By some estimates, entry-level employee turnover can cost companies somewhere between 30-50 percent of the employee’s annual salary.
As the American job market continues to improve and more positions become available, taking steps to retain talented entry-level employees might be one of soundest investments you can make.
The first step to retaining employees is understanding why they leave. Many entry-level workers change jobs at or around the two-year mark because it’s the fastest way to increase their salaries, according to Cameron Keng’s 2014 article in Forbes Magazine. On average, employees increase their salaries by 10 percent to 20 percent by leaving one company for another. In comparison, employees who remain in their jobs can expect a salary bump of just three percent.
Money isn’t the only driving force behind staff attrition. Even if your company is not in a position to offer large raises, there may be other things you can do to keep entry-level employees happy and on board. According to Mark Royal of the Hay Group, a global management consulting firm, "Five critical factors influence employee retention: trust in the company and its leaders, career-development opportunities, a fair exchange of rewards for effort, the degree to which the employee is given authority and independence and an environment that permits success."
Deloitte Consulting’s Talent Edge 2020 study advises employers, "The best countermeasure to losing an outstanding employee is to create a work environment that makes top employees want to stay … Retention plans should then be tailored to match different, specific skill sets and talent types that are needed by the company and crafted to appeal to the general workforce population and to specific age groups." According to the Pew Research Center, in 2015, Millenials surpassed Gen Xers as the largest generation in the work force. Employers then, would be wise to develop retention plans that address the preferences of this group. The Talent Edge 2020 study notes that for millenials, "the most influential factors are opportunities for promotion, job advancement and additional compensation."
Millennials also value job satisfaction, work/life balance, socially responsible companies and good benefit packages that include perks such as health club discounts, tuition reimbursement and flex time options. Entry-level employees seek bosses whom they can respect and who are good communicators. For example, young employees may respond well to managers who have open-door policies and provide positive feedback on a regular basis. Small rewards such as dress-down days, company-paid holiday parties, staff softball teams and retreats go a long way toward making employees feel appreciated, too.
The Work Institute recommends companies conduct "stay interviews" with their employees several times a year. These candid discussions between managers and staff members provide opportunities for employees to share concerns about their jobs, managers and company culture before they become insurmountable problems. When caught early enough, concerns can be addressed by management and in many cases, staff turnover can be avoided.
Eventually, even the happiest employee may need a change. When your best employees leave, handle their departures with grace. Wish them well. But don’t forget to pick their brains before they exit the building. If time allows, ask them to compile a guidebook so remaining staff members can benefit from their valuable institutional knowledge. When possible, have them train their replacements. Don’t skip the exit interview! Learn as much as you can about what your departing employee thinks about his job, supervisor, colleagues and the organization overall. Armed with that information, you will have a good shot at preventing other staff members from following him out the door.