One of the most common challenges small and medium businesses face is high employee turnover. In many cases, employees leaving business creates such a bad experience for business owners that they conclude it is not worth bringing an outsider into their business and that they are better off doing everything themselves. Such a decision creates more challenges like work-life balance for owners and inefficiencies for the business. Hence, as a result, the business never reaches its potential.
It is also important to acknowledge that most employees will never stay forever and will eventually move on. Large corporations with billions of dollars of revenue can also not retain everyone, despite being able to offer fancy stuff that a small business cannot afford to do ever.
No single "ideal" employee turnover rate applies universally to all organisations in Australia, as turnover rates can vary significantly by industry, company size, and other factors. However, lower employee turnover rates are generally desirable as they can help organisations reduce the costs associated with recruiting, training, and onboarding new employees and can also help improve productivity and morale by fostering a stable and engaged workforce.
According to the Australian Human Resources Institute (AHRI), Australia's average voluntary employee turnover rate is around 15%. However, this can vary widely depending on the industry and other factors. For example, some industries, such as hospitality and retail, may have higher turnover rates due to seasonal fluctuations. In comparison, other sectors, such as healthcare and education, may have lower turnover rates due to the nature of the work and the level of training and qualifications required. So it is clear that you cannot hold everyone back, but what can you do so an employee sticks with you long enough to deliver value to the business?
Reducing employee turnover requires a combination of strategies that focus on creating a positive work environment, providing career growth opportunities, and ensuring that employees feel valued and supported. Here are some strategies that can help reduce employee turnover:
Invest time in your hiring process: It is always cheaper to invest time and resources in your hiring process to help you choose the right person. Start with the structured recruitment and selection process. Always start with a structured job description and KPIs for the role. Tailor your job ads and their language to match the type of candidate you are looking for. The process to ensure that the candidates fit the organisation's culture and values starts when you decide to hire. You can use free tools like Identifier by Contribution Compass.
Provide fair compensation and benefits: Offer competitive salaries and benefits packages to attract and retain the right talent. Unlike entrepreneurs, the employee mindset is to gain a fair deal for their skills and experience. There is a shortage of skilled human resources in Australia post-covid. Your employees have many options, and you are responsible for offering attractive deals that suit the type of person you are looking for. Note that not all employees are attracted to only money. You can use the Contribution Compass profiling tool to understand what can be an attractive offer to the type of person you seek.
Offer career development opportunities: Employees want to feel like they are growing and advancing in their careers: offer training, mentoring, and opportunities for professional development. Post-covid, everyone is jittery and cautious. Like business owners and employees also want to make up for the time lost during the lockdown. Everyone wants to upskill them with various skills to ensure they remain employed next time they face another calamity like Covid. Always look for opportunities to provide more exposure to your employees. Add variety to the activities they perform. Mentor them, and coach them. Training does not always mean expensive courses. But where possible look for government grants and state-funded training opportunities. You can provide them with structured and well-designed induction or on-the-job training.
Provide a positive work environment: Ensure the workplace is positive, safe, and healthy, where employees can thrive. Promote work-life balance and provide opportunities for social interaction and team-building activities. The right team will always thrive if they are clear about the purpose of your business and what they aim to achieve collectively as a team. Most employees leave a job due to the negative culture in a business. You and your leadership team are mainly responsible for ensuring that organisational culture and environment support growth and offer a sense of belonging. Take a free business health assessment to determine where your business stands on this critical business growth factor.
Encourage open communication: Encourage open and honest communication between employees and management. Provide regular feedback and encourage employees to share their concerns and suggestions. You and your team play a vital role in this space. The majority of people take up a job to excel and deliver. However, the passion of such employee is culled by the unskilled manager, who needs to gain the skills to lead and coach. Invest time and resources in upskilling yourself and your manager to lead a team and provide feedback. When you make your employees feel they get clear instructions and have space to share their thoughts and suggestions, they will stick around longer, even if they are not fully satisfied. Use 1:1 or team coaching services to build clear and open communication skills.
Recognise and reward performance: Recognise and reward employees for their hard work and contributions to the organisation. These rewards don't have to be monetary always. Employee preferences differ in what they appreciate more . You can use a combination of verbal acknowledgment, a variety of tasks, exposure, coaching, mentoring, and training. Also, let us not ignore that most of us work for some financial reward because that helps us with hygiene factors like security, food and family need. Your reward and recognition plan must include bonuses, promotions, and other incentives. Suppose you have used the Contribution Compass profile while hiring or upskilling a person. In that case, you can use the insights to tailor the reward to each individual's preferences.
Accountability: The most critical component in employee dissatisfaction can be a need for more clarity on their KPIs. Many employees get dissatisfied because they can observe or feel that business owners need more skills and ability to hold non-performing employees accountable. This can be due to many reasons, e.g. the non-performing employee is their relative or friend. Non-performance creates a burden for other employees who take their job seriously and want to perform. It is essential that a business owner can act on employee-related issues, complaints and challenges immediately and professionally. Taking prompt action also saves business owners ongoing trauma and stress associated with taking hard decisions.
By implementing these strategies, organisations can create a positive work environment that attracts and retains top talent, reduces turnover, and improves overall employee satisfaction and productivity.
Book a complimentary coaching session with Atif and walk away a simple action plan. Our free "Business Health Assessment" will also help you discover the areas you need to focus on to build a sustainable and self-propelled business.