How to reduce employee churn
It’s the stuff of nightmares, a looming question that we know business leaders wish they could avoid …
What would you do if nearly half of your workforce disappeared?
A nightmare, yes, but unfortunately, this is becoming more and more of a reality for industries and businesses of all sizes. Our most recent retention research found at least 42% of employees are actively looking for a new employer or intend to in the next 12 months. 66% of companies report their companies are actively hiring - so they’re looking for talent to poach. Plus, UK job vacancies are at a record high as wages pick up.
The threat of losing almost half of your people is real and has material, bottom-line impact:
The Cost of Losing Top Talent
|Average UK salary||£31,461|
|Average cost to replace employees = 33% of salary||£10,382|
|Cost to 100-person business with 42% attrition rate||£436,044|
|20% attrition rate||£207,640|
|10% attrition rate||£103,820|
Note: Based on data for average UK full-time salary from the Office of National Statistics from 2020. Does not account for loss of productivity, knowledge, IP and morale.
Take a 100-person business as an example, and give UK employees the average salary of about £31k. The average cost to replace an employee is about 33%, which means with an aggressive attrition rate of 42% is costing this business over £400,000
"With a 10% attrition rate, that’s a £103,820 cost that eats into their profitability."
And this is based on conservative averages from the Office of National Statistics from 2020. What it doesn’t account for is all of those somewhat more intangible factors, such as loss of productivity knowledge, IP and morale.
So employers are asking themselves, if we’re to avoid this material loss to productivity, is turning back to the pre-COVID-norm really an option?
The short answer is no: COVID-19 was a turning point, whether you are prepared to call it that or not.
Why we need to redefine the employee/employer relationship
Research from across the board - Reward Gateway, Gartner, Seek, the Future Forum, Thrive Global, PwC – are aligned in our findings: employees have witnessed a different level of support and flexibility from companies the world over – some experienced it from their own employers, or they’ve heard about what their friends’ and family’s company offered.
Our 2020 survey found that employees who said their company had handled COVID-19 well indicated it was because their employer:1) had the right workplace tools and technologies in place (42%)
2) maintained regular communication (38%)
3) took steps to ensure employee wellbeing (35%)
To stay competitive, businesses have to look at their overall employee experience they offer through the lens of COVID-19 and how this has changed employee needs and expectations. What does this mean?
Our research found three key findings in how to improve the employee experience and reduce the cost of employee churn: Employees want more flexibility, a sense of belonging and better support.
Workplace flexibility is a must-have
Studies report that many British employees want flexible working to stay, but how many employers are prepared both culturally and technologically to make flexible or hybrid work successful?
Although many employees in the UK have already returned to the office, they still want the option to work from home. According to recent studies, 89% of employees surveyed want to be able to work as many days in the office or remotely as they wanted, and 75% favoured a 3:2 hybrid working model. The need for flexible work will be ongoing, as employees continue juggling home life and work life.
So how is this for you? Is your business debating whether it’s worth implementing flexible work and supporting hybrid work modes? Have you considered the impact high anxiety and uncertainty will have on your people’s productivity and willingness to stay?
Foster a sense of belonging
For years we’ve been advocating for purpose-driven businesses that allow employees to do meaningful work.
At a time when employee distrust of government and media are at an all-time high, purpose-led businesses can stand out by offering employees a sense of direction and consistency when so many factors outside work life can’t.
Add to this a global movement calling for leaders to proactively work towards diversity, equity and inclusion, and what we have is a keen appetite for employers to provide in an environment committed to cultivating both physical and psychological safety.
Offer holistic support
Finally, during the pandemic, practical support for employee health and wellness became a top priority, with more and more businesses challenged to have vulnerable, open and candid conversations about mental health and burnout at work.
To stay ahead, employers need to think creatively about how to use what limited budget they have to stretch the financial, physical and emotional support they offer their people.
Employers need to be the ones to make the decision on when and how they can give that support to them, or risk losing their top talent that helped them thrive throughout the pandemic.
If you’re looking for new ways to avoid the cost of employee churn and keep your star players well into the future, the team at Reward Gateway can help you.
Sign up for a 1-month free trial of Reward Gateway for Small Business, and we’ll show you how we can help your company attract, engage, and retain great talent.