Embracing Employee Engagement to Overcome the High Cost of Turnover
People who arrive at their job feeling connected to their work, the people around them, and the mission of the business are going to be more productive. Engaged employees will demonstrate their passion through their interactions with others, their enthusiasm, and their daily tasks. Conversely, a disengaged employee’s attitude and performance will probably be unsatisfactory in the long term. The process of finding and training replacements can be expensive, so it makes sense to explore the issue of turnover.
The Work Institute reported that turnover cost American businesses $600 billion in 2018, and it is expected to reach $680 billion by 2020. When calculating the full cost of turnover, there is more to the calculation than the costs directly associated with finding and training the replacement. The full financial impact includes such items as:
- The number of lost-work days to fill the open position
- The cost of the time for those involved in the interview process
- The time it takes for the new hire to learn the job and produce at the expected level
Case study in turnover
For a company with 200 employees, an average annual salary rate of $50,000, and a turnover rate of 19 percent, turnover will cost the company $638,324 annually (Fortin, 2017). When companies include indirect costs such as potential increases in equipment repairs, warranty claims, and safety incidents, the costs can grow exponentially. The non-financial implications of turnover such as damage to the company’s reputation and lower employee morale should also be considered.
Approaches to employee turnover
In the situation above, how do you engage employees to help increase retention? Employees want to feel that the work they do matters. They want to have quality relationships with coworkers, supervisors, and organizational leaders. They want to feel a sense of belonging, and much of this has to do with the rules, habits, and norms of an organization. Some organizations face fairly simple changes, while others might need to look at a deep cultural shift.
Given the cost of turnover, it’s understandable that leaders are beginning to turn to employee engagement as a way to reduce their losses and increase retention. The company in the example above could realize a savings of over $300,000 just by bringing their turnover rate down to 10 percent.
As the need to strengthen engagement grows, human resources, operations managers, and organization leaders are working to identify the reasons for high turnover and implement strategies and tactics to create a more engaged and satisfied workforce.
How we can help
Each company has unique culture challenges so approaches to engagement must be tailored an organization’s distinct needs. CLA works with clients who want to improve employee retention. Our approach is collaborative and focuses on learning throughout the process so that the changes, growth, and improvements can continue into the future. Strategic workforce planning, succession planning (from senior leadership to first level leaders), leadership training, and coaching, can all help organizations strengthen their cultures and reduce the financial and personal impacts of employee turnover.