The struggle to retain employees is far from over in 2023. With workers struggling to keep up with inflation, the push-pull of companies asking people to come back to the office or come back to their regular frontline position after a pandemic pivot, and talent shortages across the board, reducing employee churn needs to be at the top of every business’s list—no matter the industry.
Plus, as we lean into hiring the next generation of workers, businesses are quickly learning they’ll need to meet demands fast or this new generation will start to look for other opportunities. This article will map out the importance of managing turnover, give ways on how to reduce turnover, and help set your business and workforce up for success in 2023. Let’s hop to it.
The importance of reducing churn in 2023
No matter your industry, employee turnover costs are high, especially in an economic downturn. A study found that employee turnover costs for hourly employees remains around $1,500, technical positions are between 100-150% of a yearly salary, and C-suite staff can cost companies north of 200% of a yearly salary to replace.
Employee churn can not only be a huge cost to a company; it can also drastically stall your growth. It will see your business redirecting growth priorities to now filling those people gaps that no one wants to see. And, with hiring managers taking up to 36 days to complete a recruitment process—that’s not even including the admin on building and launching job ads—businesses can derail for months in trying to find the right role.
Common causes of employee turnover
Let’s take a look at a few common causes of employee turnover that, as a manager, you’ll need to be looking out for in your workforce.
High workloads & burnout. Not understanding employee workloads and capabilities is a common contributor to employees burning out and leaving.
Lack of recognition. More than 70% of employees that only receive recognition from leaders a few times a year are likely to leave the organization within a year.
Limited career growth. 94% of employees say they would stay longer at a company if they were provided with learning and development opportunities, while a McKinsey study found that 40% of employees are leaving roles because of their lack of career advancement.
Poor company culture. A FlexJobs survey found that the number one reason employees are leaving a company is because of a “toxic company culture.”
“Company culture should be at the top of every HR person’s list. You’re building a space (physical or digital) that people spend nearly 25% of their time in a week. If that space isn’t inclusive and safe, then it’s in their best interest to leave it.”—Anja Sejfic, HR Business Partner at Rinkel.
Learn how you can create a positive company culture.
Lack of flexibility. Diverse ways of working are no longer a nice-to-have; they’re a must-have. Flexible location options are at the top of the list with more than 50% of Americans now able to work remotely. However, if you’re not able to offer remote options because of your industry then flexibility in hours, shift choices, and even lunch breaks can go a long way.
Poor communication with management. This is one of the biggest contributing factors for employees disconnecting from their work. And we know that if employees are disconnected, they’ll churn.
Low-to-no employee benefits. Benefits stacks are an absolute must for businesses looking to attract and retain workforces; this is especially true for the next generation of workers.
It’s one thing to know the common reasons employees leave for greener pastures. But how can you proactively fight churn in the first place? Let’s explore twelve ways to reduce employee churn in 2023.
11 Strategies for managing employee turnover
1. Start with smarter hiring practices
First up, understand how to spot candidates who will be easier to retain. Consider the hiring process and how you can hire the right people/talent. Are you truly getting an accurate overview of the person you’re hiring, or are you simply understanding if they’re able to do the job?
Skills tests are a great way to screen candidates, but they shouldn’t be the only way you interview. From screening, make sure you’re running culture fits. Ask the right questions to your candidates that will highlight if they aim to be with you in the long run, or if the role is a filler position for them until they find their passion project.
2. Align people with a positive impact
Positive impact initiatives aren’t just a surface-level employer branding strategy to help secure customers. True acts of good will help you find talent that aligns with your positive impact initiative. You’ll need to source your impact champions internally and put them on the podium they deserve. Give all employees a greater purpose to help your company align with your positive initiative, feed the desire they have to do good, and do better together. This shared sense of purpose is critical for retaining talent in the long-run.
3. Provide opportunities for growth
Opportunities for growth and development are crucial for long term employees. Let’s take a look at what some of these opportunities for growth can look like for your business.
Career pathways. A clearly mapped out career progression is great for employees to understand how they can develop and grow within your business. Timestamping these pathways (or goal stamping them) will drive employees to ensure they’re hitting goals for your business that align with the pathway they want to be on.
Salary pathways. Double-up your efforts and keep things transparent with salaries. Having a clear financial growth pathway for employees can help you better manage expectations and allow employees to manage their own long-term financial goals better.
Pivot pathways. Lastly, the pathways you’ve chosen aren’t necessarily the pathways that will work for everyone. Ensure you’re offering employees their own chance to pivot, or evolve into something that the company needs (and they’ll enjoy). Upskilling or promoting from within is a lot smarter—and cost-efficient—than replacing employees.
4. Prioritize workplace happiness
More and more companies are increasingly hiring roles with titles like Chief Happiness Officer. And, with good reason. Happy employees see an increased ROI, are more productive, relate better with customers/clients, and stay with businesses longer. It’s a lot to ask your HR person to build initiatives that increase employee happiness, especially if they’ve got a lot more on their plate.
Either assign the role, or assign the responsibility to someone who has the time, and ensure that happiness initiatives like team building events, wellbeing perks, supportive work environments, and more are focusing on creating happier teams.
5. Competitive pay and benefits stack
Despite the push for more mission-driven companies, a competitive pay and benefits package are still crucial. In fact, they're often integral in building a positive company culture and being able to reward and recognize employees for their dedicated work.
A few common benefits that companies are introducing to help fight employee churn and retain talent are:
- Personal development stipends
- Wellbeing stipends
- WFH stipends
- Paid volunteering time off
- Earned wage access
If you’re ever unsure what to offer in your benefits stack, asking your employees is always a good place to start. Knuckle down on what to ask in your employee benefits survey, and find out what your employees really want and will use the most.
6. Upskilling vs reskilling
We mentioned this a bit earlier when discussing pivoting, but it bears repeating. It takes time and money to find and train talent. It takes more time to do it all over again. Rather than losing an employee altogether, consider offering upskilling or reskilling opportunities to keep them within your company. Even if they want to move into an entirely new department—something completely outside their skillset—they already know so much about your company and what you do, that it would be well-worth investigating.
Furthermore, upskilling and reskilling employees to shift into new areas within the company can increase the diverse inputs that teams have as these employees bring new insights, data points, and customer pain points with them from their experience elsewhere.
7. Offer flexibility: remote work, hybrid work, payment flexibility, and more
Work-life balance is more important than ever before and remote work options, flexible work schedules, and flexible payment options are all key indicators that you care about your workforce and want to meet their needs.
While not everyone may be able to offer the option to work remotely, flexible pay options are available to all companies. Being able to provide instant tipping, earned wage access, online banking, and instant off-cycle payments is one way to offer the financial flexibility and security that employees need today. The old days of having employees waiting till the end of the month to receive their wages, tips, or one-off payments are gone. The modern workforce needs to be able to work wherever they want, and get paid on the go.
Check out how Branch can help you offer the payment flexibility your employees want.
8. Mental health initiatives
If you’re truly looking to fight employee churn then you need to be prioritizing mental health for your employees. Here are a few popular mental health initiatives to consider for your team.
- Mental health days. It may sound silly, as people have been taking mental health days before, but actually naming them as a category gives people the understanding that their company accepts and promotes them taking a step back when their mental health demands it.
- Wellbeing stipends. These are for employees to use towards things that help their mental wellbeing—anything from massages to therapy sessions.
- Therapy. In-house therapists are becoming more common in larger corporations. If not, then therapy access is always a good idea.
- Rec rooms. If you’re an onsite company with office space, then rec rooms are a great idea. These are spaces employees can use to find peace and meditate, switch off their phones, do something creative, or just take a nap.
- Meditation & Yoga classes. The pair have been found to help with better decision-making, boost morale, reduce stress, and make for happier employees.
- Burnout flags. Introduce a burnout flag process between HR and employees so that employees can instantly alert HR if they’re feeling overwhelmed, without needing to communicate why, in that moment. This helps HR spread the word to management to give that employee some space until matters have been addressed.
9. Handling crisis
Unfortunately, handling crisis will need to remain on most managers’ lists for 2023. With the ongoing recession and the uncertainty of the economy, there will be a few more ups and downs throughout the year that will need the utmost care and attention.
Employees will note C-suite level behavior. How are companies handling lay-offs? How are they addressing global issues? Remember, sometimes no response is still a response. So, put together a crisis management training plan for your leaders to ensure you’re reflecting the company in a positive way and continuing to build a positive company culture, no matter what's happening in the world at large.
10. Monitor employee engagement
People thrive in a connected work environment and it’s your responsibility to ensure that environment remains connected. Pay attention to employee engagement stats and constantly benchmark it against your previous data collection round. Are employees still engaged? Is there a drop in engagement? Can you form a hypothesis for a lack of engagement if that’s the case?
At this point, it will be worth defining what engagement actually looks like for your business. Is it something as small as reactions to company announcements on a Slack channel? Perhaps it’s the usage of a certain tool you’ve onboarded to try and engage your workforce better? Maybe it’s the number of events an employee attends across the quarter?
Figure out what engagement looks like for your business, track it, benchmark it, and find ways to improve it if you see things slipping.
11. Stop the domino effect
Last, but certainly not least, is the domino effect. When an employee churns, it often wakes other employees up and they’ll consider doing the same. If two employees go within a small timespan, then you could have a domino quitting culture on your hands. This is a dangerous situation for any workforce and could lead to entire teams leaving a company within a matter of months. We discussed the financial and time costs of replacing one employee—now multiply that.
To stop the domino effect you’ll need to deep-dive into why employees are leaving. Are they unhappy? Is another company offering them a better deal? You’ll also want to directly address the remaining workforce on the situation. Addressing the situation head-on is much better than sweeping the problem under the rug and hoping employees won’t trip over the elephant in the room. In short: spot it, stop it, speak about it. The three S’s. Only then can you save an entire workforce from churning.
Retain your workforce and see your business grow in 2023
Hopefully you’re walking away from this article with some actionable steps you can start implementing to fight employee churn and hold on to that talent that your business deserves. It’s a competitive world. It’s also financially unstable. Talent is on the move, and you’ll need to move with it if you hope to keep up. It’s time to put pen to paper and beat that average annual employee turnover rate. You’ve got this.
Branch can help you better support your workforce during these economically uncertain times. By offering free earned wage access, instant tip payouts, other other real-time payments, your employees will feel more financially secure and become less likely to leave your organization.