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Small Business Employee Benefits and HR Blog

4 Small Business Employee Turnover Myths

April 1, 2014
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As a small employer, you have likely found yourself asking, how can I lower the rate and cost of employee turnover? In the same breath, you've probably asked yourself how turnover is affecting your business and how you can control it.

These are common questions for small business owners and sometimes the answers are not always as difficult as they initially seem. Employee Turnover Myths

Offering a fresh perspective on the topic of employee turnover, we have collected four myths and rebuttals about small business employee turnover.

Myth #1: Low employee turnover is ALWAYS a good thing

Rebuttal: While lower turnover is generally better than higher turnover, it is not always the case.

A strong and growing organization is one that has direction. In hiring, strong organizations have a clear idea of what the ideal candidate will look like. They interview and recruit in hopes of finding the candidate that will help drive business results with common direction, vision, and strategy.

But, mistakes in hiring happen all the time. As you work to hire the right employees for your team, don't be afraid to hire fast and fire fast

There are a number of reasons why low employee turnover can be harmful to your organization. Unmotivated or unskilled workers, too high of pay, and complacency can also be a recipe for disaster. No matter the reason, low employee turnover is not always a good thing.

Myth #2: You should always hire external candidates to fill the gaps

Rebuttal: Studies suggest that hiring from within has it's benefits. While there certainly are positions that require an external candidate with specific knowledge and expertise, many positions can be filled by internal hard-working and intelligent employees. We are in an age where information is easily accessible and the thought of learning skills relevant to various jobs (via the internet) is not unheard of.

Invest in the learning and capabilities of your employees to reduce employee turnover among your most valued employees. Set aside time in their schedules, or make the acquisition of technical skills an objective for the year. These types of programs can help encourage the development of your employees, and prepare them for promotions or transfers to new departments. Investing in employees' growth also makes employees feel valued, ultimately leading to lower turnover.

Myth #3: In today's market, small businesses can’t compete to retain or recruit the best talent

Rebuttal: I cannot stress enough how misleading this is. Finding the qualified and preferred talent isn’t necessarily about whether the organization is a 10 person operation or a Fortune 500. It is more about the company culture and becoming a coveted Employer of Choice.

Simply put, if you want to have qualified and preferred talent working for you, become a qualified, talented, and preferred organization to work for.

There are multiple ways for small employers to become an Employer of Choice.

  • As discussed in rebuttal #2, focus on employee growth and engagement. Give employees the opportunity and the resources to engage, learn, and excel.

  • Foster and encourage an open dialogue of thought.

  • Provide experiences that encourage motivation in the workplace, and watch the results drive themselves.

  • As employees feel valued, turnover will decrease. The higher levels of employee engagement, the higher levels of revenue growth -- much lower levels of employee turnover.

Myth #4: It's not possible to control employee turnover

Rebuttal: If you haven’t noticed by now, there is a common theme among these employee turnover myths and rebuttals - show your employees you care. Turnover is controllable and there isn’t just one right way to manage it. But the first step to controlling employee turnover is being able to measure it and having a plan of action.

Recently, we outlined tips for employee retention, including:

  • Benchmark your employee retention rate

  • Use proven retention strategies, not guesswork

  • Don't assume employees are happy (create a high-feedback environment)

  • Implement a health benefits program such as a traditional health plan or defined contribution health benefits (aka health insurance allowances)

  • Provide different benefits for different employees (focusing on the high-value, expensive to replace employees)

  • Conduct exit interviews to understand which benefits employees value, receive feedback on the culture, and identify areas for improvement

These four myths aside, it's important to take the time to create a culture that is desirable to your key employees, and has a significant impact on the quality of work your company produces, the types of talent your company recruits and retains, and most importantly, has a positive impact to your bottom line.

See related article: Employee Retention - The Real Cost of Losing an Employee.

What employee turnover myths and rebuttals do you have? Leave a comment below.


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