Addressing the Challenge of Employee Turnover

July 5, 2023 | Business Development, Government














Photo by Andrew Teoh on Unsplash

Today, we’re going to address a significant topic that impacts us all: employee turnover. It’s a challenge, especially within the sphere of government contracting. While there is no specific evidence about turnover in our industry, I have experienced firsthand how it can affect government contractors. When we lose an employee, the cost goes beyond financial commitments like recruitment and training. It can actually amount to anywhere from 16% to a hefty 213% of annual salaries.

Think about this: according to the Society for Human Resource Management (SHRM), the overall turnover rate in the U.S. was around 19% in 2020. For those who left voluntarily, the figure stood at 14%. These numbers certainly underscore the importance of managing turnover.

But there’s more to turnover than meets the eye. Factors such as decreased productivity and lost opportunities, while not as easily quantifiable, have a substantial impact.

The biggest shock for an organization often comes when an employee leaves unexpectedly. Of course, unforeseeable circumstances sometimes prompt employees to leave, but if we’re regularly caught off-guard, it’s time to investigate.

One way to reduce such surprises is by regularly checking in with our employees. Frequent, meaningful conversations and genuinely listening to their feedback can make a world of difference. And by frequent, we don’t mean annual reviews. Instead, we should strive for an ongoing dialogue.

Transparency also plays a crucial role in managing expectations and reducing unexpected departures. For instance, when filling a position, each candidate not chosen should be informed personally before the successful candidate is announced. This is especially important when current employees are interested in the position. It’s far better for them to hear it directly than from an impersonal memo or office gossip.

As for reasons for leaving, a 2020 Work Institute report highlighted career development, work-life balance, and management behavior as top reasons. It’s also worth noting that younger employees, especially those aged 25-34, tend to have higher turnover rates, as shown in a 2018 BLS report.

When an unexpected departure does occur, it presents two issues: the immediate loss of the employee and the realization that we didn’t see it coming. However, these situations can often be anticipated, and sometimes even avoided, with open communication and a strong relationship.

Reducing turnover isn’t just about retaining employees; it’s about nurturing a happy, motivated team. It should also be highly considered in contractors’ strategy to deliver high quality, cost-conscious services to the Federal Government.

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MYTH: Providing goods and services to the government means you have to wait forever to get paid.

FACT: Many government contracts are subject to the Prompt Payment Act which was enacted to ensure the federal government makes timely payments. Bills are to be paid within 30 days after receipt and acceptance of goods/services or after receipt of an invoice whichever is last. If a timely payment is not made, interest should be automatically paid.