Employee Turnover: The Bottom-Line Buster
What does employee turnover mean?
Employee retention and turnover are front-of-mind challenges in the security and cleaning industries. According to a U.S. Bureau of Labor Statistics report, 4.35 million workers left in February 2023, an increase of 94,000 from the previous month. However, there were 11.27 million openings in the same month.
Here’s why that matters.
Turnover is one of the highest business expenses within your labor costs. As cleaning and security industry profit margins are already paper thin, employee turnover can be the factor that tips a contract from profitable to unprofitable – especially if you can’t keep shifts and work orders covered.
In today’s competitive race for talent, finding hard-working and committed employees is difficult.
Oftentimes, trying to keep employees past their first payday may seem virtually impossible. A lot of effort goes into the hiring process: HR posts jobs, interviews a select group of candidates, makes a hiring decision, onboards and trains them, only to have to do it all over again because of voluntary or involuntary separations.
Why is employee turnover important?
Many professionals think it’s just easier to find someone else to do the job. But hiring a new person can cost businesses more than simply retaining an employee. According to Indeed.com, most companies can expect to pay between $4,000 to $20,000 to hire a new employee, not including salary and benefits.
Although that figure varies depending on company size, hiring volume, and seniority of the position, it suggests that businesses can lose a lot of money if they fail to understand attrition rate, which is a measure of employees who have left the workplace over a set timeframe. Understanding attrition rate and comparing that number to the percentage of employees who remained on staff is key.
Does the unemployment rate have an impact?
To add to the turnover burden, unemployment is low – very low. According to the U.S. Bureau of Labor Statistics, the national unemployment rate was 3.7% in May 2023, which is close to what economists consider full employment, as the remaining individuals are either employed or not actively looking for work.
As the unemployment numbers dip, this means that the number of jobs available is outpacing the available talent pool needed to do the work. In fact, there are now a record 5 million more job openings than unemployed people in the U.S. Companies trying to maintain an active workforce must find a way to retain their workforce and lower employee churn to better serve customers and protect bottom lines.
There’s no silver bullet to reduce voluntary attrition. But there are key best practices you can implement to increase engagement, connect with employees and demonstrate your commitment to them as an employer.
What are creative ways to retain employees?
Step 1: Encourage an open dialogue
First, just talk to them! Have a meaningful conversation — and not just once, do it regularly. Take time to understand their challenges and motivations, what they need to do their job better and what they value about their job. Then find ways to support them.
As an employer, you satisfy their basic need to make money, but so does every other business out there. Take a different approach, and what you discover by simply connecting with them will lead to other actions you need to take.
This could mean they need a more competitive pay rate, better equipment or opportunities for professional development. It could be that they want more decision-making authority or to do a different type of work. Maybe it’s a flexible schedule that provides more work-life balance and in the end reduces your churn rate.
Step 2: Gain commitment
Gain commitment then use that information to positively impact their job satisfaction. Once you find out what they value, commit and show them — not just tell them — that you support them. In turn, you’ll earn commitment from them. A happy employee means happy customers – and, ultimately, a happy business.
Employee retention strategies are important because your competitors, professionals in other industries and even some of your customers will be trying to hire your staffers. Earn their commitment whenever possible.
Consider employee preferences when scheduling – even if it’s just for a period of time. Lessen the need for tedious transportation arrangements and factor in job location while making their schedule. Making it easier for staffers to commute to work will increase the chances that they work consistently and arrive on-time.
Step 3: Use technology to keep your workforce engaged
Lastly, don’t forget that you can’t take human nature out of the work. If you use technology to communicate or operate any aspect of your business, make sure you find the most up to date technology to help your employees perform efficiently and train them to use it. Show them how to use the technology, which can keep them better engaged.
For example, self-service portals for distributed workforces are key, because they need to be self-sufficient when completing work at different job sites. They need to be able to see what work they need to accomplish, have a method to raise concerns or questions, capture evidence of their service quality and then also have access to the things they really care about – such as their time-off, opportunities to claim open shifts and pay stubs.
Working more efficiently means they can spend more time on high-value activities, both at work and at home. But keep in mind that you can’t just throw technology into the mix and expect it to fix your employee engagement and communication problems. It’s a tool, not a solution.
By improving employee retention and reducing time and money spent on turnover, you can focus on investing in other things to maintain a competitive edge, like technology. Take the time to analyze your people and what you need to do to keep them. It will cost you less time and money to find the right people and keep them happy than to have a constant revolving door of hiring and onboarding.
Different factors come into play on the subject of voluntary turnover and reducing employee attrition rate. However, as a TEAM Software customer, you don’t have to brave employee engagement alone.
TEAM Software can assist in aligning your staff, procedures, and technology with their extensive tech and industry expertise. Check out our eBook titled The Get and Keep Playbook for more information on reducing employee turnover and retaining workers.