According to CNBC, the number of Americans who resigned from their jobs reached a record high in September 2021, with 4.4 million resignations. While the number dropped in October, it remained at a high of 4.2 million resignations. The latest data from the Job Openings and Labor Turnover (JOLT) report of the Department of Labor shows that job openings numbered 11 million in October. Employees who were quitting had many opportunities to choose from. On the other hand, employers with job openings found recruiting difficult. Companies only filled 6.5 million jobs in the same month.
Employee Turnover Is Costly
Losing employees and hiring new ones can have a high cost for a company. The estimate is that it can cost up to twice the employee’s salary. For workers earning an hourly wage, the company will spend $1,500 each. For employees in technical jobs, the company will pay twice to 150 percent of each employee’s salary. The company can spend up to 213 percent of each one’s salary for managers. These are from the cost of vacancy and the cost per hire.
The cost of vacancy comes from the loss of employees. Mass resignations can affect the company’s reputation. If the employees are client-facing and have a good relationship with clients, some clients may be disgruntled with their leaving. Even if the employees who left were not client-facing, their loss means that they leave behind many tasks that management must distribute among the remaining employees. This eventually increases their workload. Also, suppose the remaining employees do not have the knowledge and expertise of those who left. This can lead to a dip in performance that clients can notice. At the worst, the company can lose clients, as well. The remaining employees will also be unhappy at taking on the extra work means staff morale will sink. This can lead to a domino effect of further resignations. Furthermore, with the remaining employees overburdened, the company cannot take on new projects, losing potential revenue.
The cost per hire refers to the cost of taking in a recruit. This begins with the cost of putting out ads for the new position or hiring a recruitment service and the time and effort spent on screening applicants and deciding on who to hire. After that comes the time and effort to train new employees. Current employees will be pulled from their everyday tasks to undertake such training, further spreading the workload among other staff members. It takes time for new employees to perform at the level of current employees. In the meantime, everyone’s productivity dips. Current clients may notice and become unsatisfied.
Retaining the Best Employees
Rewarding loyal employees who have stayed with the company for long periods is an excellent incentive. Some businesses award their dedicated employees with physical mementos that commemorate their stay with the company. Customized signet rings are a great option to reward a batch of employees. Still, a company can also grant a more senior employee with intricate designs. In addition to plaques and other physical awards, a financial bonus is a great incentive. The key, however, is how to develop such loyalty.
Why Company Culture Matters
Company culture is one of the main reasons employees get attached to a company. This covers their relationship with management as well as with their peers. To build a healthy company culture, there must be two-way communication between management and staff and among employees.
Managers must have regular discussions with individual employees to learn how they are doing. This means finding out if they are having difficulties with the job and finding ways to address this together.
This is also the time to determine what the employee wants from the job to arrange for a good fit. For instance, during the pandemic, most employees want to work from home at least two to three days a week. Some want to be able to work from home full-time. All employees want the flexibility to determine when they will work from home. Many are willing to quit if not given this opportunity.
Career Development Retains Employees
Another huge factor for employees to stay is having career development and advancement opportunities. If they do not see a career path in their current company, they will look for it elsewhere. During the pandemic, many employees invested in their own skills development online to prepare for better work opportunities. Companies must provide such skills training in-house and discuss potential paths for career growth with each employee. The company must be structured in such a way as to encourage promotions from below. Hiring must be for entry-level positions. There is nothing more disappointing for employees than to be passed over for promotion and seeing the company hire for the higher position from outside.
Companies must learn to listen to employees and adjust accordingly to retain the best talents. They must also show proper appreciation for the work accomplished by employees. Well-appreciated employees feel valued and, in turn, value the organization they are in.