The workforce demographic is undergoing a big shift. Millennials are flooding the workforce, and are predicted to make up 75% of the workforce by 2025. But millennials have different values from the previous generations. According to the Future Workplace “Multiple Generations @ Work” survey, millennials expect to stay in a job for fewer than three years.
It’s also a hiring market that favors the job seeker. In some sectors, such as tech, talent wars are happening in some parts of the country. It’s difficult to retain employees when recruiters and head hunters are constantly on the prowl, looking to poach your talent.
Why is high turnover so bad?
High turnover can be a real problem for several reasons.
First, hiring and training people costs money and time, and every time someone leaves, especially when it happens soon after hiring, the company loses that investment. According to SHRM, replacing an employee is estimated to cost somewhere between 90-200% of their annual salary. It is especially expensive when someone leaves an organization within the first 6 months of being there.
Second, productivity suffers when there is a constant stream of new employees and a loss of old. Projects get put on hold, tasks get forgotten, and things just generally take longer.
Third, morale generally droops as well because your current employees can’t settle into a work routine. Knowing what to expect when you go to work is important, and seeing that empty desk every few months can cause some distress and lack of engagement.
Fourth, you may have some reputation issues as an employer. People talk, and if their experiences are negative you will have a growing problem with recruitment. With online resources such as Glassdoor, job seekers can do research on your performance as an employer quite easily.
Why HR is KEY
Solving the issue of employee turnover falls under the umbrella of HR responsibilities. However, often times in smaller companies HR gets in the routine of spending most or all of its time on basic operations. While things like payroll, time and attendance, and benefits are necessary to the company, they do not really help drive the business or utilize the true value of HR.
On the other hand, focusing on strategic operations like performance, culture, employment brand, satisfaction, retention, engagement, learning and development, etc., helps a business have greater success. So how can HR focus on the more important strategic operations?
First, eliminate waste. Evaluate the ways HR uses its time and determine what the company can do without. Next, organize operations, streamline and become as efficient as possible. Third, automate as many operations tasks as possible. Use technology to take care of the basics so that HR can do the more in-depth great work.
After freeing up this time and energy, determine the strategic outcomes that take priority and do the corresponding activities needed to reach those outcomes. Measure the value and impact of your work and solve problems. Your HR needs to think and act like a business!
Once you have freed up some time in your HR department, the next step, and the thing that drives the most employee loyalty, is increasing engagement. Engagement is what makes it difficult for your employees to consider leaving. They are bought into your vision and goals and want to stick around to make them happen.
John Quincy Adams said, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” It is the task of every company to inspire their employees to be a part of the vision. But how is this done, especially with the growing millennial workforce?
A strong purpose. Employees want to feel that they are involved in something bigger and more important than just earning a paycheck. They want to know they’re making a difference.
A good cultural fit. Even if an employee is a hard worker, if he doesn’t align with the company culture, he won’t be happy there in the day to day.
Personal/professional development. Millennials want to advance their careers as much as anyone else. They just want to do it differently. Offering continued education and professional development is a great way to inspire your employees and increase loyalty.
To feel a sense of investment. Whether it be with time, effort, or equity, when an employee is invested in a company he will be more engaged in his work.
To feel valued. Receiving rewards and/or recognition for achievements helps employees feel valued and appreciated for their hard work.
A sense of winning. A company that essentially keeps score, or knows how they are doing and is having success, helps their employees feel like they are winning.
A sense of belonging. When people feel connected to others and feel that they belong, they will be more engaged in their job. Having friends and being part of a tribe or community helps instill a sense of pride.
No matter the cause or the effect, solving high turnover comes down to company values that match those of your employees. If the majority of the people you employ are millennials, learn more about this unique generation and what is most important to them. As you do this, you will begin to boost engagement and loyalty, thus reducing turnover.
Much of this information was provided in the BambooHR webinar titled, “How to Manage Employee Turnover.” To learn more, click here.