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November 7, 2022

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5 min read

6 tactics guaranteed to minimize employee turnover

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It’s in every organization’s best interest to ensure that your top-performing employees stick around. Most businesses have some sort of initiatives in place that exist to mitigate turnover; however, as employee expectations continue to evolve in today’s workplace, the tried-and-true tactics of the past are due for a much-needed upgrade.

Despite the threat of economic uncertainty, data shows that people are still leaving their jobs in record numbers. It’s a critical time for people leaders to take a look at turnover rates through a new lens and strategize what actions are necessary to better retain top talent going forward. 

In this article, we’ll review the meaning of employee turnover, discuss the business implications of high turnover and share actionable ways you can mitigate it in the long term.

 

What is employee turnover?

Employee turnover is a measure of the number of workers that leave an organization within a specified period of time. This includes workers who voluntarily leave, as well as employees who were terminated, got laid off, retired or died.

As your business progresses, employees will come and go  — you will always experience some turnover. This is a natural part of the employee lifecycle and is largely inevitable. 

Where turnover becomes problematic is when you experience a high turnover rate, which means that you’re losing employees faster than you can replace them. High turnover is expensive and can significantly slow down organizational growth since you have to continuously funnel resources and time into hiring and training replacements.

Additionally, high turnover can be indicative of greater issues within the workplace such as poor management, lack of learning opportunities or a toxic work environment. Looking at turnover also:

 

  • Exposes opportunities for improvement within the organization
  • Allows you to re-evaluate your talent needs
  • Acts as a catalyst for greater change within your company culture 

 

If your company is experiencing high turnover, it’s critical to understand what’s going on below the surface.

 

Turnover vs. attrition

Attrition vs. turnover

Although workforce attrition and workforce turnover are often used interchangeably, these are two distinct concepts.

When turnover happens, the organization seeks to fill whatever role was recently vacated. In contrast, when attrition happens, the role is made redundant and unavailable — meaning the organization does not try to refill the position.

Attrition often occurs due to purposeful downsizing or because a shift in technology or business needs has eliminated the need for the position.

 

Employee turnover rate formula

How to calculate employee turnover rate

Here’s a straightforward formula you can use to calculate employee turnover rate for the business as a whole or individual departments for any given timeframe:

Divide the number of employees who left within a chosen time frame by the average number of employees working during that same time frame, then multiply the quotient by 100 to get a percentage value. 

employee turnover rate formula

For example, let’s say you had 500 employees at your company over the past year. Of those 500 employees, 50 of them left. So your formula would look like:

50/500 = 0.1 X 100 = 10%

In this example, the turnover rate would equate to 10%.

As with most metrics, what constitutes a “good” or “bad” turnover rate largely fluctuates by industry and company. Some industries, such as food service and hospitality, tend to have higher turnover rates than others. A general rule of thumb is that anything below 10% is considered a healthy turnover rate. While this is a useful benchmark, be sure to leverage your organization’s historic turnover data to determine what is standard across roles and departments and set your own custom benchmarks. 

 

Why staff turnover matters

Why turnover matters

Staff turnover is inevitable, but this does not mean it’s something your organization can afford to ignore. High turnover can negatively impact a business when:

  • You lose talent to competitors
  • Your employer brand gets a bad reputation that makes you less appealing to prospective hires
  • You spend outside of your budget to try to even out staffing levels. 
  • Increased workloads and a chaotic environment take their toll on team morale. 

 

It’s important to keep an eye on turnover rates within your company and to understand why turnover is happening so you can quickly address the causes.

 

Turnover causes

Why staff turnover happens

There are countless reasons why turnover happens. In fact, it’s likely that there are multiple influential factors that lead a worker to quit, rather than just one driving reason. To effectively address turnover, be prepared to investigate all of the possible causes at the individual, team-wide and even organizational level that may play a part in it. 

Here are some of the most common causes of turnover:

 

Poor work/life balance

Many employees leave an organization if the workload is too demanding and takes away from their personal time. Especially now, when many industries are experiencing labor shortages, workers are often expected to do the job equivalent of multiple people and may leave their employers if a healthier work/life balance is not restored.

This is a growing trend among younger generations in the workforce, with both Millennials and Gen Z’ers identifying better work/life balance as a top priority after compensation.

 

Compensation

Not surprisingly, pay is an influential factor when it comes to turnover. Employees that feel that they aren’t being adequately compensated for their work or if their earning rate is never increased over the course of their time at the company are at risk of leaving to find another employer that pays more. 

While pay has always been an important factor, it’s even more important now as employees grapple with the rising cost of living. A recent KPMG report found that 73% of CEOs are concerned about their ability to retain talent with inflation and higher living costs.

 

Lack of purpose or fulfillment

Now more than ever, employees are looking for an “emotional salary” — they want to feel confident about the work that they do and feel connected to their jobs in a way that goes beyond financial compensation. The concept of emotional salary can look different based on the individual, but it can include things such as a flexible work schedule, corporate social responsibility and access to professional development opportunities. 

 

Limited access to learning and development opportunities

Data shows that lack of growth opportunities is a top reason why employees leave their jobs. People look for employers that provide them with ample opportunities to learn and enhance their skill sets — especially in the wake of widening skills gaps and rapid digital transformation. Without adequate and accessible training and education initiatives in place, your organization is at risk of losing talent.

 

skills gap analysis template cta

 

Weak management

The relationship between a direct report and their manager is one that has a significant influence on the employee experience. A poor relationship that negatively impacts an individual’s day-to-day can override all of the other great benefits that come with working at a company. That’s why adequate people manager training and development is critical to ensuring the success of all of your employees.

 

Poor company culture

It’s no secret that poor company culture can have cascading negative effects across an entire organization. While certain aspects of company culture may be subjective, there are other non-negotiables that must always be closely monitored and strictly upheld. These include a no-tolerance policy for workplace harassment, as well as other things such as prioritizing a work environment that is diverse, equitable and inclusive at all levels. 

 

How to minimize turnover rate

6 effective ways to reduce turnover rate 

There are countless ways to tackle turnover and the exact approach you take will largely depend on the causes that you pinpoint. That said, here are some easy-to-implement actions that can help point you in the right direction:

 

  • Combine quantitative and qualitative insights 
    If you haven’t already, consider investing in quality performance management software. With employee information at your fingertips, you have the ability to view individual performance on a granular level and dig into what goes wrong in high-turnover departments. 

    To paint the full picture, you can also supplement your quantitative data with qualitative insights gathered in exit interviews with employees who have left the company. Additionally, look at reviews on third-party websites such as Indeed or Glassdoor for more unfiltered feedback. While this should always be taken with a grain of salt, it can still help you develop a deeper understanding of employee sentiment.

 

  • Invest in employee learning and education
    When it comes to growth opportunities, employees want to see a meaningful, tangible investment from their employer that actually leads to real career outcomes. Hosting a one-time training workshop or providing access to an online course provider that goes unused isn’t effective at engaging employees. A true investment in employee growth requires a comprehensive learning & development strategy that’s tailored to the skills needs of your workforce. 

    Many leading organizations do this through a strategic workforce education program that provides debt-free access to a variety of learning options, including training courses, certificates and even degree programs. This approach allows you the flexibility to develop individual career paths that directly align to both business goals and available learning opportunities. 

    It’s equally as important to train people managers on how to talk about facilitating career development with their direct reports as this is key to reinforcing a workplace learning culture. Employees should work directly with their managers to discuss development goals and determine the type of learning that’s going to get them to the next desired step in their careers.

 

  • Promote internal career mobility
    Make it known that the way forward isn’t always up. With the right reskilling, an employee with transferable skills and competencies can take on a role in an entirely different team or department. This opens up opportunities for people who may not be entirely sold on their current career path and are interested in making a switch.

 

  • Take meaningful action on diversity, equity and inclusion (DEI)
    Performative statements backed by lackluster initiatives aren’t going to cut it if your organization can’t take intentional, actionable steps toward improving DEI within your company. In today’s workforce landscape, employees expect their company to take meaningful action towards DEI and deliver on outcomes. This is absolutely necessary if you want to retain any employees, but especially true for members of your workforce that are part of historically underrepresented or marginalized groups.

 

  • Explore options for flexible work
    The way people work has shifted drastically in recent years. Remote and hybrid work, flexible time off for family needs, extended paternity and maternity leave, mental health and wellness days — all of these things have been shown to increase employee satisfaction and make a better work/life balance possible. 

    As many organizations have started to roll out return-to-office policies and claw back on other benefits that they implemented during the COVID-19 pandemic, it’s important to consider how this affects the employees who have grown to appreciate the flexibility offered by these initiatives. This doesn’t mean you should completely pause your return-to-office plans, but it does indicate a shift in mindset among employees and what they value. 

    Recent studies show that the option for flexible work is a top three motivator for finding a new job. Your definition of flexibility doesn’t have to include remote work (especially if your organization has a frontline workforce that requires in-person interaction), but you should strategize how you can offer more flexibility and autonomy to your people in ways that fulfill their needs and still benefit the business.

 

  • Re-examine hiring practices
    A high turnover rate may also indicate a faulty hiring process. If you’re not adequately describing job responsibilities, vetting applicants or onboarding incoming hires, this can accelerate turnover rates drastically.

    Spend time defining the skills, competencies, qualities and values your ideal job candidates should have. Revisit hiring practices that may be outdated.

    Finally, make sure you’re hiring workers who add value to your company culture and help to drive positive change from within. The right fit could stay with your organization for years to come. 

 

Evolving workplace practices with employee expectations

Turnover comes at a high cost that can quickly derail business growth if it goes unaddressed. There are countless factors that contribute to why employees leave, but the key takeaway is that organizations have to keep a pulse on what their employees value most. This doesn’t mean you need to flip the script every time you receive employee feedback, but it does mean making continuous small improvements to show that you’re listening to your people and care about their happiness at work. Doing so ensures you retain your best talent, and makes your employer brand even more attractive against competitors. 

Discover more talent management resources: It’s clear that upskilling and reskilling are priorities for employees and employers alike. Download this comprehensive guide to learn how to fast-track skill-building within your organization for quick impact.

You can address talent development challenges

See how a partnership with InStride can meet the challenges of tomorrow, with action today.

You can address talent development challenges

See how a partnership with InStride can meet the challenges of tomorrow, with action today.