Employee turnover rate is a critical metric for accounting and finance firms, and its impact on the bottom line cannot be underestimated. High turnover rates can lead to increased recruitment costs, disrupted workflows, decreased productivity, and a negative impact on client relationships. In today's competitive job market, it's essential for accounting and finance firms to focus on strategies that reduce turnover and retain top talent.
Employee turnover rate can vary significantly across different industries, sectors, and regions. According to CompData Surveys, the average employee turnover rate in the U.S. was 18% in 2020, but it ranged from 10% in utilities to 29% in hospitality. The accounting and finance industry had an average employee turnover rate of 19.6% in 2020, which was slightly higher than the national average.
What is Employee Turnover
Employee turnover rate is a measure of how many employees leave a company within a given period of time, usually a year. It can be calculated by dividing the number of employees who left by the average number of employees during that period. Employee turnover rate can indicate the level of employee satisfaction, engagement, and loyalty, as well as the effectiveness of the company’s recruitment, retention, and development strategies.
Employee turnover can have a negative impact on the company’s performance, productivity, profitability, and reputation. It can also result in high costs associated with hiring, training, and replacing employees, as well as lost knowledge, skills, and experience. According to a study by the Society for Human Resource Management (SHRM), the average cost of replacing an employee is between one-third to two times the employee’s annual salary3. For example, if an accounting firm loses an employee who earns $60,000 per year, it may cost them between $20,000 to $120,000 to find and hire a replacement.
Therefore, reducing the employee turnover rate is a critical goal for any company that wants to maintain a competitive edge in the market and retain its top talent. However, reducing employee turnover rate is not an easy task, as it requires understanding the root causes of employee dissatisfaction and implementing effective strategies to address them. Here are some of the best employee retention strategies that accounting and finance firms can use to reduce their employee turnover rate and keep their employees happy and engaged.
#1. Competitive Compensation and Benefits
One of the most obvious and important factors that influence employee retention is compensation and benefits. Employees want to be paid fairly and adequately for their work, as well as receive attractive benefits that can enhance their quality of life. According to a survey by Robert Half, 44% of employees said they would quit their job for a higher salary. Moreover, according to Glassdoor, 79% of employees would prefer new or additional benefits over a pay increase.
Data shows that accounting and finance professionals who feel they are fairly compensated are more likely to stay with their current employer. A comprehensive benefits package that includes health insurance, retirement plans, and flexible work arrangements can also significantly contribute to employee satisfaction.
To stay competitive, firms should regularly benchmark their compensation packages against industry standards and adjust them accordingly. Data-driven analysis can help identify gaps and ensure that employees are compensated fairly, reducing the temptation to explore other opportunities.
#2. Clear Career Development Paths
Career growth and development opportunities are crucial for retaining talent in accounting and finance firms. Data from the Society for Human Resource Management (SHRM) indicates that a lack of career advancement is a major factor contributing to employee turnover.
Employees want to feel that they have a clear and compelling career path within the company, as well as opportunities to learn new skills, take on new challenges, and advance their careers. According to LinkedIn, 94% of employees said they would stay at a company longer if it invested in their learning and development. Moreover, according to Gallup, 87% of millennials said professional development or career growth opportunities are very important to them in a job.
Firms should establish clear career development paths for employees, providing a roadmap for advancement within the organization. This can include regular performance reviews, goal-setting discussions, and opportunities for skill development and training. Demonstrating a commitment to employee growth not only reduces turnover but also helps firms cultivate a skilled and knowledgeable workforce.
Data-backed insights can guide firms in identifying areas where employees are seeking career development. By using surveys and performance metrics, firms can tailor their development programs to meet the specific needs and aspirations of their employees, thus increasing their satisfaction and loyalty.
#3. Foster a Positive Work Culture
Employees want to work in an environment that is positive, supportive, respectful, inclusive, and collaborative. They want to feel that they belong to a team that shares their values, vision, and goals. They also want to feel that they are appreciated, valued, and trusted by their managers and peers.
A positive work culture is instrumental in reducing employee turnover rates. Data consistently shows that employees who feel valued, respected, and connected to their colleagues are less likely to leave their jobs. Accounting and finance firms should prioritize creating a workplace environment that fosters collaboration, open communication, and a sense of belonging.
To achieve this, firms can leverage data analytics to assess employee engagement and satisfaction levels. Regular surveys and feedback mechanisms can provide valuable insights into areas that need improvement. By addressing these issues promptly, firms can enhance their work culture and reduce employee turnover.
#4. Implement Effective Onboarding
The onboarding process plays a pivotal role in employee retention. Data from the Society for Human Resource Management (SHRM) reveals that employees are 69% more likely to stay with a company for three years if they experienced excellent onboarding.
Effective onboarding involves more than just filling out paperwork; it's about integrating new employees into the company's culture, providing them with the necessary resources, and ensuring they feel like valuable team members from day one. Accounting and finance firms should use data to continuously improve their onboarding processes, identifying bottlenecks and areas for enhancement.
Regular feedback from new hires can help pinpoint areas of improvement in the onboarding process. Data analytics can also track the time it takes for new employees to become fully productive, allowing firms to fine-tune their onboarding programs for efficiency and effectiveness.
#5. Provide Opportunities for Flexibility and Work-Life Balance
In today's fast-paced world, achieving a healthy work-life balance is a priority for many employees. Accounting and finance professionals often face long hours and high stress levels, making work-life balance even more critical. Data from a Harvard Business Review survey indicates that 40% of employees would consider leaving their current jobs for ones that offer better work-life balance.
Accounting and finance firms should leverage data to identify opportunities for greater flexibility in work arrangements. This could include options for remote work, flexible hours, or compressed workweeks. By accommodating employees' needs for work-life balance, firms can reduce the risk of turnover and promote employee satisfaction.
Conclusion
Reducing employee turnover rate is a top priority for accounting and finance firms, and it requires a multifaceted approach. By offering competitive compensation and benefits, creating clear career development paths, fostering a positive work culture, implementing effective onboarding processes, and providing opportunities for flexibility and work-life balance, firms can significantly reduce turnover rates and retain their top talent.
