High employee turnover hurts your business in many ways. It can lead to low morale in the workplace and affects both productivity and customer service. The process of hiring and training new staff costs in both time and money.
In this post, we’ll look at what the main drivers of staff turnover are, then discuss five tips for how to address this problem in your own office.
The Cost of High Employee Churn
While turnover is inevitable in any business, you’re losing money if you’ve got a high rate of employee churn. It costs an average of 33 percent of an employee’s salary to hire a replacement, says Nick Otto, senior editor at Employee Benefit News. That’s $15,000 for a worker earning $45,000 annually.
Your talent pool suffers because of the loss of experienced employees, explains HR and employee engagement resource Hppy. This can leave your remaining workforce ill-prepared to run your business, with limited knowledge of how to handle customer needs.
It also diminishes productivity and profit, which can be especially troubling for newer agencies still getting established. That’s why it’s so critical to get to the root of turnover and do everything within your power to increase employee retention rates.
Top Reasons for Staff Turnover
There are three main issues that motivate employees to leave, with the biggest being bad boss performance.
“[Forty] percent of employees that don’t rate their supervisor’s performance highly have interviewed for a new job in the last three months, compared to just 10 percent for those that do rate their supervisor highly,” writes search engine marketer Seth Richtsmeier. “Managers that aren’t kept to a high standard can negatively affect their subordinates and result in high turnover.”
So excessive friction between employees and company leaders is hands down the biggest reason why workers quit.
Next is not being recognized. Richtsmeier also reports that 21.5 percent of employees who don’t feel recognized have explored other job opportunities within the last three months. When team members don’t feel appreciated for their efforts, it often creates resentment, which can drive a wedge between them and their manager.
Third is not having opportunities for career advancement. Richtsmeier points out that 70 percent of high-retention-risk employees feel compelled to leave their current company to advance their career. However, talent management strategist Meghan M. Biro notes that 93 percent of employees are willing to remain with their company when that employer invests in their careers.
Younger workers feel especially strong about career advancement. In fact, marketing consultant Kayla Gutierrez mentions that 87 percent of millennial employees cite professional development as being a key factor in their decision whether to stay with a company.
So to recap, the top three reasons for staff turnover are:
- Bad boss performance.
- Failure to recognize employees.
- No opportunities for career advancement.
5 Ways to Reduce High Employee Churn
Now that we have an understanding of what compels workers to leave, here are five ways to increase employee retention rates.
1. Continually Work to Be a Better Leader
The more you develop as a company leader and the more adept you become at your job, the easier it is to retain top talent. So this should be a top priority.
“Leadership is really about using yourself as an instrument to get things done in the organization,” explains Linda A. Hill, professor of business administration at the Harvard Business School. “The first imperative is you have to manage yourself because to be an effective leader you have to be able to match your intent with your impact.”
It’s all about holding yourself accountable and continually taking steps to improve as an independent insurance agency owner. Serial entrepreneur and cofounder of YoungEntrepreneur.com Adam Toren says it’s vital to keep learning about your industry and team and strive to build your knowledge base. That way you’ll stay in touch with what’s happening and be better able to adapt to inevitable industry changes.
Toren also mentions that you should make it a point to assess how your team perceives you. If your reputation is less than ideal and there’s a glaring issue, you should address it before it escalates. This leads us to the next point.
2. Build Stronger Relationships with Your Employees
A key part of improving your performance as a boss is effectively managing relationships with the people you have formal authority over, Hill explains. It’s crucial that you know how to properly manage your team and develop tight relationships with your employees.
One way to do that is to simply offer more feedback, says marketing writer Vartika Kashyap. Telling team members how they’re doing and clearly defining your expectations plays a big part in building rapport and ensuring you’re on the same page.
There are two main types of feedback: appreciative and formative. Appreciative feedback is positive where you congratulate an employee on a job well done and emphasize the impact their performance has had on the company, explains Eric Douglas, founder and president of the consulting firm, Leading Resources.
Formative feedback is where you offer constructive criticism and highlight specific areas in which employees can improve. The ideal ratio for building stronger relationships is around 5:1 or 6:1, says executive coach Francis Briers. This is the number employees need in order to feel “psychologically buoyant.”
Kashyap also mentions the importance of making yourself available where employees can reach out to you. She points to a Gallup report that finds 61 percent of millennials who are able to talk to their managers about anything plan on still being with that employer a year from now.
Beyond that, it’s nice for your relationships to transcend the workplace where you talk about other interests, adds senior editor of LinkedIn Learning Paul Petrone. Don’t be afraid to discuss things like hobbies, family and aspirations to build rapport. This can help you form multidimensional relationships where you get to know your people on more than the surface level.
3. Be Quick to Praise Employees
Saying “thank you” and giving recognition when due goes a long way to making employees feel valued. A full 58 percent of employees asked cited “giving recognition” as being one of the main things employers could do to improve engagement, writes Alison Robins at employee engagement solution Officevibe.
Treating your employees well is a surefire way to retain top talent, so you should reward them when appropriate, agrees Bennett Conlin at Business News Daily. A little praise goes a long way in today’s workplace, so you’ll want to get in the habit of celebrating employee wins.
Maybe a team member just sealed the deal with a new customer. Take a minute to commend them for their efforts and let them know they’re an asset to your business. Or maybe someone’s been a valued team member for several years and consistently provides your customers with an amazing experience. Be sure they know how much you appreciate their loyalty.
4. Start an Employee Recognition Program
To really show your appreciation, many experts suggest launching a formal employee recognition program. Some of the world’s top companies use this strategy and have seen some remarkable results, says the team at employee recognition platform Bonusly.
And Robins points out that 90 percent of employees say an effective recognition program improves engagement, and 68 percent say that it improves retention.
Head of marketing and employer branding at TalentLyft, Kristina Martic explains that the most effective programs focus on providing employees with honest, authentic and individualized recognition. She notes that there are four specific types of recognition that employees find most memorable:
- Public recognition. Praise an employee’s accomplishments in front of other team members or give them a certificate or award.
- Private recognition. Commend them for efforts behind closed doors.
- Promotion. Offer them a more prestigious position or added responsibility to demonstrate your trust.
- Monetary award. Give them an increased salary or bonus.
The key to creating a winning employee recognition program is personalizing your approach to each individual employee, adds workplace insights analyst Aaron Brown. For example, if someone was a natural introvert and didn’t like to call attention to themselves, it would be best to use private recognition rather than putting them on the spot in front of your whole team.
5. Promote from Within
Finally, you should place a strong emphasis on career development and make an effort to promote from within. With career advancement being a major goal for so many employees, this is an effective way to retain your top talent and build a strong supportive culture.
Founder and CEO of relationship marketing hub Optimove, Pini Yakuel says going this route is ideal because of the emotional attachment an existing employee has to your brand. They’re often more willing to give maximum effort and can use their existing skill set and built-in customer relationships to take your insurance agency to the next level.
Improve Your Bottom Line by Increased Employee Retention
One-quarter of employees nationwide left their jobs in 2018, reports Chastity Fox at Work Institute. But 77 percent of them could have been retained if employers had only put more effort into reducing employee turnover.
The point here is that many workers don’t want to leave just for the sake of leaving. There’s always a reason. And understanding the core drivers behind employee turnover and taking steps to avoid common employer mistakes should help you noticeably increase employee retention rates and ensure consistent growth for your independent insurance agency.
Images by: stockasso/©123RF.com, rawpixel/©123RF.com, langstrup/©123RF.com