When it comes to business, so many of our everyday actions affect the bottom line. Companies are constantly seeking ways to cut costs, improve productivity, increase efficiencies, and generate revenue. But here’s something that is often overlooked: Employers lose $11 billion each year due to employee turnover.

The True Cost of Turnover

$11 billion dollars each year is nothing to laugh at. These costs come from recruitment, training, loss of productivity, and a plethora of additional factors. It’s expensive to replace employees, and the higher the quality of the employee, the more expensive they become to replace. Replacing an entry-level employee costs 30-50% of their annual salary. This number increases exponentially, rising to 150% for mid-level employees and 400% for high-level or specialized employees.

And employee turnover is trending up. Millennials (born between 1980 and 1996) change jobs more often than any other generation. 21% have changed jobs in the past year, which Gallup estimates has cost the U.S. economy over $30 billion a year. The solution to this growing problem is to find out why employees leave, and how to retain talent once you’ve acquired it.

So, What Causes Turnover?

There are many reasons that people move on from their jobs. Rocky relationships between supervisors and colleagues are one common reason for an employee’s unexpected exit. When staff are unable to communicate and relate with the rest of their team, they start looking for a new environment. Lack of opportunity for growth and development can also lead to turnover, especially when employees feel stagnant within a company.

Poor hiring practices are another culprit and can result in a lack of passion for the work, unfulfilled expectations, and a bad cultural fit (more on that below). Burnout is another growing problem, especially with the growing presence of technology allowing us to stay “plugged in” long beyond office hours.

While it’s important to determine how to retain employees, it’s even more important to identify who to prioritize in your efforts.

Prioritizing Your Top Performers

Low turnover rate means nothing if you can’t keep your top performers. Studies have shown that they are about 4 times more productive than an average employee. These employees deliver more than just a fourfold boost in production; they are often a cornerstone of morale whose absence can leave a heavy burden on the rest of your team.

The loss of a top-performer can lead to a significant rise in disengagement, which costs U.S. businesses as much as $550 billion a year in lost productivity. They are also more expensive to replace. When evaluating the talent within your organization, prioritizing the retention of your top performers can save you more than retaining a half-dozen average employees. It will also keep your company strong and competitive.

Don’t be afraid to look at management as a potential culprit in failed talent retention. Often, poor management systems or inept leadership can cause the loss of more valuable, top-tier talent. Make sure you have leaders and systems in place that can attract, equip, and keep talented team members. Look for our upcoming article on effective leadership, set to publish in December.

How to Reduce Turnover and Retain Talent

Hire the right person. When looking for new or replacement talent, invest the time and effort in finding the right fit. This goes beyond qualifications and metrics to personal goals and mutual respect. Be up front and realistic about the position, the compensation, and the potential for growth. Often, the temptation can be to sensationalize the position in an attempt to attract the best applicants. This almost never works, as these employees will soon look for opportunities that better match their goals and preferences.

Hire the right group of people. Many books, influencers, and companies like us put a lot of emphasis on company culture or making sure team members are a good cultural fit. Although this is very true, and the right core values are vital to every operation, these buzz words can often become fluffed and diluted. Employees work best when they enjoy the company of their colleagues. Generally, this means common interests and similar work ethic and communication methods. Whenever possible, try to introduce applicants to the rest of the team, and trust your gut.

Listen to your employees. Set aside time to check in with employees and discuss their needs and desires. Consider Dr. John Sullivan’s approach of conducting “stay interviews.” Dr. Sullivan describes a stay interview as “a periodic one-on-one structured retention interview between a manager and a highly valued “at-risk-of-leaving employee” that identifies and then reinforces the factors that drive an employee to stay. It also identifies and minimizes any “triggers” that might cause them to consider quitting.” Proactively connecting with your employees to discover their drives, triggers, and goals may be the best way to reduce turnover and increase engagement.

Establish clear paths to ongoing education and career development. One of the top reasons for changing jobs is better opportunity for growth. Your employees want opportunities for learning and advancement. As soon as they feel stagnant, they’ll begin to seek opportunity elsewhere. Clearly define paths for advancement and offer ongoing learning to your team. This allows them to see the way forward and set goals, while continuing education will leave your team invariably more valuable.

PAY THEM! You’ve seen the cost of turnover. Don’t lose employees trying to trim labor costs. The cost of turnover will always be greater. It’s also important to set clear standards and expectations for pay. If you’re waiting for employees to ask for a raise, it’ll be too late to keep them. Focus on equity over equality. Some employees will be more deserving of raises or incentive pay than others, but it’s important for morale that the opportunity is fair, even if the pay is not equal. Whether rewarding seniority, production, or both, be consistent and clear so that your employees know how to achieve their financial goals. Keep in mind that many employees look for more than just salary. Health and retirement benefits, wellness programs, or professional development can go along way in keeping your staff happy.

Evaluate previous turnover. Perform exit interviews to discover exactly WHY your top performers left. Talk to your staff and find out how you can prevent turnover in the future. This could mean making a change in management, restructuring your compensation and benefits package, or simply bringing back casual Friday. If the first step in solving a problem is acknowledging that there is one, then the first step to stopping turnover is to find out why it happened in the first place.

Acknowledge and reward excellent performance. In addition to clear metrics for compensation, find ways to acknowledge and reward your employees for a job well-done. From weekly shout-outs, to a company outing, to a nice bonus check, make sure your employees feel valued. For most, personal satisfaction in a job well-done is simply not enough. Publicly and personally commending those who deliver will give them satisfaction in their work and motivate others to excel.

Your employees are your greatest asset, and like anything else, they require maintenance to perform their best.