leaders should be able to inspire and motivate their teams, provide clear direction, and support their professional growth. They should also be approachable and open to feedback, creating a two-way communication channel.

Companies with a powerful mission experience a 49% decrease in attrition, according to LinkedIn.

When employees have trust and confidence in their leaders, they are more likely to stay with the company.

Implementing an Effective Onboarding Process

Planning a Comprehensive Onboarding Process

A well-planned onboarding process starts with a warm welcome to make new employees feel valued from the start.

This is followed by an introduction to the company's vision, mission, and values to help them understand its direction and culture.

Providing Detailed Job Descriptions and Expectations

It's crucial to provide new hires with detailed job descriptions and clear performance expectations.

This gives them a clear understanding of their roles, responsibilities, and the standards they are expected to meet, helping them to perform effectively from the start.

Interdepartmental Introductions

The onboarding process should also include introductions to their team and other departments.

This helps new employees understand how their role fits into the larger organisational structure and how different departments interrelate.

Continuous Support and Feedback

An effective onboarding process doesn't end after the first day or week. Managers should provide continuous support and regularly check in with new hires during the first few months.

Providing constructive feedback and addressing issues or concerns can help new employees adjust to their roles faster.

Fostering a Culture of Open Communication

Regular check-ins and feedback sessions also foster a culture of open communication.

This helps build trust, ensure that issues are addressed promptly, and keep new hires engaged and motivated.

Evaluating the Success of Your Onboarding Process

One way to evaluate this is through employee feedback. Regularly ask new hires about their onboarding experience, what they found helpful, and areas they believe could be improved.

Another way to measure the success of your onboarding process is by looking at retention rates. If you notice a significant decrease in employee turnover after implementing your new onboarding process, this indicates that your efforts are working.

However, if turnover rates remain high, it may be necessary to revisit and revise your onboarding strategy.

Continuously Improving Your Onboarding Process

Onboarding is more than a one-time event; it's an ongoing process lasting up to a year. An effective onboarding process should be flexible and adaptable to accommodate the needs and pace of new employees as they navigate their first year in the new role.

Regularly review and update your onboarding process, which can involve updating training materials, incorporating new technologies, or changing the structure of the onboarding timeline.

To Sum Up

In managing employee turnover, it's crucial to understand its implications and costs.

Engage your workforce, retain top talent, and create an effective onboarding process. Strategically addressing these areas means you'll not only reduce employee turnover but also enhance productivity and morale.

Remember, a well-managed organisation doesn't merely retain its workers—it empowers them to thrive.

At Upscale, we're here to help organisations manage employee turnover in an effective and efficient manner. Our talent management solutions provide the tools and resources to help you build a successful organisation.

With our support, you can ensure your employees are motivated, engaged, and have the confidence to stay with your company for the long haul.

Visit upscale.my to learn more.