The Cost of Millennial Turnover
According to a report from Milliennial Branding and Beyond.com, The Cost of Millennial Retention, companies report that it costs them an average of $15,000 and $25,000 to replace every millennial employee they lose. Multiply that by your annual turnover rate times your headcount and it’s obvious – turnover is tearing businesses’ guts out by the roots.
According to Black Box Intelligence out of Dallas, Texas, the average turnover in the millennial-heavy restaurant industry now tops 110 percent per year.
To put it in perspective, that’s twice the casualty rate in General Ulysses Grant’s Overland Campaign to take Petersburg and Richmond in 1864. Restaurants are only half as effective in keeping their employees as the two commanders in one of history’s most brutal and deadly military campaigns were at keeping their soldiers vertical.
And the restaurant industry’s cost to recruit and train a new worker? About $5,000 per employee.
That’s a lot of lunches.
“So if you employ 50 people and your hourly turnover rate is 100%, you’re generating $250,000 in annual replacement costs PER restaurant, explains Jim Sullivan, a keynote speaker and foodservice leadership expert.
Don’t laugh, retail people. You’re losing employees at a 50 percent clip.
Create a ‘talent brand.’
Having a top-shelf talent brand in your community or industry reduces your employee turnover by up to 28 percent, and reduces your costs per hire by 50 percent, according to LinkedIn, which developed their own Talent Brand Handbook.
LinkedIn defines “talent brand” as “the highly social, totally public version of your employer brand that incorporates what talent thinks, feels, and shares about your company as a place to work.”
Here are some ways to develop your own “talent brand”:
- Offer flexible schedules. According to a study published in the February 2016 issue of The American Sociological Review, researchers at MIT and the University of Minnesota found that giving workers more freedom to control their own schedules decreases stress, decreases burnout and leads to higher levels of job satisfaction.
- Vary assignments. For better or for worse, younger workers don’t have the same tolerance for 9-5 drudgery that their parents and grandparents had. They want to be challenged. The worst thing you can do is bore them.
- Ensure benefits are relevant. For example, if you have a lot of younger workers who are struggling under the load of monthly student loan payments, chances are they can’t make big contributions to your 401(k) plan. No matter how generous your 401(k) match, or how awesome your selection of investment options is, students who can’t make contributions won’t care. Consider adding student loan repayment assistance, however, in lieu of an employer match – and watch your best young workers refer their friends in droves.
- Never stop training, never stop teaching. Strong managers never run out of things to teach their employees – because they’re always developing themselves. Take mentorship seriously, and seek out middle managers who themselves are strong trainers. Military veterans are great at this, because most of them have seen great role models who are also great trainers and teachers. Indeed, these trainers (NCOs) are the backbone of the U.S. military.
- Drop seniority-based promotion systems. Millennials do not buy the idea that promotions should be according to a strict time schedule. One UK survey found that 83 percent of millennials utterly reject the notion that workers should spend a specific number of years in a position before being considered for promotion. If your organization has such rules in place, your work site is a turnover mill waiting to happen.
- Ruthlessly weed out duds, placemarkers and oxygen thieves from the ranks of management. Deep down, you know who they are. (If you’ve been a manager in the same place for at least six months, and you don’t know who the duds are yet, you’re one of the duds!) And get serious about selecting solid leaders to fill junior management slots. “Stars don’t work for idiots,” says Sullivan, in this must-read interview.
- Make sure managers are technology savvy. If they aren’t, they’ll quickly be outpaced by their subordinates — and lose credibility.
- Get updated data on compensation. You have got to keep up with current trends. But that’s not enough by itself, of course, You need to review your own compensation at least annually, to ensure you’re keeping up with the Joneses. Your millennial employees grew up immersed in social media. Believe me – they’re talking to each other. If you don’t know what the compensation standards are in your industry, they sure as heck do.
- Recognize performance early and often. Some of these cost little or nothing, but can go a long way to helping workers feel appreciated and valued. That’s going to help you if someone else can offer them more money. If they don’t feel like you value their contributions and they aren’t being recognized for their hard work, and you can’t even compensate them competitively, why on earth would anybody stay?
- Pass the praise, not the buck. Middle managers should be trained to pass credit down the chain to lower levels. Good bosses will know what’s happening – and the best middle managers will be the ones with the best teams, so the credit will be well-deserved anyway. But woe to the manager who passes blame down the chain, or hogs the credit when things go well. Even in weak job markets, your best workers will always have options. They won’t work for weak managers. It’s the poorer performers who will have to stay.