Employee Turnover: What, Why and How to Reduce it

Dec 10, 2019 | Company Culture, Cost, Recruiting | 0 comments

Employee turnover is a common HR issue for companies on a global scale. Employee turnover can lead to many negative outcomes, such as inconsistent departmental performance, increased hiring and onboarding costs, and competitors obtaining quality talent.

The good news is, employee turnover can be measured, and subsequently reduced, with the right strategies and tools in place. This article will focus on answering the following key questions related to employee turnover:

  • What is it?
  • Why is it important that organizations keep track of it?
  • What are some common contributing factors to employee turnover?
  • Finally, how can companies effectively reduce employee turnover?

What is Employee Turnover?

According to BambooHR, employee turnover is defined as:

“The measurement of the number of employees who leave an organization during a specified time period, typically one year. While an organization usually measures the total number of employees who leave, turnover can also apply to subcategories within an organization like individual departments or demographic groups.”

Employee turnover falls into one of two basic categories: voluntary and involuntary.

  • Voluntary turnover occurs when an employee decides to leave the company. This could be due to another job offer elsewhere, stressful working conditions, dissatisfaction with current wages, or other factors.
  • Involuntary turnover is when a company terminates an employee because of poor performance, failure to abide by company policy, toxic behavior, or other reasons.

Why is it Important to Keep Track of Employee Turnover?

Keeping track of employee turnover is desirable for a number of reasons. 

First of all, employee turnover rates serve as one key barometer of a company’s financial and cultural health. For example, not all turnover is considered undesirable: if a frequently tardy, disengaged, and unproductive employee is replaced by a worker that meets or exceeds all of the company’s basic standards, then this actually results in a win for the organization. Thus, employee turnover should be measured with regards to overall impact on the business.

Secondly, once the rate of undesirable turnover has been accurately assessed, the compiled metrics can help HR managers pinpoint which areas of the work environment/culture need special attention. A simple illustration would be a high turnover rate among productive employees that have been with the company between 2 and 5 years. Perhaps the root cause of this turnover rate lies in a lack of advancement opportunities for motivated, ambitious workers.

Finally, year over year employee turnover metrics can help senior management keep track of overall improvement or regression with regards to employee retention strategies.

Common Causes of High Employee Turnover

While there are countless reasons why an employee may leave his or her current position, the following are common causes of employee turnover:

Toxic Culture

Employees that have to deal with rude coworkers, overbearing managers, a lack of work-life balance, and unreasonable deadlines day in and day out are much more likely to leave their company than employees that work in positive corporate cultures. In fact, some studies have shown that dealing with a bad manager is the number one reason why employees quit their jobs.

Employee Misalignment

Many new hires are actually not qualified for their job, or have values that don’t align with the company’s mission and business objectives. In such a scenario, the employee almost invariably winds up frustrated and ultimately leaves the position.

Lack of Empathy

When employees feel that they are not being heard, they quickly lose motivation to give their best at their job. As many companies claim that employees are their most valuable resource while simultaneously laying off hundreds of long-time team members, disaffected workers feel no compunction about looking for better opportunities elsewhere.

Lack of Advancement Opportunities

Many employees are keenly interested in advancing their careers and are more than willing to do so with their current company. However, a lack of opportunities for promotion, or even lateral movement, can frustrate these employees and cause them to seek a way out, perhaps by defecting to a competitor. 

Inadequate Training

Employees that are not properly trained, or in some cases not trained at all, will likely leave the company sooner rather than later. Research indicates that almost 40% of employees leave their job within a year when they receive inadequate training for the demands of their position. 

How to Reduce Employee Turnover

There are many cost-effective, even subtle ways that companies can reduce employee turnover. These include the following strategies:

Foster a Winning Culture

A positive, forward-looking company culture is one of the biggest contributors to employee satisfaction and will allow an organization to retain top-tier talent instead of losing productive workers to the competition.

For example, many employees are very concerned with maintaining a healthy work-life balance. In response, some companies have offered flexible work schedules and even remote work opportunities for qualifying team members.

Hire the Right People for the Job

It is important to carefully and thoroughly interview job candidates, not only to learn about their tangible skills, but also to determine how well they would match up with the company’s culture, with their managers, and with their colleagues. Fortune 500 companies such as Bayer utilize strong assessment methodologies both in the initial hiring process, as well as in individualized career planning for current employees. 

In addition, many companies use a pre-hire assessment tool, such as the one from Bryq, which combines an evaluation of cognitive skills and personality traits to help match the right person to the job and ultimately reduce employee turnover.

Encourage Employee Feedback

Since the vast majority of employees have a deep-seated need to be heard, wise employers will create opportunities for them to air their concerns, perhaps to their immediate supervisor, and even to senior management. Such feedback sessions should also result in appropriate follow-up; or at the least, an explanation as to why action cannot be taken.

Give Commendation

Employees blossom with praise. Even when negative aspects of an employee’s performance need to be addressed, discerning managers will spend some time focusing on what the employee is doing right.

When a company has a culture of sincere commendation in place, employees will be more productive, and more likely to stay on with their employer. Moreover, employees will be more likely to advance their careers within the company.

Provide Exceptional Training

A robust onboarding program, coupled with periodic refresher courses, will give employees the knowledge and confidence that they need to find satisfaction in their assigned duties. Any investment in such a program will likely yield a high return.  

Even though employee turnover is an issue that almost every business organization in the world has to face, measuring it, identifying and handling weak points in the hiring process, and implementing effective employee retention strategies will help company leaders to reduce employee turnover and promote organizational growth.

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