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Struggling to Keep Staff? Decrease Churn Increase Sales

A restaurant owner upset about staff quitting.

Keeping staff can be a struggle for any business. For some more than others, staff retention can be an absolute nightmare. A rotating staff is terrible for any business, and just as the name suggests, high churn will wear down the business. Not to mention, customer service and your bottom line will ultimately be affected because of the indirect effects of staff churn. When churn is decreased, and staff retention is the norm in your business, however, you could increase sales exponentially. In this article, we’ll address the key factors that contribute to churn, what you can do about it, and how increasing staff retention can positively impact your bottom line.

What is Churn?

Churn is a combination of turnover, attrition and new hires joining your team. It’s the movement of workers out of your business, and back into it. Monitoring churn is important because it shows a high-level view of how well your employee retention strategies are doing. The difference with turnover and attrition is that turnover is when an employee leaves, expectedly or unexpectedly, and a new hire is brought in to replace them. Attrition is when an employee leaves, but the position is left open for a long time, added to the duties of an existing employee’s position, or eliminated altogether. Churn is important because having a low rate of long-term employees will see your business lose more than just that person’s productivity rate.

Why Is Employee Retention So Important?

Let’s look at the numbers to understand what exactly makes keeping employees for the long-term so attractive to your business goals. As a generally well-received training program lasts at least 2 weeks. That is valuable time that employees are not yet at their most productive. They are also meshing into the company culture, figuring out how to best work with management and their team, and finding their rhythm. When a long-term employee remains at the company, they retain a host of assets. Their knowledge and wisdom surrounding the company and the roles they have been in are immense, and only months or years of time may cure losing this wealth of knowledge unexpectedly. They have also assumedly been working productively for all of that time, and have gained your business a lot of revenue. They also may have the specific skills you would need if you expand, or need to fill another position with someone who already knows the company and required skills. Employee retention can save businesses untold amounts, and when employee churn is lower overall, it demonstrates that your employees really value working with your business. This can additionally help attract more top talent to your company because you’re doing something different than the one down the street.

Why Do Employees Leave?

Employees leave the business for a variety of reasons, not the least of which being pay. This is one of the reasons the churn in the restaurant industry is notorious, and since the post-pandemic world has increased expectations so too must businesses increase their actions. Work-life balance was one of the most-cited reasons why employees leave a company, behind a pay they felt was too low for their productivity and skills for duties performed. If they feel they can receive better pay elsewhere, they will start looking. Management being perceived as poor is another major reason employees look elsewhere for opportunities. If they feel management has unreasonable workloads assigned to them, is not helpful to them, is unclear on expectations, and a variety of other reasons, they are more likely to find a management style they mesh with. This is one reason why finding the right fit for the company during the interview process is so important. If an employee doesn’t mesh with the company culture, or if they feel like their work is boring, overbearing, or if work conditions are abhorrent, chances of leaving for other employment can increase higher and higher.

How to Decrease Churn

Focus on a strong onboarding and training program. According to research, a training program of at least 2 weeks is seen as “good or better” by over 50% of employees. Conversely, a training program of less than 1 week is seen as “good or better” by about 14% of employees. The trend is clear, a strong training program to give employees clear direction, and demonstrate that management is supportive can be a helpful part of the process to decrease employee churn.

Give employees what they want. Compensating employees fairly for their work based on standards in the industry is one way to do this. If your employees feel they are being justly compensated they are far more likely to stay at your company, rather than seek out the competition. For some, this is easier to do than others. For example, the restaurant industry has a common practice to pay their front of house employees on a tip-basis. Essentially on a commission basis. While this can be quite lucrative, it has also been shown to significantly increase burnout and decrease job satisfaction. Some businesses have implemented mandatory service charge fees to lessen this burden, and in some cases the service charge has been able to pay their entire front of house staff between $15-$25/hour for their work, or more. You could also consider if performance bonuses would be helpful. Compensation is one of the key factors in taking a job in the first place, and if well met, can increase employee retention in no small way.

Create a culture and opportunity balance that can give employees a sense of purpose and belonging at work. A culture that focuses on the employees, recognizing their achievements, and a strong work-life balance can bring in and retain some top talent. Giving these employees the opportunity to upskill, move up within the company, or other opportunities for advancement, as in moving beyond where they currently are, can contribute to a lower attrition rate, decreased turnover time, and decreased general churn.

The Bottom Line

This retention can lead to a significant increase in revenue, and in turn, sales can increase in tandem. Losing an employee can be costly, up to a year’s-worth of their salary or more, and having to operate in crisis mode when there is a vacancy in the business is no easy task. This recurring crisis mode can also lower overall productivity, and slow growth. Decreasing churn and increasing sales are a plausible proposition. It can take a substantial amount of work and changing processes in order to have a long-term solution that can positively affect your business for years to come. As we have seen from the costs of a high churn rate, this initial time investment can save your business a great deal of loss. To learn more, check our other articles for additional insights. Now get out there, and crush your next target!

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DISCLAIMER: The information herein is provided for general informational purposes only, and is not to be construed as business consultant advice, real estate advice, wealth advice, financial advice, tax advice, or any other kind of advice. XYLO does not guarantee that you will have any specific results by following this information, and does not warrant the completeness or accuracy of any of the information. Make sure you consult with a professional, like a licensed business consultant, Realtor, wealth advisor, financial advisor, tax advisor or other professional that suits your particular situation before making any decision pertaining to those areas.


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