Employee Turnover: Causes, Impacts and Reduction Strategies
— January 1st, 2022
In simple terms, employee turnover is defined as the number of employees who quit their job at a company, or, are asked to leave, and are replaced by new employees. Businesses often calculate their rate of employee turnover as a means of predicting the impact on productivity, customer service, or even morale.
It doesn’t make a difference whether an employee chose to leave or was asked to, their absence and the process of replacing them takes a toll on an organization all the same. Retaining employees from the beginning will help reduce the hassle, costs, and wasted time of replacement.
A workplace survey report found that 94% of surveyed employees responded that if a company invested in helping them learn, they would stay longer. This is why it is vital for employers to learn to understand the reasons behind staff turnover, so they can devise initiatives that reduce turnover and encourage workers to stay loyal to the organization.
The Ultimate Guide to Internal Communications Strategy
Types of Employee Turnover
There are four different types of employee turnover. There are as follows:
- Voluntary turnover: Voluntary turnover is when an employee leaves a job because they have taken up employment elsewhere, they are retiring, or they have moved to a different role within the company. There are no external forces making the decision and it is completely of their own free will. This type of turnover most often occurs with valuable employees who are high performers within the company. As a result, replacing these staff members can be costly.
- Involuntary turnover: The opposite of voluntary turnover is involuntary turnover and this occurs when an employee is let go or asked to leave the organization. This type of turnover can happen for a variety of reasons including unsatisfactory job performance, poor behavior, or staff reductions.
- Desirable turnover: Of course, turnover isn’t a wholly negative thing and it can even be desirable in certain cases. A good example of desirable turnover would be if an employee whose performance wasn’t up to company standards was replaced by a worker whose performance met or even exceeded those of the original worker.
- Undesirable turnover: Undesirable turnover is when an organization loses its top-performing employees, often unexpectedly. This type of turnover will likely put a strain on businesses that will need to find a new employee that is capable of living up to the same standard as the person they lost.
What are the main causes of employee turnover?
Lack of employee purpose
LinkedIn’s Talent Trends Survey demonstrated that businesses with a purposeful mission experienced 49% lower attrition. Businesses that possess purposeful missions understand the importance this plays in motivating their employees and making them feel like the work they do matters to the organization.
A business's purpose doesn't have to be aimed at changing the world. Something as simple as a shared vision or working towards the same goal can do wonders for employee morale.
Bad company culture
Studies show that at least one-third of job seekers would pass up the perfect job if the corporate culture was a bad fit, and in one survey, 72% of workers cited corporate culture as a factor influencing their decision to work at a given company.
Each company will always have a set of values, rules, attitudes and unspoken routines that make up its own one-of-a-kind culture. When workers love their company’s culture, they’re happier and more productive. When they dislike their company’s culture they become unmotivated and unproductive and much more likely to leave their positions.
The business saying, “employees don’t leave companies – they leave bosses,” appears time and time again and this is for the simple reason that it’s true. According to a Gallup workplace survey, 52% percent of employees say that their manager or organization could have done something to prevent them from leaving their job.
There are several ways managers can let down their employees, from overworking and undervaluing them to failing to take the time to tap into their talents.
Lack of development opportunities
If an employee feels like there's no room for them to grow within the company, then they're likely to seek employment elsewhere. Employers should pay close attention to workers' dissatisfaction with career development to prevent drops in workplace effort and employee attrition. It’s also important that when advertising for a job it is described accurately so as not to raise false employee hopes about growth or advancement within the role
Lack of recognition
Being recognized for achievements and hard work shows employees that their company values them and the work they do. One study shows that organizations with formal recognition programs have 31% less voluntary turnover than organizations that don't have any program at all.
From offering a simple thank you or well done to perks and bonuses, leaders should have some type of recognition program in place to make their workers feel seen, respected, and appreciated.
Employee turnover strategies
Naturally, there are a number of strategies that an organization or manager can employ to mitigate employee turnover. They range from simple things like offering feedback to ensuring employees have access to learning opportunities.
Here are some other strategies worth considering for organizations trying to maintain worker satisfaction in the workplace.
- Organize effective team-building activities
- Onboarding and orientation
- Mentorship programs
- Employee compensation
- Wellness offerings
- Job perks
- Open communication
- Training and development
- Recognition and rewards
- Work-life balance
- Flexible work arrangements
- Effective change management
- An emphasis on teamwork
- Acknowledgment of milestones
- Share regular feedback
- Encourage employee creativity
- Foster respect In the workplace
- Earn employee respect
- Seek employee feedback
- Challenge employees in a healthy way
- Provide employees with the tools they need
The Ultimate Guide to Internal Communications Strategy
Turnover occurs when employees leave their jobs for a variety of reasons, either voluntarily or involuntarily. When turnover happens for negative reasons and at an unexpected rate it can have a significant impact on a company’s performance and finances.
However, if a company is taking the right steps to improve its staff turnover rate then its efforts will pay off. Apart from costly recruitment processes being avoided the organization will retain skilled staff that are motivated and share the values and vision of the company.