Despite a competitive job market, high turnover is a problem that many companies continue to face. While some C-Suite executives view high turnover as a necessary evil, others seek to find the root cause and actively work to encourage positive change. Depending on the industry, high turnover can have a variety of causes, but company culture has been found to have a greater impact on turnover than previously thought.
Aside from damaging a company’s reputation, high turnover can also impact a company’s bottom line. It is associated with added expenses related to recruiting, hiring, and onboarding new employees. For this reason alone, increasing employee retention is a worthy goal for any company that wants to remain competitive in the marketplace.
Here, we take a look at how company culture can contribute to high turnover and how C-Suite executives and other decision-makers can foster positive change in their organizations.
What the Data Says
Losing employees means more than just finding a suitable replacement: it can be quite costly. According to an Employee Benefits News study, when an employee resigns, it costs the company over 30 percent of that person’s salary. Even for entry-level employees, where turnover seems to be more prevalent, these costs can quickly add up.
For small or mid-sized companies, this could eventually lead to a financial crisis. Much research has been done to identify the top causes of employee turnover. Company culture has been repeatedly cited as the main contributor.
Company culture can be defined in many ways, and the definition varies among industries. Generally, company culture correlates to the overall mission and values set forth by the company’s founders. As times change, these values likely change and are often influenced by employees.
The problem lies in when the company’s core values don’t align with the individual or group values of the people who keep the company running smoothly. Having a lackadaisical approach to cultivating company culture can spell disaster and will likely lead to high turnover.
Some of the top company culture-related turnover problems include:
In the TINYpulse Employee Retention report, it was revealed that poor management was a major influence on workers' decision to terminate their employment. Employees who elected to read leave their employers noted that management was not held to the same standard as subordinate employees. This widened the divide between entry-level workers and upper and mid-management professionals.
Lack of Recognition
Being recognized for your efforts is appreciated by everyone, and many employees cite their employer’s disregard for their effort as a major factor in their decision to quit. According to Qualtrics, employees who are consistently acknowledged by management are five times more likely to stay with a company. Additionally, a TINYpulse survey indicated that more than 20 percent of employees who did not feel recognized had recently interviewed for positions at other companies.
No Room for Advancement
Employees need to know that management is invested in their continued growth and success. Stagnant career paths contribute significantly to employee turnover. According to advisory and risk-management firm Wills Towers Watson, over 70 percent of employees at risk for turnover indicated they feel forced to look for employment elsewhere due to lack of advancement opportunities with their current employer.
These are just a few of the more common contributors to employee turnover. Others include lack of trust between management and subordinates, little regard for work-life balance, and resistance to remote work opportunities.
Key Indicators of Healthy Company Culture
So how can C-Suite executives change the narrative and reduce turnover? The most important step is to evaluate the company’s core values and see if they align with day-to-day operations.
This information can be gathered via special committees and anonymous surveys among staff. Taking the initiative to show employees that management is actively working to make things better can go a long way in making employees feel valued.
Another thing to consider when evaluating your company culture is work-life balance. More than just a catchy buzz phrase, work-life balance is one of the biggest deciding factors when employees are looking for work.
Of course, companies want highly-skilled employees who exhibit dedication to the company. However, acknowledging that employees are people who have lives outside of work is critical to employee retention. Again, soliciting feedback from employees is one way to identify pain points and come up with solutions.
Upward mobility is also something that C-Suite executives may need to examine. While some employees are dedicated to their employers, others are only there to make ends meet or until a better opportunity comes along.
Increasing engagement is tied to opportunities for advancement and goes beyond asking where a person sees themselves in a few years. Take time to examine the career paths (if any) available at your company and work with HR and management to address any glaring problems.
Be Proactive about Employee Retention
It is evident that company culture and employee retention are closely related, and the best companies to work for understand this connection. Use some of the tips outlined here to take a closer look at the factors that may influence turnover in your company. Knowing what to look for is the first step in fixing a problem that can potentially damage your company’s reputation and bottom line.