Turnover is a natural process in any business. However, there should be a fine line between this normal cycle and an unhealthy work environment with constant resignations.
Through retention strategies, businesses can determine and maintain a strong organizational structure. Aside from combatting turnover costs, it also helps strengthen your organization, making it more productive and resilient to challenges.
Why Do Companies Need to Focus on Turnover?
The highest turnover rate of the last two decades occurred in 2022. While the rate has subsided since then, many workers are still leaving work in search of better opportunities. In February this year, more than 3 million workers in the US quit their jobs.¹
However, the Great Resignation wasn’t fully caused by the recent pandemic. Rather, it only magnified the growing concerns in the workplace. From 2015 to 2019, quit levels have been increasing by an average of 5.77 percent every year.² This shows that even before the pandemic hit, many employees were already leaving the job market.
The reasons are very clear. Employees today are seeking better opportunities that would help them grow, satisfy their personal and health needs, and support their careers to succeed.
The True Cost of Employee Turnover
There are a few direct costs to turnover that most companies can easily identify. However, far more is at stake. These are the indirect effects of turnover that may impact your business in the long run.
1. Direct turnover costs of losing an employee.
When employees leave, companies need to reinvest in recruitment efforts, including advertising, screening, interviews, hiring, and training. These would require companies to spend resources to find the right fit.
According to LinkedIn, the average cost of turnover per employee could reach one to two times the employee’s annual salary.³ SHRM says it could reach three to four times.⁴ However, it’s tricky to calculate employee turnover costs. The real cost would depend on your company’s operation, quick turnaround, and the position’s impact on your organization.
Regardless, losing an employee, whether through resignation or termination, is a costly process for any business.
2. Loss of productivity and morale.
New hires will need time to integrate into the organization before becoming effective members. There’s a high chance they’ll make mistakes or take longer to complete tasks. This also includes training new hires, which can be time-consuming. All these factors can affect processes and deadlines, which can reduce productivity and the efficiency of your operations.
If the roles take too long to fill, some of your employees may have to take more responsibilities or even double shifts to fill them in. Eventually, this could lead to exhaustion and loss of morale. Employees look for a healthy work environment, something that attractive salaries and competitive employee benefits packages may not be able to satisfy in the long run. This is why continuous employee engagement is crucial to any organization.
3. Loss of institutional knowledge affecting culture and customers.
Tenured employees help build the company culture and your employer brand, along with the internal practices that help create efficient processes. Furthermore, as employees learn to become efficient in their tasks and build relationships with customers, they become more effective in their work.
These valuable insights are crucial to the overall cohesion of your organization. When employees leave, it also damages their relationships with their peers and customers, the values they helped establish, and the overall contribution to your culture. This is something that new hires may not easily achieve.
Reduce Employee Turnover: 9 Retention Techniques to Mitigate Costly Turnovers
So, why do employees leave? Aside from the common reasons for salary and benefits, there are other causes. It could be:
- Lack of professional development opportunities.
- Limited employee engagement.
- Undesirable workplace culture.
- Internal conflicts and disagreements.
- Unclear direction and unstable organization.
- Not being valued or heard.
A high employee turnover rate is terrible for your business. This is why you must adopt new employee retention strategies emphasizing a holistic employee experience approach.
1. Offer Competitive Benefits
Aside from the usual benefits like health, insurance, retirement plans, or incentives, consider listening to your employees and asking what they need. This can make perks more personal and it also highlights your commitment to your workforce.
For example, light industrial workers value safety initiatives and benefits. Consider offering ergonomic and reliable gear, regular paid safety training, or incentives for accident-free performance. This enhances their physical safety, showing that the company is actively protecting its employees.
Read more: The Science of Employee Well-Being: How to Promote Longevity and Satisfaction in the Workplace
2. Provide Flexibility and Additional Perks
Flexibility is something that employees value today, especially when remote and hybrid work has boomed in recent years. You can provide the following examples:
- Flexible work hours for workers that don’t rely heavily on team collaboration or jobs that can be accomplished independently, allowing them to clock in and out an hour or later.
- Compressed workweek, allowing employees to work longer hours for fewer days. For example, ten-hour four-day workweeks.
- Optional remote days for jobs that can be accomplished off-site like admin work, reporting, or training.
- Shorter work days for off-peak seasons.
3. Offer Clear Career Growth and Development
Most employees join organizations at entry-level positions, but desire to grow toward new roles in the future. Make sure to provide clear career development paths to show that you support their professional growth, such as:
- Offering mentorship and apprenticeship programs.
- Promoting tenured employees before hiring externally.
- Providing training, certifications, and educational reimbursements.
4. Recognize Hard Work and Commitment
Employees want to be seen, especially if they’ve done a great job. This helps them feel appreciated and valued as a member of the organization. Consider giving awards or monthly shoutouts like employee of the month. This can significantly encourage your employees to become more engaged and committed to their work. Even a simple thank you or visiting your workers at their posts can encourage them.
5. Create a Positive Work Culture
It’s also crucial to move away from toxic practices, as this can drive people away. Focus on creating a culture that values respect, transparency, diversity, and a sense of belonging.
Think of it this way: Employees spend most of their day in the office or on the production floor. Being surrounded by negativity and toxicity will affect their outlook and possibly influence them to leave. Employees who feel connected to the company will be more inspired to contribute and do their best.
Read more: Putting People First: Why Prioritizing the Employee Experience is Key to Long-Term Business Success
6. Practice Open Communication and Transparency
While some employees work well in isolation, most would appreciate regular communication. Everyone experiences challenges at work, and some might not be vocal enough to express their concerns. Make sure to check in on your employees and see how they’re doing. Ask if there’s anything that can be improved or see if they have recommendations, whether in operations, sales tactics, equipment usage, or overall company practice.
7. Optimize the Onboarding Process
Onboarding is not just a simple orientation program to help employees begin their new jobs. It’s the perfect time to fully integrate new employees into the organization.
This process should clearly define the expectations for each employee. It should detail how their job connects with other roles and their impact on the organization. Providing training, resources, and key people are a few of the things any new employee would need on their first day.
Read more: Building Strong Relationships with New Hires: Effective Strategies for Onboarding and Retention
8. Utilize Exit Interviews
Similarly, exit interviews are not formal meetings for leaving employees. As an employer, you should maximize this time to know more about the employee and why they’re leaving. Ask open-ended questions that allow them to elaborate on their experiences and concerns. Be open and prepared for their answer, especially if it points out a shortcoming in the organization.
Exiting employees tend to be more transparent with their reasons. Make sure to engage employees correctly to gain valuable knowledge on how to improve employee experience and reduce turnover.
9. Monitor Your Retention Rates
As you gather data, you can gain valuable insights about the factors that affect your business.
- Are people leaving due to the lack of benefits like career opportunities?
- Are they dissatisfied with how the management is handling the organization?
- Is the production floor providing a safe workplace environment?
- Do people seek higher salaries and more competitive benefits?
Using data analytics can help you refine your retention efforts. Instead of guessing, you’ll have real data on why you’re experiencing high turnover and what you can do about it.
Hire the right people from the start with Horizon America.
Finding reliable and skilled workers is crucial to your success. This is why, at Horizon America, we dedicate our time to searching for the best candidates in the light industrial sector. Turnover requires a strategic approach to retention—and with a strong staffing partner, you can build your teams right.
Hire qualified warehouse staff, line leaders, machine or forklift operators, and sanitation or production workers from Horizon America. We have also created a Salary Guide that will help guide you on the latest salary benchmarks and key compensation insights for the light industry.
References
- “JOB OPENINGS AND LABOR TURNOVER – FEBRUARY 2025.” US Department of Labor, https://www.bls.gov/news.release/pdf/jolts.pdf
- “Job Openings and Labor Turnover Survey News Release.” US Department of Labor, https://www.bls.gov/news.release/archives/jolts_03172020.htm
- Bersin, Josh. “Employee Retention Now a Big Issue: Why the Tide has Turned.” LinkedIn, 17 Aug. 2013, https://www.linkedin.com/pulse/20130816200159-131079-employee-retention-now-a-big-issue-why-the-tide-has-turned/
- Navarra, Katie. “The Real Costs of Recruitment.” SHRM, Apr. 2022, https://www.shrm.org/topics-tools/news/talent-acquisition/real-costs-recruitment
