It’s a frustrating fact that the most valuable candidates—those who are talented and those who are ambitious—are also the ones most likely to be drawn away after an expensive hiring and training process. Human capital is exchanged in an open marketplace, just like most other products and services, and to attract and the retain the best employees, you need to be willing to compete. You also need to be willing to keep a close eye on your company culture.
Here are five of the top reasons for high turnover and a few ways to create a counterforce that can keep valuable employees on your team.
1. The lure of higher paying offers
First, make sure your pay rates are competitive. This may seem like a no-brainer, but a surprisingly large number of inexperienced small firms simply review their own budgets and set salaries based on what they can afford (or what they choose) to pay. Don’t do this. Investigate your competitor’s rates and the rates for similar jobs in other industries. If you underpay, your savings will be reduced by the constant need to hire and train new staff. If budget restrictions prevent you from paying competitive rates, try to expand your perks and benefits, like health insurance and flex time.
2. Boredom or stagnation
If a talented employee wants to learn new skills or take on increasing responsibilities, find a way to make this happen or prepare to lose her. If you can’t promote her because there’s simply no higher position available, change her job title and expand her role in any way you can. Be creative. Many surveys show that employees will sometimes forego higher pay in exchange for non-monetary recognition, novel experiences, or the chance to learn new things.
3. A frustrating company culture
At the end of the day, high turnover is a management responsibility. Your turnover is likely to stabilize if you invest in high quality human resource staff and excellent managers and directors. A depressing workplace, an unpleasant culture, or confusion about responsibilities and expectations can all drive excellent employees away. Some toxic cultural aspects (For example, out-of-control competition, bullying, or weak leadership) can actually attract terrible, underperforming employees while simultaneously driving good ones away. Keep an eye on this, and make sure you hire managers who take workplace culture seriously.
4. Life changes and a corresponding need for flexibility
As employees move from their twenties into their thirties and forties, their lives change in often-predictable ways. They have children, their children grow up, and they begin to care for aging parents. Managers should not be caught off guard by these relatively common events. Inflexible or unsympathetic policies may alienate excellent employees, and since most people put family loyalty above company loyalty, employees with limited options will start looking for work elsewhere. A five year investment in a talented employee should not be lost over an unwillingness to make reasonable accommodations.
5. The lure of the unknown
Sometimes young workers leave a company to travel, enter graduate programs, or pursue unique experiences. Combat this by keeping the lines of communication open between managers and employees. If an employee wants to travel, you may be able to offer her position on an overseas account. If she wants to get her master’s degree, maybe you can fund her program in exchange for a three-year commitment to the firm. Listen to your employees and stay in touch. If you can, use annual performance reviews as a way to check in with employees about their long term plans and life goals.