Tips for Minimizing Employee Turnover
It is often said that employees are a company’s most important asset. This is particularly true in the retail banking industry where employees regularly interact with the bank’s customers and often are the “face” the institution. Because engaged and devoted employees are so critical to the success of an institution, attention must be given not only hiring, but also retaining the right employees.
A recent study shows that the employee turnover rate in the banking industry is at a ten-year high. This uptick in turnover rate involves both bank officer and non-officer positions. In addition to the general disruption that occurs as a result of high workplace turnover, there can be significant separation costs for the bank. One popular rule of thumb provides that the turnover cost to an employer is approximately 150% of the particular employee’s annual compensation, and up to 200% for managerial or sales positions.
To minimize these financial and non-financial turnover costs, it is important that community banks take steps necessary to retain their most valued employees. Research shows that the following practices can help keep employee turnover low:
- Hire the right employees. When screening applicants, banks should be mindful of applicants that frequently change employment. If an applicant’s job history shows a job-hopping tendency, there is a likelihood that the pattern will repeat itself.
- Maintain an “Open Door” policy. A productive workplace creates an environment where employees feel comfortable voicing their ideas and concerns. Bank management should set the appropriate tone by letting employees know that their thoughts for improving operations and workplace culture are welcome. Opportunities for employees to provide feedback to management is often a hallmark of a happy workplace.
- Conduct retention interviews. Many banks conduct exit interviews when an employee resigns. Rather than waiting for an employee to leave the organization to learn about his or her concerns, bank management should consider conducting annual interviews with employees to obtain information regarding employee concerns.
- Offer employees a path for growth. Not all employees are necessarily suited for management, but all employees can build skills. Bank management should seek ways to recognize such skills and challenge employees to gain even more skills.
- Promote from within. Employees will feel discouraged if they sense there is no room for advancement. When hiring, bank managers often fail to consider that the talent they seek may already exist within the organization.
- Recognize good work. Give employees praise and appreciation. This should be done in front of others. Whether a personalized written note, a positive compliment, or other type of incentive, management should provide recognition to all employees to maintain positive morale. Such gestures let employees know that their unique contributions are recognized and make a difference.
Improving retention rates is not particularly difficult, and does not necessarily require increased compensation. Rather, by creating an environment where employees feel valued and part of a team, your institution can perhaps buck the trend of increased employee turnover.
If you have any questions concerning this or other legal issues, please contact attorney Michael Rowan at 410.825.5223 or firstname.lastname@example.org.