Employee turnover is a major concern for all businesses big or small. Why, because retaining employees is as significant as finding them and hiring them. In the process of employee turnover, the company loses knowledge and incur loses when rehiring a new employee. But what is Employee turnover really and do salaries help reduce employee turnover?
Employee turnover is the loss of talented or experienced workers in an organisation.It can either be voluntary or involuntarily. This includes retirement, resignations, terminations, and departures. It is often calculated to predict its impact on productivity in business. A study by Marcel Schwantes{2018} says that sixty percent of the employees have quit or are considering quitting right now. But is money the main reason why? Money does matter, but it is all. No, salary does matter but to a smaller extent. Salary has, in fact, a small effect on the decision to leave. People also look for opportunities for professional growth, recognition of good performances and job security in a company.
Although money is not the main reason for employees high turnover rate, it is still an important factor. Their pay needs to reflect the hard work and effort they put into their jobs. Employers also need to take into consideration the cost of living for their employees so that they do not feel the need to look for better-paying jobs.
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A number of studies by Evidence-based practitioners on the causes of employee turnover from different industries revealed that pay has only a small to moderate negative effect on employee turnover. It means that if people are leaving, giving them a raise will only work to a limited degree and those who are paid less are only a little more likely to leave than if they were paid more. It revealed that benefits like scholarships, paid time off and development opportunities have more impact on employee turnover than money.
The business needs to invest more in their employees so that they feel valued and will remain loyal to the company. The company should also learn to compensate and rewards its employees for their success in the business as this will also help to increase their loyalty. This, in turn, will help a lot more in reducing employee turnover.
Although money might not be the main reason for high turnover, make sure you pay your employees a fair wage that is proportional to their worth. Doing so will ensure your employees will not start searching for better job opportunities elsewhere.
Keithley Tongai is a Consultant intern at Industrial Psychology Consultants (Pvt) Ltd, a business management and human resources consulting firm.