How To Avoid Employee Turnover and Retain Top Talent

One of the things that companies and organizations find most important in today’s business climate is to be able to stay on top of incredible loads of work. In order to do this, it is necessary for companies and organizations to maintain a steady supply of employees that can take care of the work and ensure that the business stays fully operational.

Welcoming new team members can be quite refreshing, revitalizing and energizing, but the truth is that the continuous search for new talent can also cause unwanted side effects. Employee turnover is a serious risk when new talent isn’t fully interiorized, and existing talent is pushed aside. Neglecting both sides of the coin can lead to an unwanted dynamic that can easily cause one of the most common and harmful problems an entreprise can face.

Employee turnover is a malaise that most companies and organizations have dealt with at some point and the first symptom is an unexpected letter of resignation from a golden employee. This shouldn’t be brushed aside and it must be carefully inspected to figure out the roots of the cause so as not to risk a long and steady leak of talent.

As soon as superstar employees keep leaving the team, it will start to dawn on the rest of the group that what’s left of the team is no longer relevant or important. Once that happens, the problem that started with one employee can easily spread and infect the rest of the company. The remaining employees will soon lose the motivation to do their best simply because they no longer believe there’s a future for them inside the organization.

The Important Costs of Employee Turnover
When you think of employees, you should think about them, in the words of Josh Bersin, principal and founder of Bersin, as appreciating assets because they produce increasing value over time. If you consider this, it’s very easy to understand why losing them is as expensive as it is.

The cost of losing top talent, according to Bersin, can easily double the employee’s annual salary once you consider the expenses that take place when they leave, such as the cost of hiring and training new blood, the loss of productivity, and all of the other aspects that surround the adherence of new team members.

According to a formula invented by Jack Altman’s, Lattice CEO’s, the cost of employee turnover can be calculated by considering the number of regrettable departures multiplied by the average cost of said departures. In order to better illustrate this formula, Altman offers the following example:

Let’s say there’s a company that comprises 150 people with 11% annual turnover and the expenses come down to: $25,000 per hiring, $10,000 per turnover and development, which means that the loses represent $500,000 of productivity opportunity cost on average every time a role has to be refilled; that makes the annual turnover cost reach $1.57 million. If this is reduced by 20%, it would mean $300,000 worth of value.

Of course, this formula only considers the monetary loss, but there’s a lot more to losing talented, hardworking people. For one, the emotional and cultural drain are real consequences.

Reasons for Talent Drain
Top performers, even if they are on the top tier of the organization, tend to still look for greener pastures. On a 2017 Qualtrics survey of 800 recently promoted American top talent employees it was found that they receive at least 4.3 new job opportunities per year, and 88% of these employees will respond to those opportunities.

This is a very frustrating phenomenon for managers. It makes them wonder: What is it that the best-performing team members need if they’re already so successful?

To answer this question, talent manager Lizz Pellet presents two main reasons: compensation and leadership. It is understood that money doesn’t buy loyalty, but when top talent is presented with other job opportunities and they actually consider them, compensation does become a factor in retaining this talent.

It is also worth mentioning that one thing that can be written in stone is that when an employee feels that their work is underpaid, they’re a lot less willing to overlook and tolerate things in the workplace.

Leadership can be of even greater concern for talented workers. According to a 2015 Gallup study, one in two employees resign their jobs in order to escape from their manager at one point or another in their careers. Top talent seems to prefer open and communicative managers and this directly affects their level of engagement.

Offering Positive Employee Experience
Compensation and leadership are not the only factors that determine whether or not employees are motivated and engaged over time; training and development are also essential factors that must be present.

A survey made by the American Management Association (AMA) of over 1,200 executives and managers showed that only one-third of companies focus on the development of existing employees rather than on outside recruitment.

Investing on the talent that’s already engaged in the organization’s development can reduce turnover, as it was the case with City Electric Supply (CES), a global wholesale business. When they started to take into account their employee feedback and increased training opportunities, the new-hire employee turnover was reduced by 50%.

The importance of retaining top performers is essential to any kind of business and this is something that can be easily calculated. As pointed out by CEO Thomas Hartland-Mackie, if you consider any successful business, you’ll notice that people love to see a consistent face every time they interact with the organization because it provides the opportunity to develop a relationship.

These amazing solutions find their way into the light when companies allow their employees to provide feedback because the workforce of an organization is the most valuable source of ideas. The only challenge is finding a useful outlet that allows these ideas to be actionable throughout the company. This is particularly difficult when it comes to large companies comprised of multiple offices and departments.

It is essential that employees are heard; if they’re not, this translates into a general lack of productivity, commitment, and engagement, factors that lead directly to employee turnover. Active listening, when ingrained in the organization’s culture, leads to more inclusive and transparent communication and authentic feedback, which directly contributes to the level of engagement of all employees.