In the ever-evolving landscape of employment and workforce dynamics, certain industries often steal the spotlight when it comes to discussions of high turnover rates. The hospitality sector, for instance, has long been synonymous with labor churn, a topic that garners widespread attention due to its impact on customer service and operational stability. However, the issue of high turnover is currently affecting many industries, with employers needing to make changes if they hope to cut down on recruitment and training costs.
For instance, consider the security industry, where turnover for security guards is 100% annually. Yes, you read that correctly. The average security firm experiences a complete turnover of its workforce every 12 months. This entails an immense amount of energy, resources, and time spent on the hiring process. Let's explore three industries with high turnover rates and discuss some actionable retention strategies to reduce churn.
1. Home Services
The home services sector encompasses professionals who visit your home to provide repair or maintenance services, such as HVAC specialists, plumbers, electricians, and landscapers. Last year, the turnover rate in the home services industry exceeded 50%. In the case of cleaning services, the turnover rate can skyrocket to as high as 200%.
What is the financial toll of this significant turnover? While the specific training requirements vary by business, most home services companies invest anywhere from $500 to $2,000 per employee to cover the expenses associated with recruitment, orientation, and training of new team members. Not to mention the time and energy spent by managers and team members to support hiring efforts.
So, why is the home services industry incurring substantial losses in training costs and experiencing unmet customer service demands? First, more workers are opting to venture out as independent contractors, enticed by the potential for higher pay and greater rewards within the gig economy. Additionally, businesses may be neglecting the crucial aspect of training, sending new hires into the field without adequate onboarding. A survey conducted by BambooHR revealed that 52% of employees who received ineffective onboarding held negative perceptions of their companies right from the beginning. If you are an employer in this industry, focusing on retention is imperative to maintain competitiveness.
The security industry encompasses a diverse array of services and dedicated professionals committed to safeguarding individuals, assets, and information. This sector includes private security companies, which provide personnel for roles such as security guards, bodyguards, event security, and executive protection. Security professionals are also responsible for ensuring perimeter security and providing manned guarding services at locations like malls, prisons, and workplace buildings.
Within the security industry, turnover rates can vary widely, ranging from 100% to 300% annually. Security professionals typically receive compensation close to the minimum wage, despite the inherently high physical and mental risks they face, including the potential for workplace violence. These roles can also take a physical toll, with traffic accidents, bumps, and falls being common hazards associated with the job.
Despite being a critical industry for our daily well-being and safety, the security field often receives limited attention when it comes to discussions on employee retention and turnover. However, the implications of high turnover and burnout in this sector can be particularly detrimental given the nature of the work. An unengaged, unmotivated security professional has the potential to become a liability, allowing for more theft or crime to occur. Staffing issues have even been cited as a primary factor for prison escapes.
Manufacturing is among the top four industries affected by high turnover, according to Fast Company. By 2028, it's estimated that 4.6 million manufacturing positions will become available, but only 2.2 million of these roles are expected to be filled. Several key factors contribute to this shortage, including an aging workforce that is nearing retirement. Furthermore, technological advancements and automation have exacerbated the skills gap, with many available workers lacking the specialized skills required to contribute effectively to the industry. In fact, 84 percent of manufacturing executives express concerns about their ability to secure the workforce needed to meet the increasingly advanced and sophisticated demands of the industry.
This workforce crisis demands attention since high staff turnover and the presence of inexperienced workers elevate the risks of product defects, workplace injuries, and equipment damage. (For more specific insights and solutions on how to address the manufacturing shortage,explore our Guide to Empowering the Next Generation of Manufacturing Workers.)
How these industries can tackle turnover
There are several universal retention strategies that can be implemented to keep your employees engaged and satisfied; here are three top tactics.
1. Increase Wages and Offer Faster Pay
It takes 90% to 200% of an employee’s annual salary to find their replacement. For an employee earning the U.S. median salary—just over $70,000—you could spend between $63,000 and $140,000 to backfill their role. Rather than spending resources on recruiting new employees, consider investing in your current workforce. Raise their hourly wages and create incentive programs, such as bonuses and pay raises based on their tenure with the company. Additionally, you can explore faster payment tools like same day pay, cashless tips and mileage reimbursement, or instant 1099 contractor payments, all of which accelerate pay to your workers and help build loyalty.
2. Improve Onboarding and Ongoing Development
Right from the start, ensure that your teams receive comprehensive training to perform their roles effectively and safely. Cover all company protocols, emergency procedures, and guidelines for handling uncomfortable situations. Beyond initial training, establish a framework for ongoing development, including regular check-ins to discuss long-term goals, additional certifications paid for by the company, and providing clear pathways for career advancement.
No matter the nature of your business, focus on hiring the right people from the outset and make investments in their long-term success.
3. Offer Flexibility Whenever Possible
As we mentioned before, in today’s workforce you’re competing for talent with the gig economy, as more and more workers crave the flexibility and autonomy that becoming an independent contractor can provide. Whether your business is currently a W-2 or 1099 organization, it’s paramount to keep prioritizing flexibility for your workforce whenever possible. Whether that looks like giving people more opportunities to create their own schedules, offering remote work when possible, or allowing people to pick up and trade shifts on their own, creating a flexible workplace can go a long way in boosting retention.
Whatever sector you’re in, it’s clear that retaining your workforce can help keep turnover costs low and morale high. Read more strategies to reduce churn here.