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.

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:

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

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.

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. 

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. 

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:

 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.

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:

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.

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.

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. 

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.

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.

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. 

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:

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.