Turnover is costly, but high turnover following the holidays places an extra burden on organizations right from the start of the calendar year.
At certain times of the year, employee turnover is more likely to occur. For example, some employees may leave their job to pursue new opportunities at the beginning of the calendar year. After taking some time away from the workplace during the holidays, employees evaluate their attachment to their organizations, desired lifestyle, and long-term career goals.
For leaders looking to minimize the impact of turnover on an organization, it can be helpful to track and analyze their organization’s turnover data to identify patterns and trends. When you see and understand these turnover patterns, you can implement effective strategies to improve retention in your particular context. Retention efforts include offering competitive salaries and benefits, providing ongoing training and development opportunities, and creating a positive work culture.
Research suggests that job dissatisfaction and unclear career pathways are two of the leading causes of employee turnover. When performance conversations only happen once per year, employees may go into the holiday season lacking clarity on how to advance in their roles, experiencing increasing levels of disengagement. Pando can help.
The cost of turnover in an organization
Turnover, or the rate at which employees leave an organization and are replaced by new hires, can be costly for several reasons. Some of the costs associated with turnover include:
Recruitment and hiring costs: These include the cost of advertising job openings, screening and interviewing candidates, and conducting background checks.
Training costs: New hires require training to become familiar with their job duties and the company's policies and procedures. This can be time-consuming and costly, particularly for positions that require specialized skills or knowledge.
Lost productivity: When an employee leaves, there is often a period of time when the remaining team members do additional work to pick up the slack, covering for the vacant position. This can lead to decreased productivity and reduced efficiency.
Decreased morale: High turnover rates can lead to decreased morale among remaining employees, who may feel overworked or uncertain about the stability of their job.
Damage to the company's reputation: High turnover rates can be seen as a red flag by potential employees and customers, damaging the company's reputation.
To minimize the costs associated with turnover, organizations may invest in employee retention efforts like competitive salaries and benefits, training and development, and creating a positive work culture.
According to a 2019 survey by the Society for Human Resource Management (SHRM), the average cost to replace an employee is about 21% of their annual salary. This calculation includes direct costs such as recruitment, hiring, and training, as well as indirect costs such as lost productivity and the impact on morale.
For example, if an employee earning $50,000 per year leaves the company, the cost to replace them could be approximately $10,500. This calculation is based on the assumption that it takes about six weeks to fill a vacant position, and it includes the cost of advertising the job, screening and interviewing candidates, and providing training to the new hire.
Retention through career pathways: a remedy for turnover
Frequent performance conversations, in which employees receive feedback and guidance on their performance, can also help with retention. These conversations provide employees with the opportunity to discuss their goals and aspirations with their manager and receive support and guidance in achieving them. Employees who feel that their contributions are recognized and valued are more likely to stay with the company.
In addition, career progression pathways and performance conversations can help to create a positive work culture, which is a key factor in retaining employees. When employees feel that they are valued and supported by their employer, they may be more likely to stay with the organization.
January has the highest attrition rate of any month of the year. Don’t let a lack of clarity related to career progression contribute to this decision. Build organizational trust and employee commitment.
Career progression pathways and frequent performance conversations can be effective tools for improving retention by helping employees to feel motivated, valued, and supported within the organization.
Connect with Pando for a demonstration of how our product can help retain your top talent through clear career progression pathways and provide your managers with tools for supporting the career development goals of your employees.