Why Turnover Isn't a Problem, but Retention Is

As a franchise owner, you work hard to build your location’s brand in your community, train employees, and even to find the right new hires. All the hard work you do is pointless without retention. High employee turnovers plague many industries, and while companies often strive to locate “good people” with extensive screening and hiring processes, it’s all for nothing without retention.

Hiring is just one half of what needs to be done to get good employees. Retention plays an equal, if not larger, part in ensuring that your team is experienced, passionate, and professional. High turnover rates are a symptom of something far deeper, and investing in retention just may be the cure.

The Facts: Why is Turnover So High?

As Boomers begin to retire out of the workforce and are replaced with Millennials, the culture of business is shifting. Companies who are not keeping up with Millennial views are struggling to retain their workers, which can cost these companies hundreds of thousands of dollars a year.

In a recent survey by Mercer, a global consulting leader, it was found that the majority of surveyed workers were considering leaving their jobs—even when they were satisfied with their company or job!

Breaking down the statistics, we see:

  • 45% of employees who are satisfied with their organization are considering leaving.
  • 42% of employees who are satisfied with their jobs are considering leaving.
  • 37% of employees are seriously considering leaving their jobs.

If employees are satisfied with their companies and jobs, why are they leaving? If you employ mainly Millennials, you should pay close attention.

60% of Millennials stay at a job for less than 3 years.

So what’s the deal with that? Millennials are more likely to move from position to position seeking opportunities for self-development. This is a data-hungry, information-craving generation we’re talking about here, and they know that the path to a successful career and personal happiness is to always be striving for more. More training, more knowledge, more connections, more education, more growth — whatever it is, Millennials want more of it. Is that necessarily a bad thing, though? Employers who learn to meet their Millennial employee’s needs are often rewarded with dedicated employees who constantly strive to better themselves, both personal and professionally.

Turnover & Retention: What Makes Financial Sense?

While you might feel it’s cheaper to replace employees than to entice them to stay, it turns out that the opposite is frequently true. It generally costs far less to invest in strategies to retain employees than to replace them.

Here’s the facts:

  1. The average wage of a U.S. employee is approximately $50,000.
  2. Voluntary termination is more than 10% a year.
  3. The average total cost to replace an employee who quits is between 25% and 250% of their base salary, depending on their role.

What do these facts mean? Look at it this way. If you need to replace a good employee who was being paid $50,000, and you spend the bare minimum of 25% of their base salary, you’re looking at $12,500, at the minimum. If you need to replace 10 employees in a year, you’ll be spending $125,000 every year on turn over. Ouch!

What Increases Retention?

How about you invest just the cost of replacing one employee into retention to keep those 10 employees? This breaks down to spending about $1,250 an employee to avoid spending $12,500 each. Now that sounds a little better. But how do you go about investing in retention? Here are some things to focus on when attracting ­and keeping good employees.

Encouraging Self-Growth

As mentioned above, younger workers are seeking ways to improve themselves and their professional skills. This is often the number one benefit that Millennial employees seek when evaluating potential employers. In-house training, financial assistance and professional support for community college and university courses, and other trainings that can help them advance their careers are a worthwhile investment in retaining a skilled, experienced workforce.

Being Flexible

While Boomers struggle to understand the desire for flexibility in the workplace, Millennials crave it. Many are young parents who want to balance their work with family and spend more quality time with their children. Others simply enjoy the chance to work when they are most productive, rather than forcing themselves to get up early and down four cups of coffee to feel human. Offering flexible hours or even the ability to work from home some days will go far in extending the tenure of younger employees.

Opening Communications

Every generation wants to be kept in the loop, and Millennials are no exception. While newsletters can help a company to reach employees, they’re not a substitute for face-to-face communication. The good news is Millennial employees often consider video conferencing or phone calls as face-to-face, so you can spread ideas and information easily without scheduling in-person meetings. This is also a good match for companies that allow workers to clock-in at home.

Using Positive Reinforcement

One of the least expensive ways to boost retention is to make your employees feel like they are valued as an individual. Often, programs that focus on positive reinforcement don’t even necessitate any significant expense. Think of employee of the month, birthday gift cards, or other non-cash incentives, such as dinner on the company or tickets to a game. Letting your employees know you sincerely appreciate their work is powerful.

Connecting to the Community

Millennials value involvement and community above many things. The drive to give back makes this generation a powerful force for good, and letting them do so through your company can make them want to stay. Community activities, volunteering, and donation matching are just a few ideas to give back to the community and retain good people. It can even boost morale and the sense that you are a team.

Breaking the Rules You Know

More than defying authority, this is about challenging the status quo. If there’s a better way to do it, then make the change. Don’t get stuck in the thought of “This is the way it’s done because this is the way we’ve always done it.” Ask for input and ideas. Let your employees innovate and keep your company competitive.

Putting it simply—listen to what your employees need to succeed in a career. Respond to them in ways that makes them feel like they have a voice and a place in your company. Invest in your employees, and you’ll soon discover that they’re return the investment into their work. Don’t recruit new good people, keep the ones you have.

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Contactour home services franchise opportunity team today to start your journey to franchise ownership!