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BFS Capital Blog

How to Reduce Employee Turnover | Human Resources

September 10, 2013

Turnover is back. We saw less of it during the economic downtown. But as you’ve probably noticed, employees are changing jobs again. But there are things employers can do to keep turnover to a minimum.

Turnover—having to hire new employees to replace those who leave—is a drain on your small business. It’s expensive. It’s always more cost efficient to keep an established employee (assuming you want him or her to stay) than to hire a new one. It’s costly to recruit, onboard and train new people. It’s time you could spend doing other, more productive things, and there’s a certain amount of downtime involved while the new hire gets up to speed. Employee comings and goings can also be disruptive to others as they fill the gaps left by an open position(s) and wonder how the new guys will fit in.

It’s debatable, especially in smaller businesses, whether or not some turnover is inevitable. Regardless, you need to be taking steps to minimize it. For starters, there are some basics your employees want and expect as part of the unspoken, or implied, employment contract. When employees feel they are active, valued contributors to the business and that you’re dealing with them forthrightly, reasons for leaving dwindle and disappear. Do you routinely incorporate these attributes/principles into daily life in your business?

    • Acknowledgement and/or reward


    • Clarity


    • Communication


    • Consistency


    • Directness


    • Engagement and involvement


    • Empowerment


    • Fairness


    • Growth opportunity


    • Investment (you in them)

Mediator and conflict coach Vivian Scott advises small business owners to look in the mirror when analyzing employee turnover and ways to reduce it. She suggests looking at everything from how you interview and hire—Are you doing all you can to really engage candidates and involve other employees in the process?—to how you manage (lightly) and reward good performance (often) to how you handle problems (immediately). One especially great piece of advice: Once they’re hired, let employees do their jobs! Too much supervision/control and decisions by committee are real motivation killers and will have your employees checking the employment ads in no time.

Trainer and mentoring expert Elise Wile offers five steps for investing in your employees and creating a workplace they will never want to leave.

    1. Re-tool your hiring practices. Hire for skills, for personality and for cultural fit.


    1. Make a positive environment. Cut down on stress to help avoid dissatisfaction and depression among employees and keep them from wanting to look for another job.


    1. Keep pay and benefits competitive. Even the smallest businesses can add popular perks like flex-time, telecommuting and pets at work. Employees won’t be able to replicate these in most other jobs.


    1. Is your business company-centered or employee-centered? The latter tells employees you’re glad to have them, not that they are lucky to have a job with you. Big difference.


    1. Offer professional development. Everyone likes a challenge and learning new things. Employees will be more highly skilled, and you’ll be sending a clear sign that you’re making a continuing investment in your people.

YFS Magazine says retention is all in the culture you create:

Employees thrive when they have passion, autonomy and a sense of being validated and appreciated…Employees want to feel personally motivated, passionate, and acknowledged for the difference they make on an ongoing basis.

You’ve heard this before: It’s not all about money. Making individuals feel validated and empowered is an equally or more powerful incentive.

It’s anybody’s guess where the employment picture is headed. How will the employee skills-employer needs mismatch shake out? And what will happen when the serious, predicted labor shortages hit in the future? One thing’s certain: Competition for good people will be intense; hanging on to them will be a top priority for business owners who’ll need an arsenal of creative solutions for acquisition and retention.

It will pay off to start implementing these now. (The Business of HR) lists 10 tips for reducing turnover. Among them: Get input from employees on everything, including how the business should operate, provide regular feedback, offer “unusual” perks and benefits, and create meaningful employee experiences. Check out the whole list here.

Image courtesy of Grant Cochrane /

How are you keeping good employees? Tell us what’s been working for you to reduce turnover.