This week’s guest post comes from Patrick Bailey:

Starting a business is very difficult, and that’s not even the bad news.

A study by UC Berkeley & Stanford revealed that 9 in 10 startups fail in the first year. Clearly, having a good idea is not enough. Millions all around the world have thought that they had the next best thing. Then they got a rude awakening.

Unless you are working solo, you have to understand that an organization is the sum of all parts. Everybody must be working together in unison to achieve the same task. Each of the workers must be on board with what you are trying to do.

Now, every company has a culture. This is different from a brand, which can be your identity from the customer’s perspective, or from your own point of view.

The company culture isn’t always seen by outsiders. Good organizations already have an established culture that any new employee will have to learn and adjust to.

The culture is the set of values and mindsets the employees develop in the course of working for the organization. This could either be imposed or organically assumed. An unhealthy culture is one where everybody is working for their own selfish agenda at the expense of the others and the organization itself.

An unhealthy culture is a toxic environment.

You can’t hope to retain your employees for a long term even if the pay is good.

The Cost of Employee Turnover

In general, employee turnover is costly.

We say this because some companies have managed to create a resilient business model that can weather a high turnover rate. Take McDonald’s, for example. It’s a huge training ground for employees who want a temporary stop while they finish school or move on to better careers. 

Yet, McDonald’s consistently is one of the top-earning companies globally.

But you don’t want to follow that model.

You want to retain employees because it makes the most business sense.

For example, you don’t always want to be training new hires because of the high turnover rates. Training costs money and lowers productivity, especially if you are a small organization where there are no clear delineation of functions. You have to assign somebody to train the new employee, and that takes away from their regular tasks.

Besides, you can expect the new employee to produce less while still learning on the job. That means the productivity of the organization suffers unless the others work more to fill the gap.

Imagine going through the same cycle every six months?

The 2017 Asia Pacific Employee Pulse survey revealed that even if employees work longer hours they wont to leave if they believe in the organization.

The most common reasons why they stay are:

1. The company understands that they also have lives to live outside of the organization
2. They trust their co-workers
3. Their career path is clear and there’s an opportunity to move up

A 50:50 balance between work and life could never be achieved. Unfortunately, there’s no metric to measure that. Instead, it’s mostly about the impression that the company doesn’t just see you as a worker but a person.

For new organizations, it’s important to determine the estimated cost of employee turnover. Once they see the numbers, they are going to be really serious about ensuring their workers stay.

Let’s Talk Numbers

According to the US Bureau of Labor and Statistics, the average employee stays with the company for 4.2 years. This is as true in 2018 as it was in 2016.

Younger workers (25 to 34 age group) tend to have a shorter stay (2.8 years) compared to senior workers (55 to 64 age group) who have an average tenure 10.1 years.

Turnover will also depend on the type of industry you are in.

State workers typically stay longer probably because of the security of tenure and pension. The mining and manufacturing industries have the highest employee retention compared to the other sectors.

On the other end of the spectrum are those working in the food service industry, which has an average employee retention of 1.9 years.

Here are some of the findings of the BLS

1. The hospitality, tourism, and leisure industry, which has an average employee retention of 2.2 years.
2. Architects and engineers tend to stay in one company for 5.7 years
3. Lawyers stick to one law firm for 5.1 years
4. Teachers and librarians also  shift jobs after 5.1 years
5. Managers and professionals stay in the same job for 6.4 years

You always want to keep your workers happy because when one leaves, it generally costs your company an equivalent to 6-9 months’ worth of salary.

Another study by the Center for American Progress also presented some worrying figures:

1. Specialized skills cost 21% of the annual salary of the employee
2. Workers with an annual salary of $50,000-$75,000 will cost the company about 20% of their wages when they decide to leave
3. Those who earn less than $30,000 in annual wages will cost the organization 16% of the total employee salary

How to Know if You have a Healthy Work Culture

The good news is that you are not trailblazing a new path. There are successful business models that you can follow to ensure a good working environment that will motivate employees to stay longer.

What are the traits of a healthy company culture?

1. Employees trust each other. Everybody knows that the company is a safe place. They can be themselves without their colleagues backbiting or ranting against them on social media. Nobody plays politics in order to get ahead.
2. Good performance is recognized. Nothing builds frustration faster than being overlooked. Sure, a bonus would be nice, but just calling their names during the company meeting after they’ve done a good job will go a long way. Of course, a bonus would be better, which will also motivate others to do well.
3. Everybody picks everyone up. When somebody is going through hard times in their personal life, (they are people, after all), everybody pitches in so productivity doesn’t suffer. This is because workers believe in the vision of the company so they work hard to realize that vision.
4. Employee voices are heard. Even if the salary is high, what employees really want is to know that their opinions matter. Encourage everyone to voice their concerns, ideas, and suggestions. During company meetings, employees should feel that they can speak up without fear of any backlash. There’s no better feeling than your idea being adopted by the executives and seeing it succeed. 
5. Good communication. The CEOs value the opinion of the clerk as they do the top executives and project managers. In the same vein, project managers are in constant communication with their teams to make sure everybody is still on the same page. The beauty of the technology today is the number of tools that can enhance communication within the workplace.
6. Healthy work-life balance. The employees can only put in what they can put out. Meaning, the effort is not a perpetual resource. If they continue to work without recharging their batteries, they are bound to experience a burnout. Encourage them to also take care of themselves and their families. Get some exercise, develop some hobbies, and make some friends outside of the workplace.
7. Your employees are people, too. The worst thing you can do is to treat your employees like robots and grind them to the ground. They do feel tired. They will sometimes face problems in the home, which will impact on productivity. They do have children who also need to be attended to, and this includes school activities, birthdays, and other milestones.
8. Teambuilding is a must. The company organizes team-building activities at least once a year. These may not be limited to further education, training workshops, and seminars, which can enhance individual talents. You should also take your whole company on an outing to the beach or resort just so everybody can also view their colleagues as more than co-workers.
9. Bosses are leaders. If you have no idea how to be a good leader, there are actually a lot of articles about the difference between a boss and a leader. For instance, the boss thinks that he knows it all so the opinions of the employees don’t matter. The leader knows he knows nothing so he values the opinions of others. The boss criticizes when somebody makes a mistake, the leader encourages and helps the employee avoid committing the same mistake. The boss is quick to find a weakness while the leader is quick to find a strength that can be enhanced.

The bottom line? Employees tend to be loyal to the leader rather than the boss.

Running your company from the ground up is already difficult, especially since the odds are stacked against you. However, don’t make it impossible by not working toward establishing a healthy work culture that can benefit you and your employees.