How to reduce employee turnover

What is employee turnover?

Employee turnover is how frequently employees leave an organization and can be measured monthly, quarterly, or annually. It is important to monitor your organization’s turnover rate as it provides insight into employee morale and can help with decision making. Employee turnover rates include voluntary and involuntary turnover.

• Voluntary turnover: is when an employee resigns, retires, or transfers
• Involuntary turnover: is when an employee is terminated, for reasons such as corporate restructuring or lack of performance

87% of HR professionals cited turnover and retention as a high priority for the next few years.

What causes employee turnover?

Employees can depart for many reasons such as:

• higher compensation
• poor senior leadership
• better benefits
• career progression
• better work-life balance

To understand and track the reason of departure, HR should encourage exit interviews. Exit interviews can give insight into how you can improve the culture or make the position better for new hires.

The impact of high employee turnover rates

High employee turnover rates can impact your organization and its bottom line. According to the Society for Human Resource Management (SHRM), the recruiting process can take eight to twelve weeks and the cost is at three to four times the position’s salary. If an employee was salaried at $80,000, it could cost $240,000-$320,000 to replace them. If the employee’s role was client-facing, the client can discontinue business with your organization and follow the worker to their next employer.

High turnover rates can also result in lost productivity, employee burnout, and lost corporate l knowledge for those employees still at the company. 41% of those surveyed said the source of their burnout was employee shortages. This is because employees may need to pick up the extra work to account for the lack of staffing, this increases the risk of burnout. Losing employees also means losing the expertise they take with them. According to HR Daily Advisor, about 42% of the skills and expertise required to perform a given position is known only by the person currently in that position. Meaning if a colleague picks up the position, they won’t be able to do 42% of the work, and someone hired into that role will need to learn 42% of it from scratch. Succession planning and eliminating single points of failure by cross training other employees on jobs is an important strategy to minimize impacts of turnover.

Many employees leaving an organization in a short time frame can also affect trust in the company’s management. High turnover rates impact new talent coming into the organization by making them hesitant to work with a company that so many employees are leaving.

How to calculate your employee turnover rate

Employee turnover rates are measured over a set period – monthly, quarterly, or annually. Organizations typically report turnover rates annually for the entire company. Rates can also be broken down by department or teams.

To calculate your employee turnover rate, first determine:

• The number of employees who left in the given time frame (voluntary and involuntary), let's label this A
• The number of employees at the beginning of the time frame being analyzed, let's label this B
• The number of employees at the end of the time frame bring analyzed, let’s label this C

Then calculate the average number of employees during the time frame.

Average number of employees = (B + C)/2

You can now calculate your employee turnover rate.

Employee turnover = (A / Average number of employees) x 100

How to reduce employee turnover and improve retention

Keep talent from walking out the door by addressing turnover triggers:

1. Provide flexible work policies: Implement innovative work policies such as flex schedules, remote work, job sharing, or a compressed workweek.
2. Improve manager-employee relationships: Help managers develop their leadership skills to build strong healthy relationships with their employees by setting clear expectations and hosting new manager training sessions.
3. Prioritize professional development: Employees feel valued when companies invest in their skills and career advancements. This support begins from the orientation and onboarding program, ongoing development through training programs, career development plans, and regular performance reviews.
4. Implement employee feedback: Gather feedback about job satisfaction through stay interviews and employee engagement surveys. Stay interviews consist of questions that help your employees communicate what they like about their role and what can be improved. Engagement surveys can be completed quarterly and are an anonymous way to find out how engaged your employees are.
5. Foster team building: Build a collaborative culture through hosting team events, all-hands meetings, mentorships programs and extracurricular groups.
6. Strengthen your DEI efforts: A diverse, equitable, and inclusive workplace is highly valued by employees. Improve your DEI efforts through DEI trainings, and inclusive hiring practices
7. Create employee recognition initiatives: Show employee appreciation through performance or referral bonuses, stock options, and by celebrating anniversaries or accomplishments.

Frequently Asked Questions

What helps reduce employee turnover and absenteeism?
To reduce employee turnover and absenteeism, you first need to understand what contributes to turnover and absenteeism in your organization. A great way to improve retention is by having leaders connect with their employees during one-on-one meetings. This is when leaders can connect and talk about what the employee needs to feel engaged and motivated. Managers can then address anything that may be negatively impacting the employee.

What is the #1 reason for employee turnover?
According to a survey from SHRM Research , inadequate total compensation was the most common reason for employees leaving their employer. A lack of career development and workplace flexibility were a part of the top three reasons.