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Preventing Employee Turnover in Your Startup

Human Resources

Employee turnover is a perennial concern for any business. This issue can be especially troubling for startups, which often can't afford to waste time and resources on finding replacements when an employee leaves. Also, the costs of replacement can be prohibitive. The Society for Human Resource Management estimates that employers can spend what amounts to six to nine months of an employee's salary in the effort to locate and train a replacement.

startup turnover

So how can startup founders and owners combat employee turnover and recruit new talent when the need arises? You may want to consider:

Scrutinizing your hiring process. Startups generally depend on operational speed and the ability to get to market as soon as possible. Applying these same principles to the hiring process; however, can be a recipe for failure. Without a deliberate and comprehensive recruitment and screening process, employers can only hope they make the right choice – a costly approach, considering how quickly a dissatisfied employee may start looking elsewhere for work.

Even if you are not currently recruiting new talent, making your employer brand as strong as possible may improve recruiting outcomes when the time comes. Steps to strengthen your brand can include:

  • Building a company culture where employees look forward to coming to work.
  • Promoting your employee-focused culture on social media (posts, group photos, videos, etc.).
  • Offering the best technology available to attract new hires to your state-of-the-art workplace.
  • Differentiating your company from competitors, and highlighting these differentiating factors in all of your recruitment materials and on social media.

    Hiring for cultural fit. A deliberate and comprehensive hiring process also includes taking the time to determine whether a job candidate will likely be a good fit with the company. Turnover often occurs when either the employer or employee discovers that this fit isn't quite right. Some of this can be avoided when a company clearly identifies its values, mission, and practices up front, so prospective hires can tell quickly whether to pursue employment at the organization.

    As part of the interview process, consider taking candidates on a tour of the workplace in order to see how co-workers interact. Such experiences can help both parties determine if the fit might be right.

    Offering flexible work schedules. Startups, perhaps more than other established businesses, may consider offering flexible work schedules to their employees, particularly if their competitors do so. Explore the range of remote work opportunities and technologies, and determine if this is a possibility for your business. If possible, offer employees a schedule that fits with their individual lifestyles. They may greatly appreciate this flexibility and be less inclined to leave a work/life arrangement that benefits their needs.

    Giving your employees the opportunity to make significant contributions. Of course, you hire talented individuals who demonstrate strong ability and good judgment in their work. But what about expanding the scope of what they can offer? Instead of clinging to a strict top-down creative model, look for ways to encourage employees to speak up, identify obstacles to the company's growth, and otherwise provide an honest critique of the business. When employees feel they have a genuine stake in the company's future – and that they can influence its growth and purpose – they are often far more invested in sticking around.

    Startups that recognize and celebrate the value of their workforce can attract considerable interest from job candidates. They can also benefit from having a group of employees who are invested in the company's future and want to contribute to its greater success.


    This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.