The Real Cost of High Employee Turnover
A good friend of mine runs a large retail branch network. Over dinner recently, while we were talking shop, he shared a frustration I have heard from scores of leaders in his position.
I mentioned that I have been interested lately in gaining a fresh understanding of why so many front-line employees and managers job hop. Surely, in today’s ultra-connected, AI-driven world, the reasons for high attrition must be different, right?
It is not a new topic, but it remains one that sits at the core of many sales and service challenges. A team can never reach its full potential when the customer-facing employees whom customers interact with are constantly new faces still “learning the ropes.”
He winced and said, “Sometimes I feel like I’m running a training program for other banks and businesses. And, intuitively, I know it costs me more to be continually hiring and training new people than it would be to raise salaries and keep more people.”
Recent estimates suggest replacing front-line employees costs roughly 40% of their salary. Why not just raise the salaries by somewhere near that amount to keep them, right? (Uh … not so fast.)
It’s Not Just About the Money
While money matters, loyalty and engagement will always come down to more than just salary. If the only differentiator a bank offers an employee is the paycheck, then loyalty and engagement will always come down to money.
New or younger employees with little vested in where they work rarely feel deeply connected to their employer yet. That is not a criticism of them. There is often a honeymoon period when someone joins an organization and feels motivated to be part of a new team.
One of the things I ask leaders to examine is whether there is a discernible time frame when most of their turnover occurs. Are you losing more people in the first three months? The first six? After a year?
If you’re losing a lot of people around the same point, it’s a fair bet they mentally left you before they physically did. If the most common explanation you hear is that they left for a higher salary, that may or may not be the full truth.
Building Loyalty Beyond Paychecks
If we want employees to see their work as more than just a paycheck, we have to show them that the value of being and staying on your team is more than their next direct deposit. Connection, recognition, and fairness are the true differentiators that build loyalty.
Retaining good people is not a single program or policy. It’s the result of numerous small, intentional actions that make people feel seen and supported. Experienced and engaged front-line teams may be the greatest competitive advantage any bank can have in today’s business environment.
Conclusion
Focus on retention with the same urgency and commitment you focus on business growth, because one fuels the other. It’s worth remembering that employee retention is almost never just a money issue.
