High Employee Turnover and What You Can Do About It
This post offers tips and insights to help you understand and deal with high employee turnover. I’ll break up the topics into sections to keep them organized.
We’ll start by going over a few terms. We’ll look at some formulas and recommendations for using them, followed by some tips to reduce employee turnover and improve employee retention.
Let’s get started with some terms and definitions.
Employee Turnover Meaning:
Employee turnover is a term related to the number of employees that leave your workforce during a set period.
A higher than average employee turnover rate can indicate you have a problem with your company, management, or other contributors.
A low employee turnover rate could indicate you are doing a good job and people like working for you. It could be due to a small dedicated staff. A low rate is also an opportunity to hire new talent to bring in new ideas and improved ways of doing things.
Types of Employee Turnover:
Voluntary turnover is when an employee leaves your company by choice. It may include relocation, personal reasons, a better opportunity, etc. When your voluntary turnover rate is high, it’s something you need to look into, and we will get to the details further in this post.
Involuntary turnover refers to people that are terminated. It may be behavior or performance-related, cutbacks, policy violations, etc. A high rate of people being terminated means something is wrong, and you need to investigate the root cause. We will also focus on this area in the upcoming sections.
Employee Turnover Industry Reports:
You can find reports for turnover rates by industry. What you want to look for are specific reports.
For example, if you own a fast-food restaurant, looking at the turnover rate for the hospitality industry would be too general. Instead, look for the fast-food industry turnover rate. It’s even more effective to get the turnover rate for your region because rates differ by area.
Instead of using the country’s overall rate, try to find a rate for your state or province. Also, see if you can find information for your city, which would indicate if you have a problem, or your turnover rate is within limits.
You’ll want to start by obtaining accurate turnover rates for your company. Suppose your method of obtaining the numbers offers an overall turnover rate. You won’t be able to pinpoint the problems or create an effective solution.
Accurate data will allow you to find any underlying problems with your business. Inaccurate data will throw you off and can result in bad decisions.
In the formula section next, we will use the formula in multiple ways to pinpoint the problem.
Employee Turnover Formula:
The formula is not difficult, but there are a few ways I would use it. First, let’s take a look at the formula, but first, you need three pieces of information.
1. Determine the Time Frame:
You need a specified period to create an accurate report. You can calculate your employee turnover rate over a few years, the previous year, by quarter, or monthly.
2. The Average Number of Employees:
To get this figure, add the number of employees at the beginning and the end of the period and divided by two.
1st Quarter Beginning – 103 employees
1st Quarter Ending – 95 employees
Average employees = 99
3. The number of employees that left the company during the time frame your using.
Now for the Simple Formula:
Take the number of employees that left the company and divide that number by the average number of employees remaining in the company and multiply by 100. Which will give you the percentage of turnover.
Last year you had an average of 65 employees and 12 left the company,
let’s do the math.
(12 employees gone / divided by an average of 65 remaining employees X 100) = 18.46%
In the above example, your turnover rate would be 18.46%
You may be thinking, is that good or bad? Which is a good question. As mentioned earlier, I would get a benchmark rate for my industry and for my area to compare the rate with the benchmark.
Digging Deeper Into Your Data:
Let’s look at some important issues to consider and get employee turnover rates that can help us pinpoint problems.
1. Define the timeframe you want to study—for example, the past month, quarter, or year. If you know there is a problem, get the numbers by month and the overall rate for the year. This allows you to identify the times your employee turnover rate was the highest.
2. Using the formula above, get the overall employee turnover rate, including voluntary and involuntary turnover, and record the number to give you a starting benchmark for your company.
Now you should have your data, and we can start to pinpoint areas of concern.
Identifying Problem Areas for Your Employee Turnover:
Is Your High Employee Turnover Internal or External:
In the step above, we have data for our turnover rates by month for the past year. Identify if any spikes are present in the data. If you have spikes, do some research on the dates to determine if any external events were present.
For example, in February of last year, there was a spike in employees leaving the company.
Do some research to find out what happened in your location last February.
Let’s look at some examples:
Non-Competitive New Company in the Area:
Did any new companies come to the area that attracted part of your workforce? It could be you were unaware of a nearby non-competitive company that was hiring at that time.
Low Unemployment Rate:
Was the unemployment rate low? With low unemployment rates, job offers become more competitive, and it’s a time when employees can find better jobs.
Were there any issues that affected the local population, for example, a natural disaster where many people relocated to a different area? Were there any circumstances where people left the area for a booming industry in another location?
Voluntary vs. Involuntary:
Check the rate of terminated employees vs. the employees who resigned. If you have a lot of employees that were fired. Then you’ll want to look at the cause.
Some example questions to ask are as follows:
- Were the wrong people hired?
- Was the job description miscommunicated?
- Are you doing a poor job of training?
- Was your company restructuring and cutting jobs?
The same would apply if the majority of your turnover rate was voluntary. Look into issues such as:
- Is your company paying low wages?
- Is your management team doing a poor job?
- Is there a problem with the company culture?
- Are there rumors causing a sense of company instability?
- Are working conditions poor?
Employee Turnover Rates by Department:
Determine the turnover rates per department. Any department with a higher than average turnover rate will be something you’ll want to investigate to determine if there is a problem within that department.
For example, are there problems with any jobs in a certain department? Are working conditions harsh? Is it too cold, too hot, labor-intensive, is your management team to blame, etc.? Once you have accurate data, you’ll be able to find the main issue or a combination of problems.
Employee Turnover Rate by Manager:
Now it’s time to pull the turnover rates per manager. A manager with a higher than average turnover rate is something you want to look at closely. It could be the management style that’s driving away your employees. The manager might be abusive, and that’s something you’ll want to investigate and take prompt action to correct. The last thing you want is a boss that is not managing your employees fairly.
Employee Turnover Cost Calculator:
Using a turnover cost calculator may be an easy way to come up with a figure. But is that figure correct? Unless you know the cost to rehire for your company and the different costs for different jobs, a cost calculator won’t give you an accurate number. It’s better to find out your cost to hire once you have that. You can easily multiply that by the number of people you had to rehire to get an accurate estimate of costs.
Cost of High Employee Turnover:
Naturally, there is a cost involved with high turnover. Let’s look at each area to consider and determine what applies to your company so you can estimate the costs.
If you depend on job recruitment agencies to find employees suitable for your operation, consider the fees involved. Some agencies will take a flat rate, while others will work off a percentage of your employee’s wage, which can fall within the 15 to 20% range.
Job Posting Fees:
If you do your own hiring and post to popular job boards. It can cost anywhere from $250 – $500 per posting for a 30-90 day job post. Other modules include cost per click, which can vary from $1.20 to $1.50 per click.
Background checks can cost you from a few dollars to around 80 dollars, depending on the level of information you want.
Whether you use an agency or do the hiring yourself, you need to consider the cost.
Suppose you have an HR manager, an HR generalist, or an assistant dealing with the hiring process. In that case, they will need to put in many hours when you’re hiring. They need to put up the job posting, take calls, collect and sort through resumes, set up and interview people, etc. All these tasks are part of the cost of hiring.
Onboarding and Training:
Onboarding and training is an area where a lot of your hiring expenses could go. Especially if the position has a long learning curve before an employee can become productive and handle the work effectively.
If it takes a few months to train an employee for a job, you have to consider the costs involved. Let’s take a closer look.
1. The Cost of the Trainer:
Whether you employ a full-time trainer or a coworker to perform the training, it involves a cost to the company. Also, consider if a coworker is training. Their work is getting behind or not completed because of the training, which is an indirect cost.
2. The Cost of the Lost Productivity:
When you are training someone for a position, productivity suffers because the trainee isn’t productive during training.
3. The Cost of a Vacant Position:
When you have a position vacant, overall productivity suffers until that position is filled.
Consider the cost when a position is vacant for 60 days. Other people will have to take on the extra workload, threatening their quality of work and adding stress to their job.
Suppose it takes 30 days to hire someone new and 30 days to train them. That’s two months out of the year lost.
Now imagine if you had a high turnover rate and hired 10 new people every year. Those 10 people would have a combined productivity loss of 20 months. That’s a high cost to absorb and something to think about when it comes to high turnover rates.
Employee Turnover Statistics:
Statistics are an important part of understanding a topic. You can pick up tips and insights, and it will help you develop a stronger strategy when you understand the topic.
Statistics are always changing. You want to get the most up-to-date information when you are looking at your company’s turnover rates.
You can use the following search query to find the latest information for the employee turnover rate for your industry and area. You can also use it for searching on Facebook, Twitter, YouTube, LinkedIn, and other social platforms.
The query is:
[ INDUSTRY employee turnover statistics YOUR AREA ]
Companies and Industries with High Employee Turnover:
Many industries and companies have high employee turnover rates because of the way they operate. Let’s have a look at a few examples:
Labor Intensive Jobs
Companies with unattractive jobs have high employee turnover rates. For example, labor-intense jobs, such as those found in the agriculture industry. Employees may take the job if they don’t have other options, but they will leave once something better is available.
Many people will take a job in a restaurant as a stepping-stone, and once something better comes along, they leave.
The fast-food industry pays minimum wage and is popular among students getting their first job. Students use a fast-food job as a source of income and nothing more. Most may last anywhere from a few months to a couple of years while going to school, then they move on.
Many retail establishments offer part-time work and pay minimum wage. With part-time work, they avoid overtime costs and other costs such as benefits and retirement packages. Jobs like these are stepping-stones, and most people who last are those looking for part-time work.
What Causes Employee Turnover:
There are many reasons for high employee turnover. Let’s look at a few of them. When reading over the reasons, ask yourself if any of these apply to your workforce.
Lack of Purpose or Meaning:
Without purpose or meaning in their work, an employee gets tired of their job and finds no satisfaction. They could be bored, or they feel they’re not making an impact, or they’re not providing any value. The person may seem lazy, which could be because they’re not being used to their full potential.
As a business owner, it’s important to ensure you have the right people in the right job.
Naturally, when an employee is overworked and no sign of relief, they will start to look for employment elsewhere. From what I see, many employees are dedicated to their job. Still, when you’re overworked, that means you’re underpaid, and you’re subjected to stress.
As a manager or a business owner, it’s up to you to ensure your employees are not overworked. Ignoring the issue will increase your turnover rate.
You can always look at the employee’s duties with a lot of responsibility to see if you can simplify the job. Maybe split the job into sectors and delegate part of the responsibilities to another employee with fewer duties.
This way, you reduce the workload on the overworked employee and have kept the underworked employee busy.
When an employee doesn’t have work-life balance, they become unhappy and can experience stress.
It could be the shift there working on doesn’t work well with their personal life, and they feel they’re being deprived of issues like being with family if they’re on the night shift.
Another area to consider is being on call after work. Employees feel like they’re always working and don’t have a break in their job, interfering with their personal life.
Lack of Growth and Progression
Suppose an employee feels stuck in their current position. In that case, whether they are being bypassed or feel there is no room for a promotion, they will consider looking for a job where there is growth.
Whenever you’re hiring, it’s a good idea to look within the company before hiring externally.
When you promote your own people, they know the company culture and adapt quickly. When you don’t find the talent you need within your company, then hire an external candidate.
Approached by a company
Many times, an employee might be approached by another company or a placement agency. This happens all the time with management positions. The agency or company will look for profiles that match their job opening and approach those people to see if they’re interested in changing employers.
Many employees will meet with the agency or company. After all, they’re curious because they are valued by another employer.
A lot of times, it works out because the offer is too good to pass up. Sometimes their current employer will match the offer. Other times they just let them move on.
Suppose an employee is unhappy for certain reasons in their position. In that case, they usually end up leaving whether the employer matches their wage or not.
The Job Did Not Meet Expectations:
If your job description is inaccurate and you filled that position, your employee may quit during or after the training. The job was different than what was presented. The person is unwilling to do the work or may find it overwhelming and quit before getting too involved.
When you have a bad boss, you have a bad job. You may dread every day you have to work. A bad manager is one of the main reasons people will leave a good job even though they may not have anything against the company. Still, they can’t work with their boss, so the bad boss trumps the good parts of the company.
As a business owner, make sure you keep an eye on your managers because they’re the ones running the show. If they’re treating their teams poorly, you’ll have increased voluntary employee turnover and declining productivity.
Suppose there are rumors or signs that your company is in trouble. In that case, people start to put their CVs out on the job market because they’re afraid they will be unemployed very soon. Rather than wait until the ship sinks, they get ahead of the game.
Your company’s reputation must be maintained. If any rumors are going around, put a stop to them right away, or you’ll end up with people making plans to leave.
When employees do their best, they are loyal and hard-working and don’t receive any recognition or promotions; they feel undervalued. They may look for a way out or do the bare minimum to stay under the radar. It’s important to recognize employees that are hard-working and keep them happy.
Sometimes people want to go into business for themselves. This has happened to me numerous times. When I lose a good employee, I always wish them the best and let them know that the doors are open if they ever feel they want to return.
Time for Change
Sometimes employees leave because they want a change. It has nothing to do with the company, job, or people. It’s time for them to pursue something else in their life. All you can do is wish them the best!
How To Reduce Employee Turnover Rate:
Let’s go over a few ideas that can help reduce employee turnover rates. Naturally, not all these ideas can be implemented for every business model, some ideas you like and some you’ll reject. Don’t think of them as a to-do list. Think of them for what they are, and that’s an idea. Ideas can be modified or dismissed. Have a look and keep an open mind.
Offer Flexible Work Hours if Appropriate:
Depending on the job, you may be able to allow flexible hours. It’s a huge bonus for many employees and will reduce employee turnover.
Some people can work from home. 2020 and 2021 have proved that with the Covid-19 pandemic. A lot of the global population was working from home. You may have opportunities for people to work from home a day or two during the week. Your main goal is they do a good job while completing all of their work. If they can do that effectively by a combination of working from home and the office, why not? It’s one way to reduce employee turnover.
Also, if you allow people to work their own hours, it becomes another employee benefit. Some people do their best work in the early morning while others work best late hours of the night. Allowing your employees to work when they are most productive can benefit the company.
Getting feedback from employees can help you understand what you’re doing right, what you could be doing, and what you’re missing.
To get honest questions and allow freedom of speech, you can make the survey anonymous.
You’ll also want to take some time and come up with questions that will help you. You want specific questions for the best results.
For example, if you’re planning to renovate the lunchroom, you would ask what you value most in the lunchroom.
- Comfortable seating
- Vending machines
- Fridge and freezer
- Catered breakfast
- Catered lunch
- Other, please specify
In the above survey, I have noted issues that I am willing to put in the lunchroom and offered them to add their own comments and what they would like to see in the lunchroom. Based on the results, you could implement something that the majority of your employees want.
Using the example above, you could address other issues to improve the workplace.
The issues don’t have to be high-cost projects like a renovation, but it could be a process. When you involve your employees and listen to their wants and concerns, you build company morale and happier, more productive employees. You make them part of the process, which makes them feel important and shows that you care. Exercises like these reduce employee turnover.
Update Your Benefits Plan:
If your company offers a benefits plan, then look to see if you can make improvements.
I would take an employee survey to see what are the most important benefits they value.
For example, your benefits plan may offer $1,000 a year for dental benefits. The plan offers $300 a year for chiropractic care and five dollars per prescription. After the survey, you may find that most employees would rather have $1,500 in dental, $100 for a chiropractor, and two dollars per prescription.
You can make these changes with little effort and calculate the cost to see if it’s something that you can do. Looking at it from this point shows that you are listening to your employees and giving them what they value most. If you make the changes, you will let your employees know that this is what most people want, and these are the changes we’re putting in place.
Offer a Decent Yearly Performance Raise:
I believe it’s important to give yearly raises to all your employees. That raise can be a set 1 to 2%. Give those employees that go the extra mile, are dedicated, hard-working, talented an additional 2 to 3% raise.
This extra performance bonus shows your employee that you recognize their hard work. It also says keep up the hard work, and you can expect the same thing next year. An employee who expects a decent raise every year will put in the extra effort and think twice before leaving the company.
Offer a Bonus When You Can:
When employees go over and above, keep them motivated, keep them happy, and improve employee retention by offering a bonus when you can.
For example, if an employee comes up with the idea that will improve efficiency and can implement that idea and take charge, why not give them a bonus for their initiative and hard work.
Bonuses are a great way to get employees motivated and improve employee retention.
Offer a Good Retirement Plan.
Offering a retirement plan is another way to improve employee retention. Some of the money will come out of the employees’ wages. The company can match whatever the employee puts into the plan to a certain amount. For example, if an employee puts in 4%, the company can match 50% of that, resulting in a 2% company contribution. When an employee has a decent retirement plan, they will think twice about leaving the company and working for one that doesn’t have a retirement plan in place.
Make Your Employees Feel Appreciated:
Appreciation goes a long way, especially in the workforce. I have seen many employees work hard, and they get frustrated when their work goes unnoticed. Some managers may think if I appreciate my employees, they will want more money because they think they’re more valuable.
Even though this may have some truth to it, showing appreciation won’t hurt you.
For example, let’s say that you show your appreciation to an employee who is working hard. That employee asks for a raise because of their hard work and effort. You can say your job only pays what you’re getting. I can’t give you more money because then I’ll have to make adjustments for the rest of the workforce, but I will keep this in mind during our annual performance reviews and raises. Keep up the good work. When an opportunity presents itself, dedicated, hard-working employees have a better chance to move up in the company for jobs they are qualified for.
There are many ways to show employee appreciation. See Employee Appreciation Ideas To Impress Your Staff to get your creativity flowing.
Keep an Eye on Department Heads and Managers:
As mentioned earlier, many people quit their job because of the boss they’re dealing with. I have seen many companies in my lifetime, especially the bigger ones. The department head can do whatever they want as long as they hit their quotas and keep the cost down. Nothing else matters.
You may have good managers in place. When you follow up with employee satisfaction, it makes your managers even better because they know your goals and values. When you put workforce treatment as part of your core values, you improve your department leaders to treat the workforce well.
Perks at work
Offer at work perks – Think of Google.
Have you ever had a look at The perks google offers its employees?
Let me list a few of them:
- Free onsite gym/gym classes
- Free food
- Massage therapists
- Onsite medical staff
- Decompression Capsules
- The “Death Benefit”
Although perks alone may not be the sole reason to keep employees, they help improve employee retention. Naturally, you’re not going to invest your whole operating budget on employee perks. You could offer something new every few months, which will prove employee appreciation is consistent.
You can list all the issues you can put in place, making an employee think twice before leaving. Once you have your list in place, you may want to send out your survey to your employees, asking them what they would value the most out of your list while allowing them to add their own ideas.
Once you have the feedback from the survey, you can do some research to determine what parks you can put in place.
Ensure You Have the Right People in the Right Position:
If you have people in a position that isn’t right for them, your productivity will diminish. When a highly skilled person is in a mediocre job, they become bored, and job satisfaction plummets. They are not being challenged and will lack any interest in the job, appearing as lazy, nonproductive employees.
If you put an underqualified person in a high-demand job, they are stressed trying to keep up. Productivity suffers, and errors are made. It’s important to review key jobs to ensure you have the right employee in the right position.
Respect and Building Relationships:
If you own a business, you want to protect one of your most important assets, your workforce. Without your workforce, you have a problem, and you can’t operate your business. It’s important to treat them with respect and value them.
When you have a working relationship with all your employees, you build loyalty, respect, and a team. Take some time to speak with employees. If you took a walk during the day and checked on operations, don’t you think your employees would appreciate you taking the time to talk to them.
Some managers and business owners avoid interacting with the workforce because employees can complain and be demanding. So they don’t bother and avoid speaking with them.
Suppose every time you do your walk, an employee asks for something. If you read between the lines, it means there are a lot of problems. Why not take on the problems head-on? If it’s a legitimate request, then you found something out that you wouldn’t have if you didn’t do your social walk. If it’s not a legitimate request, let the person know why.
Suppose an employee asks you if they could switch shifts. Naturally, you’re not going to say yes or no, but tell the person we have processes in place, and that’s something to address with your supervisor and HR if needed. This way, you have kept the chain of command and your policies in place. Suppose an employee tells you about working conditions. In that case, you could ask for the details and say I will discuss it with the department manager and get back to you. This way, you are not stepping on the toes of your manager.
You can get your exercise every day by taking a 15-minute walk through operations. The trivial request will disappear. Your employees will get the hint and go through the proper channels, and your walks will become more social and enjoyable.
Get to know people by name. Get their opinions and ideas, even take some time to coach the workforce as a team. This can build loyalty and strong relationships, and it will help reduce employee turnover. While allowing you to get to know the people that keep your business in operation.
You will benefit a lot by building an authentic work relationship with your team. Let’s say you have thousands of employees, then naturally, you wouldn’t be able to reach all of them during your daily 15-minute walk. Still, you could send out a broadcast and coach your managers to perform their own daily walk.
Well, there you have it—an overview of high employee turnover. How to pinpoint your company’s problems and a few solutions to help you reduce your employee turnover rate.
Improving employee retention takes time, strategy, and planning. It’s usually a process you work towards. It’s something that you want to keep working on. After all, your employees are an important part of your business.