Losing an employee can be expensive. While estimates vary, studies are united in their conviction that losing a salaried employee can add significant costs to an organization. For lower level employees this amount might be relatively small, such as 15-20% of an employee’s annual salary. When companies lose employees that are higher on the corporate ladder, however, costs can rise dramatically. Some studies suggest that losing an executive can cost as much as 213% of his or her annual salary.
The cost of losing an employee includes more than the time spent recruiting and training. It also includes a significant adjustment period of lost productivity, in which a new employee may need to work up to two years to reach the productivity level of previous workers. New employees are also more prone to making mistakes and may require more input from managers. Remaining employees may also be affected by the loss of an employee. A high rate of turnover can threaten employee morale, paving the way for additional losses and expenses in the future.
A sound organization relies on a competent team of workers with plenty of incentive to stay with the company. Fortunately, there are techniques that managers and HR departments can use to help increase not just employee retention, but also morale and general job satisfaction. Let’s take a look at three of those techniques.
1. Create measurable benchmarks
Employees need to feel that they are doing well in order to be happy with their work. They also need to feel that they have clear direction. They want to know precisely what they need to do to succeed. Providing clear benchmarks with quantitative indications of progress may go a long way to giving employees the sense that their talents are being used. If employees feel they are making a difference and that the organization is improving with their contribution, they will be much more likely to want to stay with the organization.
2. Match employees with managers
Communication is important at all levels of any organization, but different managers may have different communication styles. Match employees as much as possible with managers who have similar communication styles. If a worker prefers open communication with frequent meetings and two-way communication, managers who prefer to lead this way will be a natural fit. Similarly, for employees who prefer more of a hands-off style, with room for independent work and individual responsibility, place them with a manager who prefers not to micromanage. Regardless of a manager’s own communication style, it is always important that managers are trained to listen, be sensitive to employee needs and lead in a nonthreatening manner.
Managers also need to inspire a sense of loyalty in their employees. A manager should be a great leader – a mentor. Employees are happier when they feel they can look up to their managers as role models. Oftentimes what separates a good leader from a poor leader is the degree to which he or she is genuinely concerned with employees’ success. If you can show employees that they matter and that you care about them and their contributions, then you will likely find yourself leading a competent, enthusiastic team.
3. Financial rewards
Another approach is to create a financial incentive to stay with an organization. While the degree to which organizations are able to do this may vary, employees generally appreciate salaries that are above the labor market average. Corporate organizations may also consider providing bonuses like stock options to their loyal employees. In either case, financial rewards function to show employees that they are, quite literally, valued members of a team.
4. Provide small perks
While medical and dental coverage, holiday time and employee development programs are obvious perks, studies have shown that it may be the smaller things that keep employees most happy. Recent studies have shown that as many as one in four employees consider the existence of office perks to be an important workplace benefit. Sometimes, creating a positive work atmosphere is as simple as having a casual dress day or free food and drink. Employees may also appreciate the ability to telecommute on occasion. If a worker’s load is computer-based, and work can reasonably and effectively be done in a home environment, it may be worth allowing employees flexibility in work environment. Particularly for workers with families, being able to work from home may be a significant boost to morale and career satisfaction.