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How contractors can reduce employee turnoverOctober 12th, 2021 by
Building a workforce takes time, patience and persistence, resulting in a team you can trust. Yet employee turnover is a reality in any field, especially construction, with an employee separation rate of almost 69% in 2020.
Turnover in the construction industry doesn’t just mean losing a body to do a job; it means losing a skilled worker. Turnover can also be more far-reaching, resulting in project delays, cost overages and scheduling nightmares. So, what can you do to help keep employee turnover from costing your business?
In this article, we’ll discuss what employee turnover is and how it can affect your business. Once you understand why it happens, follow these tips to enhance your overall team satisfaction.
What is employee turnover?
Employee turnover is the loss of employees in your workforce over time. Turnover can be voluntary or involuntary. This can include resignations, layoffs, terminations, retirements, location transfers, or even deaths.
Understanding your rate of turnover can help you grasp the issues that exist and work on ways to improve your business to retain more employees.
How to calculate employee turnover
Your turnover rate can be determined by a simple formula. Divide the number of employees who left (within a given period) over the average number of employees within that time period. You then multiply that number by 100 to determine your turnover rate.
The average turnover rate in the construction industry hovered around 5% in the first half of 2021. You can use this number as a benchmark when determining your specific turnover rate. While some turnover is normal, a rising pattern in employee turnover can affect your team’s morale and productivity.
The cost of employee turnover
Employee turnover can be challenging for multiple reasons. Not only can employee morale take a hit, so can your company’s resources as you spend time and money searching for talent and filling open positions. The true cost of construction employee turnover consists of the following factors.
- Exit cost: Processing closeout documents and procedures.
- Lost productivity: Delays in projects and deliveries due to labor shortage.
- Recruiting costs: Finding and vetting new job candidates.
- Onboarding costs: The time and cost of breaking in a new hire.
- Training costs: Getting a new hire up to speed with the job’s logistics, tools, machinery, paperwork, etc.
- Unrealized hiring ROI: Some workers leave without the employer ever recouping the cost of having them.
How to reduce employee turnover
A high employee turnover rate can take a heavy toll on a business’s productivity, revenue and growth. Luckily, there are a couple of ways you can minimize turnover in your construction business. But before we discuss those, the first step in combating turnover is understanding why employees leave in the first place. Drawing from various reports and statistics, these are the main factors for employee turnover in construction:
- Career development opportunities
- Work-life balance
- Relocation and workplace proximity
- Work safety concerns and injuries
- Well-being (health and physical fitness)
- Job characteristics or working conditions
- Pay and compensation
Let’s look at practical employee retention tactics that work around these turnover triggers.
Get a clear picture of your employee turnover rate
We’ve already touched on the common reasons why employees leave work. But every organization is unique. It’s important to find out the cause of turnover every time you lose an employee. When possible, schedule an exit interview or discussion and ask the employee why they are leaving. Doing this will help you track your turnover rate and gain valuable insights into your turnover pain points and what it would take to alleviate them.
Emphasize on teamwork
Encourage a team-based work culture by creating opportunities for collaborations and sharing ideas and solutions. If every employee works as an individual, some of them might start to feel alienated. Teamwork and camaraderie strengthen bonds within the workforce and the organization as a whole. In addition, work at a construction site needs to be harmonized to get things done correctly and on time.
Engage your employees in important discussions
Make your employees feel valued by engaging them through open communications. Encourage each person to share their opinions, suggestions and feedback, especially on matters directly affecting their work. Close engagements bring the whole community together and make everyone feel that they matter.
Improve the work experience
Construction sites are often noisy, dusty and riddled with hazards, which you usually can’t do much to change. But you can make life a bit easier, safer and more comfortable for your staff by improving their work experience. For example, you can ensure that all workers have the necessary gear, tools and equipment to complete their jobs efficiently. You could also be more flexible with schedules and working hours to allow for a better work-life balance.
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Recognize exceptional conduct and talent
Everyone likes to be appreciated for a job well done. Be sure to regularly acknowledge and reward hard work and exceptional dedication among your workers. It doesn’t have to be anything fancy or formal. You can simply call out names during daily briefings or meetings. And the rewards don’t have to be over the top either—anything that incentivizes the workforce will do. Gift cards, time-off, meal vouchers and even a pat on the back can go a long way in showing appreciation for your workers and building their morale.
Offer self-improvement opportunities
Many employees will walk away from a company that doesn’t align with their career path or overall life goals. Enrich your workers’ lives by providing meaningful self-improvement perks. Incorporate programs such as life coaching, career development, upskilling and training, health and fitness, financial planning and wellness in the employee benefits package. In short, give your employees more than just a paycheck.
With the skilled labor market becoming more competitive, it’s becoming more challenging to find reliable, qualified talent. Adding in a high turnover rate will only make the situation more challenging. Understanding your turnover rate and why employees are leaving can help you to grow a team that sticks around.
Reducing turnover starts with viewing employees as more than just workers or resources. Following these tips can help you to grow a team that is around for the long haul.