The Value of Culture and Employer Brand in High Turnover Industries

Over the weekend, I was explaining what I do to a few friends. In describing what we do, I emphasized the need for strong company culture, employer brand, and talent strategy because these elements of a business affect the bottom line in the long run. By not caring about these things, companies risk high turnover, among other consequences. Costing between 25% and 250% of a single employee’s annual salary, high turnover has a profound effect on the bottom line.  While explaining this to my friend, he asked, “is there ever a time when turnover is good?” I had to think about this one for a bit. According to Software Advice, new employees who replace those who left can bring new ideas; however, high turnover is traditionally thought of as a negative indicator. That said, there are some industries where turnover inevitably is, and likely always will be, high. For example, retail, food service, or customer service are all industries with high turnover. These jobs consist of a workforce that is typically compensated on an hourly basis. There are many reasons why turnover is high in these industries – some of those people might be high school students or pursing higher education, some of those people may need a second job, or some people may be drawn to competitors.

If these industries typically lose employees often, then why should they care about culture and employer brand? One answer is referrals. There are plenty of reasons why employee referrals result in better hires – better quality, lower cost per hire, faster application-to-hire times. While only 7 percent of applicants come from referrals, 40% of all hires come from referrals – an astounding number. If you know your employees aren’t going to stay forever because of the nature of your business, you can at least provide them with a positive employment experience so they spread the word. The strength of an employee’s network is huge. If one employee has at least 100 people in their network, multiply that by 100, and you now have 100,000 contacts.

Drawing from my own experience, in high school and college, I held two hourly jobs – one in retail and one in food service. My retail job at a well known clothing brand was short. I knew I wasn’t going to stay forever, and so did my employer. My experience was fine – got paid the bare minimum wage ($5.25/hour), had minimal hours, and not much mentoring. The only perk was the discount. It was a job. It only lasted a summer.

My other job, working for an ice cream and chocolate shop, was a far different experience. I ended up working there for 5 years during my summers and the school year. They paid me slightly above minimum wage, great perks (unlimited chocolate) , flexibility on hours, and a lot of responsibility. I liked it so much, I referred my best friend, so we often worked side by side. As a 16 year old, what could be better than working alongside your best friend while collecting tips from scooping ice cream? We had the best time, and I’m sure it translated to our customer service. I still go in there from time to time and praise my positive experience to current employees.

Referrals – another reason for a strong culture and employer brand in a high turnover industry.

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