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As a small business owner, your staff are crucial to the smooth running of day-to-day operations, in which disruptions can have a big impact. Reducing staff turnover rate is vital to preserving valuable resources as well as fostering a positive working environment within your company. Therefore, knowing how to keep staff turnover low is essential.
Below, we’ll guide you through what a staff turnover rate is and how you can keep it low in order to ensure maximum growth for your small business.
What is staff turnover?
Staff turnover is the number of people that leave your company and need to be replaced. Your staff could leave for several reasons, from low job satisfaction to lack of opportunities for progression or a wrong cultural fit.
Staff turnover also encompasses employees that are removed from the business e.g. being let go after a probation period or being fired by a manager. It does not, however, cover situations such as redundancies or where a job role has been rendered as not needed anymore.
Why is staff turnover a problem for small businesses?
In a small business, your resources are highly valuable and should be used carefully. Unlike medium to large organisations, small businesses often don’t have the luxury of an HR team, meaning it can be incredibly time-consuming to recruit. Some of the issues a business can face when dealing with a high staff turnover rate include:
Cost of hiring
Without a large HR team in place, many small businesses have to spend a considerable amount of time placing ads on large job board websites or outsourcing the hiring process to a recruitment company. When your employee turnover rate is high, you will encounter these costs frequently and it can hit profits.
Cost of training
When hiring a new staff member, your small business has to spend a considerable amount of time and budget on training up the new staff member. Investing in a new employee is only beneficial if they are with your company for the medium to long term.
How to calculate your staff turnover rate
By calculating your staff turnover rate, your business will be able to keep track of how many employees are leaving and when. This will enable you to work out the reasons for your high staff turnover rate and put measures in place to reduce it.
According to Ceridian, the average staff turnover rate in Australia in 2020 was approximately 8.2%. In the September-November period, job openings jumped almost a fifth or 18.5% from the previous three months to 396,100. With the hospitality and retail industry experiencing the highest turnover and vacancy rates due to a shortage of international workers.
You can calculate staff turnover rate using the following steps:
- Divide the total number of leavers in a year by your average number of employees in a year.
- Times the number by 100.
- The total is your annual staff turnover rate as a percentage.
How to reduce employee turnover rate
You can reduce your employee turnover rate by taking the following steps:
Offering staff incentives to stay with your business will make them less likely to seek out a new role. Examples could include increased leave entitlements per year of working, mental health days and flexible working arrangements.
Internal communications and company culture
Ensuring a positive employee company culture and effective internal communications will increase the wellbeing and happiness of your employees, making them less likely to leave.
Offer professional development
Offer access to training courses or funding towards your staff pursuing additional qualifications or higher education.
Improve team management
Effective team management will increase the likelihood of your staff staying for the long term. Consider sending your staff on management courses in addition to getting them certified as mental health first aiders where possible.
Revisit your hiring process
A poor hiring process could leave new employees disgruntled from the beginning. Ensure you have an effective hiring process and onboarding routine in place that fosters a positive employee culture from the get go.
Exit interviews enable your business to get to the bottom of why employees are leaving and put measures in place to prevent it from happening again in the future.
By using an employee management software like Square Team Management, your small business could save valuable time while gaining more control over the employee management process. With features such as automated shift scheduling, you could cut out the manual work and spend more time implementing a positive employee culture that reduces the staff turnover rate.
This article is only for educational purposes and does not constitute legal, financial or tax advice. Make sure you consult a professional regarding your unique business needs.