The first step in creating a local business with zero or nearly zero turnover is to understand the “causes of turnover.”
Once you know the causes, you can steadily improve by addressing and rectifying each one. Even if you’re currently struggling with a high turnover rate, you can make consistent improvements.
Here are the six reasons for turnover:
1, Insufficient explanation by the company before joining
Providing detailed explanations about the work environment before joining (during visits or interviews) is crucial in preventing turnover.
However, in most local business, they decide on hiring people by asking 2-3 questions and briefly explaining internal rules for about 5 minutes.
This is simply not enough for applicant to accurately imagine their future after joining.
Naturally, if there’s a gap between the explanations received before joining and the reality after joining, it creates an misalignment in perception between the company and the new employee, leading to turnover.
Once misunderstandings arise during the recruitment phase, they’re difficult to rectify later.
To prevent this, it is essential to explain salary or wages, working hours, relationships (with customers and staff), and company rules clearly without using vague expressions until the other party is satisfied.
Just doing this significantly reduces the likelihood of employee quitting.
2, Too much respect for individuality
There are local business that emphasise “respecting the individuality of each staff member” and “valuing what staff members want to do.”
Of course, I don’t disagree that each staff member has their own personality, and respecting that is commendable.
However, a local business functions as an organization.
It requires certain common rules (constraints that creates work environment) alongside valuing individuality. otherwise, it won’t function as an organization.
For example, imagine the beauty salon where a new staff could freely choose the products they wanted to use, the services they wanted to offer, and freely express their opinions.
While this seemed free and wonderful, it led to “chronic long working hours” and “stagnant sales.”
Because there were no clear closing rules, there was a mysterious pressure within the company that praised those who worked longer hours, leading to an environment where even those with nothing much to do pretended to work endlessly.
Naturally, such unproductive time does not increase sales in proportion to the hours worked, leading to a vicious cycle where sales don’t improve despite staff’s efforts.
Consequently, the company’s profit margin goes down. In such a hellish state where both staff and the company are exhausted, there was a constant turnover due to low pay and long working hours.
3, Overloading one store with unnecessary things
Overloading one store with unnecessary things can lead to turnover. Common examples include overloading menus and roles.
Why overloading menus leads to turnover
Expanding the menu because of the request from staff and customer may seem good idea, but it can potentially lead to turnover.
For example, if the owner asks staff, “Are there any services you’d like to try?” various staff members might suggest different services.
If all of them are implemented, it quickly creates a menu that offers everything.
Having a diverse menu without a focus leads to thin content on the company’s website.
While being able to do everything, the salon lacks a “specialized feature,” making it less attractive.
As a result, getting new clients becomes more difficult, and staff may end up competing for a small pool of new clients among themselves.
This results in the emergence of “unsuccessful” employee whose wages decrease, leading them to quit due to dissatisfaction with the situation.
Why overloading roles leads to turnover
Some local businesses adopt a system where they train new graduate staff to become executives to prevent them from becoming independent.
Although it may seem like a well-organized pyramid system, it’s also one of the factors contributing to turnover.
Typically, small organizations like beauty salons (with no more than 10 staff members) don’t need many roles.
However, if roles are created as a tool to just keep staff, it creates an overflow of roles that has no meaning in a productive way.
As a result, the roles becomes inflated, diminishing its value.
If a company isn’t attractive enough for staff to feel they want to work without the last resort of “roles,” it’s inevitable that staff, who have grown to a certain extent, will leave (or become independent) one after another.
In conclusion, overloading one store with unnecessary things creates a loss of uniqueness, turning it into an unattractive business.
So it’s important to narrow down activities we choose our focus on, make the uniqueness (or selling point) clear, and decide what NOT to do.
Deciding not to do something and narrowing it down, rather than doing everything, creating something new becomes the reason for employee to choose stay in current space, ultimately preventing turnover.
4, emphasizing “staff growth” too much
Local businesses that value the “growth of staff,” too much also suffer from turnover.
This is because growth creates independence.
When employees can attract clients and sell independently, what is the point of working for the company since they can do everything.
Therefore, it’s the natural outcome. They can handle everything on their own without relying on your local business.
Furthermore, excellent staff members who can do everything themselves are highly trusted by their peers. Therefore, when they become independent, it’s common for them to poach other staff members from your local business.
Big resignations cause a fatal loss for your company.
Don’t get me wrong that I agree that it’s important for the company to grow that individual staff members grow.
However, prioritizing individual growth too much and depending on it might cause huge impact on your business not in a way you expect.
5, Imposing the owner’s values on employee
Imposing the owner’s values on staff can lead to the breakdown of trust.
For example, the more strongly, passionately an owner becomes, the more pressure they tend to impose values such as “being a hairdresser or therapist is a wonderful job!” or “I absolutely want to make staff happy!”
While being a hairdresser or therapist might be a wonderful job for the owner, whether employees can share the same sentiment is a different story.
The same applies to considering the definition of happiness.
Some may find happiness in working from early mornings to late nights, improving their service and technical skills towards independence, regardless of weekends or public holidays.
Others may find happiness in balancing private and professional life with a 3-day weekend and a flexible schedule.
Happiness is defined differently for each person.
Nevertheless, if the owner tries to push too much their value into personal principles and values of employee, they’ll be rejected for sure.
They will actually reject it from the bottom of their hearts and may leave your company over trivial matters, leading to resignation.
If you want to keep turnover rates low, it’s ideal to maintain a certain distance and deal with staff according to pre-established rules, rather than pushing their value into their personal principles and values.
6, Making promises that cannot be kept
Owners losing employee’s trust by making promises they can’t keep can lead to turnover.
For instance, if an owner says things like “I want to increase your salary” or “I want to give you a position,” with good intention, but cannot fulfill it, it damages trust.
If you can’t provide an environment where you can answer employees’ questions about whether those promises have been fulfilled, you’ll lose trust.
Rebuilding the trust you built in the past is so difficult and ultimately leads to turnover.
Such troubles occur because owners get consumed by what the employees are thinking of us and misjudge the distance.
It’s important to consider employee’s daily tasks and work and appreciate them when necessary, but refrain from too much communication. It can lead to trouble.
To prevent this, it’s important to maintain a certain distance, as with point 5.
So far, I’ve introduced the six reasons for turnover. If your local business is struggling with employee turnover, I would recommend reviewing your company with these 6 points and thoroughly improve them if there is any that applies to your company.
