8 Strategies to Lower your Turnover Rate

by Katie Sawyer, 10 minutes read
HOME blog 8 strategies to lower your turnover rate

8 Strategies to Lower your Turnover Rate

What is a Turnover Rate?

A turnover rate is a percentage used to understand how many employees quit or left a business over a certain period of time. Keep in mind that an employee doesn’t necessarily have to quit or be terminated to be included in the turnover rate, employees that retired are also included as well as anyone else that left for other reasons.

Why it’s so Important

In order to keep your business running like the well-oiled machine that it is, you’ll need a strong team of employees that are willing to go the extra mile. Not only that, but you need to make sure that they are there for the long haul and that your business isn’t a constant revolving door of employees coming in and out.

That’s why you need to invest some serious time and energy into implementing strategies that will help to lower your turnover rate and ensure that your team is here to stay.

That said, keeping a low turnover rate is no easy feat. Industries with hourly workers are notorious for having a high turnover rate and it’s especially prevalent in restaurants. One reason why these industries are so prone to high turnover rates is because they make it hard for their employees to receive their schedules and swap shifts with one another, which will have them looking for a new postion before you know it. To make sure this issue doesn’t persist, click on the button below to begin your free trial of Deputy


Negative effects of a High Turnover Rate

  • Managers frustrated from having to spend even more of their time on recruiting.
  • Having to constantly train new employees.
  • Develop a bad employer brand.
  • Low employee morale.
  • Lower productivity due to constantly having new employees that need training.
  • Lower profits

Businesses Most Affected by High Employee Turnover

  • Restaurants
  • Hospitality
  • Healthcare
  • Retail Businesses
  • Technology

Now that you have a better understanding of the negative effects high turnover can have on your brand, along with the industries most affected by it. Let’s take a look at how you can calculate your business’s turnover rate so you can get a better sense of the work that needs to be done.

How to Calculate Turnover Rate

Knowing your employee turnover rate is crucial for running a successful business. A few examples of the benefits of knowing your exact rate include

  • Understanding if your turnover is higher or on par with your industry standard.
  • Seeing if any changes in your hiring caused any drastic effects on your rate of turnover.
  • Knowing if any recent policies may have caused people to leave.

With some of the benefits clearly laid out for you, let’s now take a look at the formula. Don’t worry! There’s nothing too crazy here, just a very straightforward math problem.

Turnover Rate by Month

First, take the number of employees that left that month and divide it by the number of employees you had for that month. Then multiply it by a hundred to get the monthly turnover rate.
Take a look at the formula below to get a better visual.

8 Strategies to Lower your Turnover Rate

Turnover Rate by Year

You’re going to want to come up with the exact number of employees that left your business after less than one year of employment, then divide that by the total number of employees that left in that same year. As seen in the formula below:

Now that you understand how to calculate your business’s turnover rate, let’s take a look at the 8 best strategies for lowering it.

8 Strategies to Lower your Turnover Rate

1. Hire the Right Person in the First Place

This one may seem like a no-brainer, but you’d be surprised by the number of managers that are willing to hire anyone that throws in an application. Although this may be good for a quick fix, it will inevitably lead to recruiting employees that aren’t a good fit for the position.

It’s understandable that many industries that rely on hourly workers don’t feel like they can be as picky as other fields due to the type of work that’s involved, but you’d be surprised by the improvements that can be made within your workforce when you’re willing to take charge and make adjustments to your hiring.

Some adjustments that can benefit your recruiting involve:

  • Test for Learning and Analytical Skills. (This is where pre-employment assessment tests come in handy.)

  • Check for a culture fit by making half the interview a group interview with a few of their would-be co-workers to see if they can get along.

  • Ask questions to see how they would handle very job-specific situations. (Ex: How do you respond to a customer that is being rude and argumentative with you?)

  • Always call or email references to get a better understanding of their work ethic and how they respond to pressure.

2. Make Work Fun

We understand that you run a place of business and that you expect your employees to focus on their jobs, but you need to understand that employees aren’t machines and need to blow off some steam in order to avoid burnout. It’s also great for helping employees take pride in their workplace and for encouraging them to work hard and see their company as an extension of themselves.

That’s why you should put some work into implementing techniques for making sure that employees have a good time at work every now and then. Some of these strategies include:

  • Start traditions with your team that boosts their mood. This can be free pizza once a month, a company outing to a restaurant every quarter, etc. When it’s a company-specific tradition, this aides in helping employees feel like they’re apart of something bigger when they come to work, versus just clocking in & waiting to clock back out.

  • Celebrate holidays by offering employees gifts and/or food. You should also celebrate an employees birthday by getting them a signed card along with some cupcakes for the team.

  • Put up some decorations in the work areas (where customers can’t see!) to brighten the employees’ mood and to make them feel more at ease.

  • Compliment an employee each day. Positive affirmation has a big impact on people’s moods, especially when they’re at work. Try to give at least one compliment to a different employee each day so that they feel more appreciated.

3. Allow for Flexible Schedules

When you run a restaurant or some other retail business that involves hiring a lot of hourly workers, it’s to be expected that your employees are balancing their work schedules with school, a second job, etc. So you should make adjustments so that your employees are able to work schedules that don’t interfere with the other parts of their life.

Keep in mind that a large aspect of having a flexible schedule is giving employees the ability to designate when their unavailable, as well as the ability to trade shifts whenever they’re in a situation where they need to.

The best way for employers to tackle this is by using an all-in-one software solution that allows their employees to easily: show when their sick, when they’re planned to go on vacation, switch shifts with employees, send messages to the entire staff if an emergency comes up and they can’t make it to work, as well as a number of other tools. To learn more, visit Deputy.com to get a better look at the features that work to free up your managers’ time.

While it may be hard for certain businesses to offer flexible schedules, even something as small as letting them choose between the closing and opening shifts isn’t very common in hourly industries and can be the very reason why they would choose to stay and work for your business versus working for someone else.

4. Offer Competitive Pay and Benefits

You knew this one was coming.

If you’re serious about lowering your businesses turnover rate, you’re going to have to show it by offering a competitive wage to your employees. Although money is often tight, especially with small businesses, it is a necessity if you want to attract the type of employee that is less likely to leave.

8 Strategies to Lower your Turnover Rate

That said, don’t feel like you must go bankrupt in an effort to offer better wages, you’ll find that offering just a few dollars over the minimum wage in your area would do wonders in bringing in quality restaurant staff.

In addition to a competitive wage, you should also look at offering benefits to your employees in the form of health insurance. It’s understood that health benefits for employees are very costly and should be thoroughly considered before a final decision is made, but it should also be known that an employee would be MUCH less likely to leave their company if it meant that they would also lose their insurance.

5. Show how they can Grow in the Position

Being stuck in one place for too long will drive any employee crazy, especially when they’re in an environment where they’re not seeing any of their co-workers move up in the company.

That’s why it’s important that you promote internally and demonstrate to your employees how they can advance themselves by working hard and being consistent in their efforts.

Even when there aren’t enough management positions to go around, you can still give employees more responsibility as they progress to show them that they’re making an improvement.

You should also go the extra mile by providing them with coaching and training opportunities to give them the chance to learn new skills that would be helpful in advancing themselves.

6. Recognize and Reward Specific Employees

We touched on this a bit before but it’s worth diving more into.

When you have an employee that is consistently going above & beyond, it’s important to take the time to single them out and recognize the contributions they’ve made to help their company and fellow employees.

This is most often found in the form of “Employee of the Month” awards that are given to the employee that has shown the most improvement or given the biggest effort each month.

8 Strategies to Lower your Turnover Rate

These awards work to give employees the positive affirmation they strive for and works to show the other employees that their efforts are recognized and noted by the employer.

Just make sure to attach the award with an actual gift to really show your appreciation, but don’t feel like it has to be anything crazy. A simple $20 gift card to their favorite restaurant would do just fine.

7. Engage with your Employees

In most cases, the business owner isn’t the one that understands the problem that’s causing so many people to leave, and neither does the manager. The employees are the ones that are in the trenches and understand what’s causing so many people to leave.

That’s why it’s so important for managers and owners to constantly engage with their employees to gain a better understanding of how they feel about their work along with getting them to identify any areas that need improvement.

The best way of getting feedback is by:

  • Scheduling time to get individualized feedback from each employee once a quarter.
  • Taking the time to engage with small talk with employees throughout the day, so that there are more chances to identify any frustrations that are giving them trouble.
  • Having a suggestion box so that employees are able to let you know of any issues in the workplace while staying anonymous.
  • Sending them a message privately so that they can respond when it’s convenient for them. A scheduling software platform like Deputy is great for handling all of your management related tasks like sending employees private message whenever you need to.

8. Analyze your Best Employees

In analyzing your best employees, you gain a better understanding of the qualities to look for when recruiting, as well as the hiring strategies that could have caused their successes.
For example, if you recently implemented an online lesson plan to train employees and notice that the employees that were trained online are doing better than the ones that were trained with the old instructional video you used in the past, than it’s safe to say that you should get rid of the old video altogether and stick to using the online lesson plan for onboarding purposes.

Closing thoughts

You need great employees to run a great company, that’s why it’s so important for you to understand what’s causing your staff to leave, as well as how to improve on it.Make sure to calculate your employee turnover rate, as well as understanding the strategies to best lower it, in order to build a team of staff that are there for the long haul.

Along with that, you’ll need an effective employee scheduling platform that makes it easy for your staff to receive their schedules and easy for your managers to create the schedules if you really want them in for the long haul. To help you out with that, click on the button below to begin your free trial of Deputy.

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