9 common reasons your staff are quitting and 10 strategies to get them to stay

10 May 2018
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Small to medium (SME) sized businesses in Australia together employ 7.5 million people out of a total workforce of about 10 million. They are the work horses of the economy keeping most of us in employed.

And, while many SME employees enjoy long tenure in a job, almost a quarter of people who start a job end up leaving within 12 months. The cost of this is significant to an individual business owner and astronomical to the economy (think billions of dollars).

Keeping good staff—those who create a significant return on investment—is therefore a chief concern for business owners. This isn’t to say that turnover is a bad thing that should be avoided at all costs. New staff can reinvigorate a business, whether that be the hire of a candidate straight out of uni or training, a skilled worker switching industries or mature-aged staff able to guide and mentor others.

Average staff turnover rate

So, what should you be aiming for when it comes to staff turnover? While there will be variation depending on your industry and occupational sector, turnover of 10 to 15 per cent is considered reasonable.

The costs of staff turnover

Good staff will come and go, regardless of what you do to enhance retention. Sometimes there is a benefit to this turnover, but mostly, in the short-term, it costs. The negative effects of high turnover can extend from decreasing staff morale to poor brand reputation. These can negatively influence your bottom line.

1. Training costs

Training a new employee can be expensive. In-house training sessions may need to be led by your more experienced employees. If these employees are training, they are not engaged in the core business of satisfying customers or contributing in the usual ways of adding value to the organisation.

2. Advertising Costs

Advertising vacant positions is costly but so too is using an independent recruitment company who will want their cut. The greater the turnover, the greater the cost. Recruit well in the first place and reduce your turnover.

3. Interview costs

Interviewing can be time-consuming and tedious. For larger organisations there may be travel expenses if candidates come from out-of-town. As with training, time spent on interviewing can cost the business through lost productivity.

4. Lowered Engagement

A constant procession of people leaving will affect those remaining, wondering what’s wrong with the organisation or business. The risk is they will become disenchanted, with a subsequent drop in productivity.

5. Productivity of staff

When you take on new staff, they are unlikely to be super productive from day one. There’s a steep learning curve. The period it takes for them to come up to speed could be from a couple of days to a several months, depending on the nature of the business. It can be a challenging time for new and existing staff.

Right about now you might be starting to panic about how you can retain your good staff, particularly when you don’t have the specialised personnel sections, budgets and developmental opportunities often enjoyed in large businesses, corporations and multi-nationals.
We’ll get to retention strategies shortly, but first you need to understand why your staff leave. Generally it’s due to internal factors driving your staff away or external factors attracting your staff away.

Factors driving your staff away

1. Poor management through poor communication

People often leave because they don’t believe in their leaders. Have you set the tone for the company, including the company’s vision and the path to achieve it? Are expectations clear and realistic? Effective, unambiguous communication is key. Communication is also a two-way street. Ensure that honest feedback can be provided—and is valued. This can help identify emerging issues. Confidential avenues may be necessary.

2. Bullying, discrimination and harassment

Bullying, discrimination and harassment destroy a company’s culture and lead to a lack of trust and environment of fear.  The social cost of exclusion is large, but the economic cost to business is even greater. Root it out or suffer the consequences to your bottom line.

3. Lack of career opportunities in the current job

Money and non-financial benefits won’t keep your best talent, especially in a rising market when more jobs become available. Most workers seek opportunities for career progression, or at least regular training and development. The grass may start to look greener elsewhere without these opportunities.

4. Personality issues at work, with supervisors or colleagues

This one is hard to avoid and can grow in magnitude if left unchecked. This is especially so in the close quarters of small business operations. You can help avoid it by ensuring new staff are the right fit, both for the culture of the organisation and those staff already working there. Skills and personality are important.

5. Small or non-existent pay rises

A competitive salary may help you attract talented staff, but ongoing recognition in the form of pay rises or other benefits will help keep your best performers. Other benefits, opportunities for development or tax-effective perks can get you through until you’re in a position to top up salaries.

6. Poor work/ life balance

Inflexible work arrangements will have staff heading for the door. By recognising the significant out-of-work demands on staff and providing work-arounds for this, you will be demonstrating that you value your staff. Chances are if you give a bit, staff will be more likely to repay you with loyalty and a preparedness to chip in when the work gets busier or more challenging.

Factors attracting your staff away

1. A new career opportunity with potential for more experience

There is more to work than getting paid. People generally like to feel challenged and that they have a level of expertise that renders them useful to the company. If an employee feels like they have stagnated and that opportunities for promotion or learning are limited, they will be open to working elsewhere.

2. Better pay and and/or improved non-financial benefits

The benefits required may be very different for millennials compared to generation X staff or baby boomers. Know your people; know what they value. If you don’t, another employer will. If another business in a similar field starts looking attractive to your best staff, you’re in trouble.

3. Personal and family circumstances

This could include a need to provide more care for relatives, or a partner changing jobs which could require moving to a new town. Flexible work schedules and the opportunity to work from home can be attractive enticements for staff dissatisfied with their current restrictive circumstances.

Strategies to help you keep your best staff longer

Your retention strategy must be ingrained in everything you do as a business and must start from the beginning. Are you selling your business and the role honestly at interview? If you make a job sound like something it’s not, don’t be surprised when your new person quickly becomes dissatisfied at work.

Also think about day-to-day work-life. How can you make sure your staff satisfaction pendulum swings more towards the happy than the frustrated? Trial the following short and longer term retention tips to see if they make a difference to turnover at your business.

Short-term staff retention tips

1. The right fit

In Australia, when people change jobs, they usually don’t change industries. One reason for this is because employers tend to focus their recruitment on people who have done the same job in the same industry. In other words, they take on people with relevant experience. And people tend towards industries in which they have experience, thinking this will enhance their job prospects. Consider casting the net wider to attract a pool of candidates who not only have transferable skills, but also have the right personality traits and attributes to work in harmony with your existing staff.

2. Clarity of the role

Make sure new staff know exactly what is expected from them and what the role entails.

3. Confidence in their ability to do the job

Provide a clear orientation and induction process for new staff.

4. Social acceptance in a workplace

Ensure that new staff get to know their work colleagues and are made to feel part of the team.

Longer term staff retention tips

1. Training and development

Give people opportunities for professional and personal development. Let an employee shadow you, or bring in an expert to talk on an issue that will benefit staff and the business. The other end of the spectrum is sending someone on an external course. Find out what staff want and need in terms of development. And encourage them to share their learnings afterwards.

2. Constructive feedback (aka praise)

Giving thanks for a job well done is one of the most effective ways to boost staff morale. Thanks can be private or public, but must be regular (more than yearly). How you do it will depend on what you’re praising them for and their own preferences. Hoisting a shy person in front of 50 co-workers might not work as well as you thought.

3. Ask someone to step up

People value being valued. Being asked to step up and take on a leadership role or some short-term responsibility will often bring out the best in staff. Just make sure you’re not asking for more than they can realistically give.

4. Give an early mark

Regularly, or out of the blue, shout your team a Friday early mark. Clocking off an hour early is a winner, allowing staff to start their weekend full of life. It’s only an hour, but it can mean the world to them. This may not be appropriate for all business types, but is still worth considering.

5. Tell them how the business is going

Update staff on a regular basis about how the business is performing. If they can see how their role is contributing to business objectives, they are likely to feel more worthwhile. Follow up with staff on a regular basis about their own performance. Make sure you are all singing from the same song sheet. Monthly catchups may be more useful than annual ‘performance evaluations’.

6. Regular morning teas and the occasional lunch or dinner

Don’t discount a once a fortnight or once a month brief down time for your staff or team to enjoy a coffee and some cake. Take them to lunch and dinner occasionally, even if it’s only at Christmas. It will be worth it.