Turnover is an ongoing challenge for organizations. It can increase operational costs, impact productivity, lower morale, and detract from the bottom line.

Consider this: replacing a full-time employee can cost from half to 2X that employee’s yearly salary, which includes the cost of recruitment, training, and inefficient operations. Even replacing a part-time employee can have a significant time and monetary impact.

In 2023, with continued economic turmoil, persistent inflation, and lingering post-pandemic effects on the hiring landscape, it’s more crucial than ever for companies to prevent ongoing employee turnover.

What’s behind rising employee turnover?

Before you can take steps to mitigate employee turnover, you need to first understand what’s prompting workers to leave.

Pre-pandemic, an annual average of 31.9 million employees quit their jobs—that rose nearly 20% (to 37.4 million) in 2022 according to Gartner.

While we don’t yet know how 2023 will compare to 2022, we do know these are among the biggest drivers of increased turnover the past few years:

  • Low pay. A McKinsey study highlights that inadequate compensation is the top reason 36% of employees quit. More than ever, attracting and retaining top talent rests on offering competitive pay. Especially during these times of record inflation. With the cost of living now higher, many workers will head for competitors or even jobs in other industries if it means a better wage.
  • Lack of flexibility. According to a 2022 Gartner survey, 52% of employees said flexible work policies would impact whether or not they remain with their current employer. Today’s workers want work-life balance, especially in the work-from-home era. From numbers of days off to maternity leave policies to overtime and flex schedules, employers who offer benefits that align with worker expectations will come out ahead.
  • Feeling underappreciated. Inc. found that a failure to recognize work performance is 2.9 times more important than compensation in predicting employee turnover. A little recognition can go a long way toward letting workers know you value their efforts and view them as a crucial member of the team. Acknowledgement costs a lot less than backfilling an open role.
  • Lack of growth opportunities. 41% of employees in a McKinsey study cite lack of career development or growth opportunities as their top reason for leaving their job. Today’s workers want to be challenged and feel like they have the chance to be promoted, earn more money, or take on new roles as their interests change. If it becomes apparent that they’re in a job that lacks advancement opportunities, they are likely to look for a new employer.
  • Work culture. Pay, flexibility, recognition, and growth are all part of the larger overarching umbrella of work culture. Today’s workers have more employment options than ever. If they feel that work culture is toxic, demonstrates a lack of respect for employees, or promotes unethical behavior, they will not hesitate to leave in search of a more positive environment.

5 tips for increasing worker retention

As an employer, once you’ve hired the right employees your work isn’t over. Just because a candidate becomes an employee, it doesn’t mean they will stay.

The first year of employment is rife with voluntary exits, especially at the beginning—two out of three employees who leave in the first year do so in the first six months. You have a short window to show new hires that your company is the right place for them.

It’s harder than ever to attract talent, so don’t let your hard work go to waste. As you look to increase employee retention in 2023, these 5 tips can prompt workers to stay.

  1. Re-evaluate pay scales. The cost of living has skyrocketed. Inflation continues. To retain workers in 2023, you have to stay on par with the wages your competitors are offering. Both competitors within your industry, and those in other industries who hire workers with similar skills.

    To ensure your pay scales reflect reasonable ranges without over- or under-valuing what a position is worth, do your research. If you operate in a hot regional market, pay close attention to local salaries listed for similar roles. If you operate countrywide, consider what the same positions go for in different states, but be sure to adjust for cost of living in your area. Look online, drive around to see if signs are posted, even check the newspaper. Wherever jobs are advertised, that’s where you want to look.

  2. Create defined growth paths. While every role has a unique trajectory, those filling a role want to know there’s the potential for them to “go somewhere”—whether that means staying in the same position and taking on more responsibility, advancing to a managerial position in the same department, transitioning into a new role in a new department, or creating new processes for those who come after.

    Career growth also means investing in ongoing training and education opportunities. Think about what career advancement means for a worker, and provide that to them, so they can see a future with your company and know you’re invested in their long-term success.

  3. Revamp your onboarding. The onboarding phase sets the stage for an employee’s experience with your company. It’s crucial to new hire retention, yet still overlooked at many organizations. Less than 47% of HR leaders say their onboarding program successfully retains new hires.

    That’s why it’s time for an onboarding overhaul. After all, a strong onboarding program improves new hire retention by 82%. So where do you start? Begin by taking paperwork out of the equation—have new hires complete all forms before day 1. Set up informal welcome meetings with their direct team, with no expectation other than having them get to know one another. Assign a mentor who can answer their questions about company policies and rules, and show them the ropes. Pace out training to avoid overwhelming them and ask them what they need via weekly check-in meetings.

  4. Focus on job flexibility. Whether salaried or hourly, today’s workers are looking for better work accommodation. Depending on the job and the industry, additional flex time and flex hours, more paid time off, added breaks, revised overtime protocols, and the ability to work from home in some capacity could all be important to a job candidate.

    Take a step back to assess your existing work policies to see where there might be room for greater flexibility. A competitor with a similar job posting in the same pay range may win out simply because their work processes and expectations are seen by a job seeker as more aligned with achieving better work (and work-life) balance.

  5. Embrace employee recognition. Workers want to feel appreciated, seen, and valued, regardless of industry or role. Celebrating an employee’s achievements or acknowledging outstanding efforts shows that they are more than a timesheet or cog in the wheel, and that their contributions are not taken for granted.

    Look to create a culture of support, one that champions your staff and sets the precedent for a positive work experience. Existing workers will be less likely to leave if they feel they matter, and candidates will see that your organization feels every role matters. It could be as simple as sending an informal company-wide email every Friday to recognize high performers, or as formal as an official employee recognition program with benchmarks to reach, coworker nominations given, and awards handed out.

While we know each of these tips will help you on the road to increased retention, the right salary is especially important when it comes to attracting and retaining workers. To learn more about how salary impacts the open roles you’re looking to fill, download our just-released 2023 Salary Guide today!