February 2023 Volume 5

OPERATIONS & MANAGEMENT

Reducing Employee Turnover by Focusing on Mental Health By Melanie Williamson and Ray Harkins

Turnover is a common problem that impacts all industries. To an extent, turnover is a factor that employers will always need to face because there will always be employees who leave for one reason or another. However, high turnover can lead to increasingly more significant issues that will impact the company’s overall productivity and ability to grow or even survive. There are two types of turnover: voluntary and involuntary. Involuntary turnover refers to termination, and voluntary turnover refers to employees choosing to leave the company. While employers may assume they have little to no control over involuntary turnover, looking at what company policies are being violated, resulting in terminations, can reveal underlying issues that can be corrected. For example, involuntary turnover can result from decreased productivity or absenteeismresulting frommental health symptoms. It is important first to understand that turnover is a cyclical problem. High turnover has direct and indirect costs that negatively impact the employer, which will be explored further in this article. High turnover negatively impacts the company's culture and employee morale, leading to more turnover. The long-term impact of high turnover can be devastating for a company and directly impacts profitability. Additionally, when a company gains a reputation for high turnover, it will have a challenging time attracting quality According to the Bureau of Labor Statistics 2021 study on employee turnover, the average annual turnover rate across all industries is 57%. The direct costs associated with turnover include recruiting, onboarding, and training new hires. These are referred to as the cost per hire and vacancy. These direct costs vary depending on the position being vacated. The estimated cost is 1.5 to 2 times the employee’s annual salary. Turnover of hourly workers is estimated at $1500 per employee. Technical positions are estimated at 100% to 150% of their annual salary, and C-suite turnover can cost upwards of 213%. The cost of turnover includes a wide range of costs, including ad spending for open positions, time to train new employees, missed or delayed revenue due to decreased production, potential loss of business, and decreased morale due to understaffing. There is also the loss of knowledge when experienced employees leave, which is intangible. The actual cost of turnover is high when all factors are considered and is often hard to calculate due to the indirect costs of turnover. employees, which feeds the cyclical nature of turnover. What Is the Cost of Employee Turnover?

Evidence That a Mental Health Focus Can Increase Retention An independent survey conducted by Forrester Consulting in 2021, which included over 1200 employees and over 500 human resource administrators andC-level executives, showed an increased desire for mental health benefits. According to their study, 79% of employees and 81% of managers stated they would be more likely to stay with a company that offered high-quality mental health resources. 73% of employees and 76% of managers stated they valued mental health benefits over other employer-sponsored perks. The Forrester study showed 67% of business leaders reported productivity improvements when offering mental health support to their employees. One mental health benefits provider studied employees engaged with their services and those not engaged and found that retention was 5.5% higher among those engaged. Additionally, terminations were roughly 5% less among employees engaged with mental health provider services. According to theMind Share Partners’ 2021Mental Health atWork Report, employees who feel supported by their employer are 45% less likely to experience mental health symptoms. They are also 5.6 times more likely to trust their employer and 3.5 times more likely to be proud of where they work, increasing loyalty and employee retention. How Can an Employer Focus onMental Health? An employer can do many things to focus on mental health and effectively reduce employee turnover. Some actions will cost the

FIA MAGAZINE | FEBRUARY 2023 46