One of the biggest challenges that Singapore companies face is employee retention. About 46 per cent of employees in Singapore are likely to leave their jobs within a year, according to a report by IDC and Workday.
This could explain why some employers might be reluctant to invest in their staff. After all, why spend time and resources on them, only to have them leave soon after?
But not being attuned to your employees’ needs can backfire. A survey by LinkedIn found that more than two in five employees in Singapore left their job because it did not provide sufficient learning and development opportunities.
Keeping turnover rates low can translate into other benefits, such as cost savings and improved team morale. So instead of looking at how employee retention efforts can be time-consuming, consider how they can work in your favour.
What Is A ‘Healthy’ Employee Retention Rate?
Retention and turnover rates can help assess the effectiveness of your workforce management approach.
Retention Rate is the percentage of employees who stay during a period of time. Divide the number of current employees by the total number of employees at the beginning. Retention rates show how satisfied and engaged your employees are.
Total number of employees at the start of 2019: 50
Total number of leaving employees in 2019: 5
Retention rate: 45/50 x 100 = 90%
According to US statistics, the average retention rate hovers at 90 per cent, with the finance, government and education industries seeing the highest retention rates. The lower rates are found in the hotel, retail and F&B sectors.
Turnover Rate is the percentage of employees who leave over a period of time. Divide the number of leaving employees in a period by the average number of people over the same period. Turnover rate helps to identify your organisation’s problems and areas for improvement.
Total number of employees at the start of 2019: 50
Total number of leaving employees in 2019: 5
New hires: 10
Total number of employees at the end of 2019: 50 – 5 + 10 = 55
Average number of employees throughout 2019: (55 + 50) / 2 = 52.5
Turnover rate: 5 / 52.5 x 100 = 9.5%
Globally, the average turnover rate is at 10.9 per cent. This number varies according to the industry, with the technology sector at 13.2 per cent and financial services at 10.8 per cent.
The True Cost Of Losing An Employee
Turnover costs don’t just involve dollars and cents, they also include “indirect costs” such as training and productivity costs. Below are a few components of turnover costs, along with possible implications to your workforce and finances.
Replacement Costs
On average, US statistics show that businesses spend about 33 per cent of a new recruit’s annual salary to replace an employee. For executive positions, that figure shoots up to 150 per cent, according to Work Institute’s 2017 Retention Report.
It’s not just the monetary costs. Hiring takes time and can potentially distract you from your core responsibilities. For smaller companies, this could result in productivity loss that can eat into your margins.
Training Costs
Like hiring, onboarding processes can take up a lot of time. With every new employee comes a wave of administrative paperwork, orientation materials or training to be done. If you have to send new employees to external training programs, that hikes up the cost too. There could be equipment maintenance courses for those in the electronics sector, or a Bloomberg Certification if you are in financial services.
Productivity Costs
New recruits do not become productive employees overnight. Even the best new hires take time to be familiar with their responsibilities. Getting newcomers up to speed can take eight to 26 weeks, depending on the complexity of the role.
Assigning a mentor to your new recruit may help ensure proper training and a speedier onboarding process. The downside is that the mentor may need to take time away from his or her regular tasks, which could affect productivity.
A High Turnover Rate Can Hurt Team Morale
A higher turnover rate may dampen team morale or affect loyalty. For starters, remaining team members will have to pick up the slack or take on additional tasks to cover for a departing employee.
An increased workload could affect quality of work and satisfaction levels down. Some employees may also feel it is unfair or feel resentful about having to put in extra hours to complete additional tasks.
A high turnover rate may also discourage newer employees from putting in an effort to establish rapport. Some may start to worry about job security, which may prompt them to start seeking opportunities elsewhere.
This is why it is important for small businesses in Singapore to keep employee retention high. Employees are a company’s strongest asset and retaining them is key to driving success.
Read also: How Businesses Can Use Enhanced Work-Life Grant For Happier, More Productive Employees
How To Retain Your Best Workers
Award accordingly. Review wages on a regular basis and ensure that you pay in line with market rates. Award raises whenever warranted – be it performance-based or across the board – and it can go a long way in building loyalty. A competitive compensation package helps you stay competitive as an employer and retains key employees.
Show appreciation. Organise a staff retreat, give financial incentives, treat them to a meal or give a handwritten note. Letting your staff know you recognise their hard work creates a positive, productive environment and reinforces their sense of purpose.
Provide learning opportunities. Customers come second, and employees come first. Having the opportunity to learn and grow is an increasingly valued trait that employees look for. Investing in your employees create a supportive workplace and increases engagement.
Develop an onboarding process. That’ll help set clear expectations and improve assimilation among new hires. A comprehensive onboarding program can increase staff engagement and retention. This is also when an employee tends to be most receptive, so you should seize this chance to connect!
Conduct exit interviews. It can tell you what’s working and what’s not in your organisation. Use the data to find out how your workplace culture and management is faring, so you know where to improve. To add on, you are always being watched by your employees, so it’s important that you handle departures well.
Creating a positive workplace begins with developing a strong company culture. So small businesses in Singapore should start focusing on developing effective employee retention strategies and stay attuned with your team’s needs to ensure the long-term health and success of your business.
Read also: Here’s Why Offboarding Employees Is As Important As Your Onboarding Processes
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