Most savvy small business owners, including Independent Insurance agents, are aware that it is much more expensive to hire a new employee than it is to retain existing employees. If you have employees who are doing an exceptional job for your company, you should do everything you can to keep them around.
If you want your business to thrive today, you need to locate, hire, and retain the best employees you have. This can be a challenge for small businesses and nonprofit organizations that have to compete with large corporations, but if you go out of your way to develop strong, personal relationships with your best employees, they will be more likely to stay.
What are some of the most common reasons why employees change jobs, and how can you keep your existing employees?
What Are the True Costs of Employee Turnover?
If you lose employees, you will immediately have to find other people to take over that person’s duties. Otherwise, your business is going to fall behind. At the same time, there are several specific expenses you will incur if you lose your employees. They include:
- Recruitment Expenses: You will have to spend lots of money hiring someone to replace the person who just left. Your recruitment costs can be expensive. They might include advertising your job opening, interviewing a lot of potential candidates, screening resumes, and training a new employee.
- Customer Service Errors: You will probably find that a new employee is not going to be as adept at solving the problems of your customers. Therefore, your customer service might suffer, and your clients might get upset. You may find that some of your customers and clients go to your competitors because they feel like they are not getting the same level of service at your company.
- Lack of Institutional Knowledge: One major concern related to employee turnover is a loss of institutional knowledge. This is a term that is usually used to describe how well your employees know your company. They know who to reach out to when they have a question, they can use relationships to help expedite certain tasks, and they fit well with your company culture.
- Possible Wave of Resignations: If someone within your company leaves, the other people in your business are going to ask why. When your other employees start to ask questions, they may decide whether it is time for them to leave as well. This can have a significant impact on your company culture.
It is difficult to put a number on the expenses listed above, but it is not unusual for companies to spend thousands of dollars replacing a single employee who has left. This money comes in addition to revenue you might lose because your new employee is unable to help your customers as quickly as your old one.
It is also important to shine a light on a couple of specific expenses you will incur if your employees leave, such as:
Reduced Morale
Without a doubt, if one of your employees leaves, it will have a significant impact on your morale around the office. You will find that many of your remaining employees have lost a valuable work friend, which can be a significant concern. Those office relationships are important. When your employees get to know one another, they look forward to seeing their friends every day.
When that person leaves, your employees may not be as excited about coming to work in the morning. They may start to show up late, it may take them longer to complete their tasks, and they might not feel a strong connection to the organization. Even though your employees might be loyal to your business, they are truly loyal to each other. If your employees begin to leave, those relationships begin to fall by the wayside, and employee loyalty might begin to suffer.
Productivity Drop
When one of your employees leaves, it will also lead to a significant drop in productivity. Even though the work everyone has to do every day is the same, you have one fewer person to complete those tasks. Everyone else will have to pick up the slack, but they are not going to be able to replace the person who left, particularly if you are simply dropping the same amount of work on a small group of people.
You will also have to think carefully about how much extra work you want to give your employees. If you expect your employees to simply do everything that the old employee used to do, they are going to get frustrated. You don’t want to risk pushing them out the door as well, and this could lead to a significant drop in your company’s productivity. This is where the revenue hit comes from.
Why Do Employees Leave?
Clearly, the cost of losing a valued employee can be high. It is important to explore ways you can retain your best employees, and that starts by understanding why your employees leave. Some of the most common reasons why employers might leave a current position include:
- They may feel like there are not a lot of opportunities for them to develop their career goals. Everyone has hopes, dreams, and aspirations. If someone feels like they are not going to be able to fulfill those at your company, they are going to go somewhere else.
- They may feel like their work is not intellectually stimulating or mentally engaging. They might feel like mindless robots when they come to work every day. If they don’t feel intellectually stimulated, they may decide to go somewhere else.
- There could be a disconnect between their work and their compensation. What this means is that your employees might feel like they are not getting paid enough. This includes not only their salary but also their potential benefits.
- They might have a disagreement with others in the workplace. If they don’t fit in with your employees, or if they don’t have a good relationship with the manager, they might decide to leave.
- Some employees might feel like their feedback is not being taken into account. Your employees should have a say in their work environment. If you collect feedback from your employees, make sure you listen to it.
Sometimes, employees leave due to reasons that are beyond their control. Maybe their spouse got transferred, and they have to move. In other cases, by paying close attention to your employees, you can make sure they are happy at work. Then, your employee retention rate might increase.
How Can You Retain Your Best Employees?
Because the cost of losing a valued employee can be high, it is important to explore ways you can retain your best employees. Some of the most important tips you should follow include:
Offer Great Health Insurance
Medical care is expensive. If you want your best employees to stay, you need to have a strong health benefits program. Starting with group health insurance is a great option, but some small businesses might not be able to afford the cost of a group health insurance plan. You may also want to consider starting a health reimbursement arrangement (HRA), which can help you reimburse your employees for qualified medical expenses while also helping you reduce your overhead expenses. You may qualify for a tax write-off if you start an HRA.
Foster a Strong Work-Life Balance
You should also encourage your employees to spend time with their friends and family members. If you show your employees that you care about helping them maintain a solid work-life balance, they will be more likely to stay with your company. For example, make sure you offer your employees plenty of vacation time and sick days. If one of your employees says they have to leave early for a family event or emergency, encourage them to do so.
Hire the Right Employees To Begin With
Finally, make sure you hire the right employees to begin with. Sometimes, employees leave because they realize they are not the right person for the job. If you have a proven strategy you can use to screen resumes and interview applicants, you can maximize your chances of hiring the right employees on the first attempt. When the fit between your job opening and the person filling it is perfect, you can maximize your employee retention rates. Consider putting a few of these strategies into practice in your office.
Reach Out To the American Agents Alliance for More Resources
If you are an independent insurance agent, you must make sure you hire the right people to help you in your office. We are the American Agents Alliance, and it would be our pleasure to provide you with resources that can help you grow your insurance agency. Contact us today to speak to a member of our team, and make sure you do everything you can to retain your most talented employees.
