BUSINESS COMMENT
COAST RIVER BUSINESS JOURNAL
MARCH 2022 • 13
Avoiding the high cost
of employee turnover
By Jessica Newhall
THERE ARE A
LOT OF COMPLEX
FACTORS THAT
HAVE LED US TO
THIS POINT, BUT
THE BOTTOM LINE
IS THERE ARE
SIMPLY MORE
JOBS AVAILABLE
THAN THERE ARE
WORKERS. ADDING
TO THIS, AS COVID
RESTRICTIONS
EASE AND
BUSINESSES
REOPEN AND
EXPAND SERVICES,
THE DEMAND
FOR WORKERS
WILL LIKELY ALSO
RISE. THE RESULT:
EMPLOYERS ARE
GOING TO HAVE
TO AGGRESSIVELY
COMPETE FOR
EMPLOYEES — AND
THIS DOESN’T JUST
MEAN FOCUSING
ON ATTRACTING
NEW EMPLOYEES.
Clatsop Community College
Small Business Development Center
“Where have all the workers gone?”
If you own or manage a business or organiza-
tion that relies on employees to operate, this ques-
tion is likely repeating in your head.
Recent Bureau of Labor Statistics data reports
that in 2021 on average over 4 million people per
month quit their jobs — compare that to a decade
earlier when just under 2 million people per month
quit in 2011. In fact, we have experienced the
greatest decline in over four decades.
There are a lot of complex factors that have led
us to this point, but the bottom line is there are
simply more jobs available than there are work-
ers. Adding to this, as COVID restrictions ease
and businesses reopen and expand services, the
demand for workers will likely also rise. The result:
employers are going to have to aggressively com-
pete for employees — and this doesn’t just mean
focusing on attracting new employees. A lack of or
poor strategy for keeping the valuable employees
that you have now can be a big and costly misstep.
March 4 was Employee Recognition Day. If
you didn’t get a chance to celebrate your employ-
ees on this day, pick a day soon to do so — because
your existing employees are your organization’s
greatest asset. Voluntary turnover, or an employee
choosing to leave for another opportunity, can be
extremely costly for your organization — espe-
cially when you consider that existing employ-
ees are one of the few assets that appreciate the
longer you have them. Studies show that replac-
ing an existing high-performing employee can cost
upwards of one-half to two times the employee’s
annual salary, not including the intangible expense
of morale issues among remaining employees or
loss of customers as you scramble to û ll gaps. So,
as you consider your retention strategy, here’s a
few things to consider:
• Communication: When was the last time
you asked your employee about their job satisfac-
tion and what might keep them around? Accord-
ing to Gallup r esearch, 52% of voluntarily exiting
employees say their manager or organization could
have done something to prevent them from leaving
their job. Make time to meet with your employees
one-on-one, even casually!
• Compensation: While not the only driver of
retention, you should know what your employ-
ee’s likely alternative compensation may be. This
doesn’t mean just looking at what your competi-
tors are oû ering. It means understanding the value
of your employee’s skills and where they could
go beyond your industry. For example, a high-
value retail or customer service hourly employee
may have skills that will qualify them for a sal-
aried and beneû ted position in an entry-level
administrative role at a larger employer. While you
may not be able to directly meet that compensa-
tion, you may be able to explore alternative incen-
tive programs such as proû t sharing or paying a
beneû ts stipend 4 or for very valuable employ-
ees, oû ering fractional ownership in the company.
• Work environment: Higher compensation
likely will not overcome a poor work environment.
Employers with the mindset of “my employees
should consider themselves lucky to have a job”
will likely be hanging out the “Hiring Now” sign
more frequently. Owners and managers are respon-
sible for setting the tone and ensuring that the work
environment is one where employees feel recog-
nized, engaged, supported and safe. Failure to do
so will lead to higher turnover, and at worst, can
lead to more costly challenges including litigation.
• Your management style: The days of top-
down, authoritarian leadership are gone. As boom-
ers retire and millennials and the younger gener-
ation move up, the expectations are for a more
inclusive, diverse and collaborative work environ-
ment. This can be very challenging for small busi-
ness owners who see themselves as the “owner”
and the employees as “workers.” If this is a prob-
lem area for you, don’t hesitate or be too proud to
invest in your own professional development.
• Job design: The pandemic caused seismic
shifts in business and operational conditions and
likely your employees experienced rapid shifts
in job duties, responsibilities and some even
up-skilled. Perhaps some took work home or
shifted hours to ensure that the lights stayed on.
Now, as restrictions ease, be careful in assum-
ing that the pre-pandemic organizational chart,
job descriptions and expectations of employees
are going to revert. Instead, use this opportunity
to really evaluate your organization’s needs, talk
to your employees about how they feel about their
jobs and design the roles and responsibilities in
your organization to ensure that there is harmony.
While you shouldn’t design a job around one indi-
vidual, don’t hesitate to get creative and keep a
û exible mindset, particularly when it comes to
hours or working location (if it meets the business
or organization’s needs).
Jessica Newhall
There is no doubt workforce management is
incredibly challenging, especially in these times.
However, if your organization depends on your
employees then you must be willing to invest in
them — including taking the time and energy to be
the leader and manager they need. Remember, peo-
ple don’t leave jobs; they leave toxic work envi-
ronments, poor management or situations where
they do not feel valued or can no longer grow.
Jessica Newhall is the associate director of
the Clatsop Community College Small Business
Development Center. She can be reached at jne-
whall@clatsopcc.edu.
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