Staff turnover is something virtually every organization faces at some time or another. But a constant turnover of staff can be a problem. Why? It can affect continuity. It can lead to a brain drain. And it lumbers you with high costs. What are the most common causes? And how do you solve this problem?
So, what do we mean exactly by ‘staff turnover’?
Before we dive into how to solve high staff turnover, it’s good to understand exactly what this is. Staff turnover is the constant change of employees within an organization due to people off ill, retiring, or leaving – voluntarily or otherwise.
Expressed as a percentage, it’s the number of employees leaving your organization annually in relation to the total number of people employed in that year. Sometimes, this is also referred to as churn rate.
But there are in fact several types of staff turnover. For example, external turnover is the number of employees actually leaving the organization, whereas internal turnover refers to changes in jobs and promotions within the organization. What’s more, it’s even possible to distinguish between forced departure (underperformance or restructuring) and natural turnover (non-renewal of temporary contracts, retirement, death or disability).
Calculating staff turnover
Calculating your staff turnover provides useful information about issues such as employee satisfaction levels, onboarding efficacy, and organizational continuity. It’s easy to calculate, too.
First, define the period for which you want to determine staff turnover. Add the number of staff in employment at the start and end of this period and divide by two to derive an average number of employees. Next, divide the number of employees who left your company in this period by the average number of employees to arrive at your staff turnover.
In this way, you can even calculate staff turnover for different periods, for example per month, quarter, or year. To spot trends, it’s a good idea to calculate turnover for longer, multi-year periods. Is your churn rate structural? Or is it just high at certain times? Can you attribute peaks to specific events, for example a restructuring or an economic crisis? Information of this kind can help you evaluate your employee policies and adjust them accordingly.
So, what’s a healthy turnover rate?
But what’s a healthy turnover rate? And when should you be concerned enough to revamp your employment policies and onboarding procedures?
Unfortunately, there’s no one number for all companies. Some organizations prefer to work with short-term employment contracts. Companies such as Amazon and Google actually encourage a degree of turnover in order to separate the wheat from the chaff; others prefer longer-term employment contracts. Turnover rates at companies like Amazon and Google will understandably be higher than average.
Nonetheless, there are a number of important variables that together determine whether your turnover rate is healthy or not.
- Don’t just look at the total percentage of staff leaving your company, but distinguish between planned and unplanned turnover. Planned turnover equates to a conscious decision to let staff go because they performed below par, didn’t meet expectations, or brought too little added value to the organization. Unplanned turnover is a different story, however. This equates to staff leaving who you’d rather have remain in your organization. If your total churn rate is 30% and this is predominantly planned turnover, then no worries. However, if this 30% is predominantly unplanned, then there’s a problem.
- It’s worth analyzing your turnover and retention costs as compared to the value that new employees bring to your company. How long does it take to place job advertisements and conduct interviews? What does it cost to train and onboard new staff to the same level as that of the employees they’re replacing?
Reasons and solutions for high staff turnover
There are many reasons why staff turnover can be high. Some reasons are trickier to identify than others, but generally there’s always a solution available.
Low job satisfaction
There’s nothing wrong with a healthy work ethos or a challenging workplace, certainly if you experience job satisfaction. But too much work on an ongoing basis is a recipe for stress and ultimately a burnout.
You can solve this problem by allocating work more evenly among staff members and automating any highly repetitive tasks. And don’t forget to touch base with your staff and ask them about their work and job satisfaction levels.
Everyone wants to be paid an appropriate amount for the work they do. Poor remuneration is a common cause of high staff turnover. ‘Remuneration’ doesn’t just relate to financial rewards, but also to a whole range of other incentives, for example leave provisions, a pleasant working environment, career prospects, or training opportunities.
Bonuses or salary raises for high performance combined with good fringe benefits are definitely one way to tackle remuneration-related staff turnover.
Many people have a highly developed sense of justice. An uneven playing field in the workplace is a ticking time bomb waiting to explode, for example preferential treatment from senior management toward certain employees.
Oftentimes, it’s not even a conscious preference, more a habit that creeps insidiously into some staff-management interactions. Nonetheless, it’s a common cause of high staff turnover.
The solution is simple – what’s sauce for the goose is sauce for the gander! For example, if you give one employee the right to work from home on a regular basis, then it’s only fair to offer their direct co-workers doing comparable work the same benefits.
Few or no career prospects
Lifelong learning is the ‘new normal’ in the workplace today. Professionals aren’t only looking to earn money; they also want to expand their knowledge and skills to build their careers. If your organization offers its employees few or no career prospects or possibilities for promotion, then this may be a reason for high staff turnover.
But what’s the solution? Introducing on‑the‑job training and opportunities for professional development is a highly effective solution.
Unpleasant workplace culture
Studies have repeatedly shown a high correlation between company culture and job satisfaction. The culture within your organization has a direct effect on employee satisfaction and productivity levels. Unhappy employees are less motivated and far less likely to remain loyal over time.
Inquire regularly and proactively about your employees’ well-being. Do they feel at ease in the workplace? Are relations with their co-workers and managers healthy and respectful? And what could be improved?
Poor and/or annoying bosses
It’s not always the organization as a whole that’s at fault. Many employees resign because they lack faith in, or stronger still loath, their boss.
Obviously, to solve this problem you need to have the right managers. And better still, it’s a good idea to provide special training to your managers that helps them hone their interpersonal skills.
Appreciation for a job well done is just as important as a good salary. The feeling of not being appreciated is a reason for many employees to seek other work or another employer.
In other words, don’t be too stingy with giving compliments or rewarding a job well done, for example with a token of your gratitude or a small gift. And don’t forget to create a working environment in which cooperation and peer-to-peer recognition play their respective roles.
Work, these days, is more than just carrying out a series of tasks to earn a daily crust. Do your employees view their jobs as meaningful and useful? Or do they think their work is boring and monotonous? If so, chances are that they’ll leave before long to find something more challenging, nudging your staff turnover rate even higher.
Meaningfulness or usefulness doesn’t mean that they’re about to save the planet or achieve world peace. But sharing a vision or reaching a joint goal is often motivating enough for many people, especially if you communicate clearly and transparently about these goals.
Poor work-life balance
Your staff have personal lives as well as a job. Most of us want the freedom to spend quality time with friends and family. A poor work-life balance can be one of the reasons for high staff turnover rates.
You can tackle this type of imbalance by offering adequate provisions for leave and planning work efficiently.
Watch out for these signs if you want to reduce turnover!
Fortunately, most employees let their dissatisfaction be known, directly or indirectly, and you can use these signals to your advantage. Watch out for these signs:
- decreasing productivity – the more unsatisfied employees become, the lower their productivity
- reduced quality or bare-minimum effort – this can be a sign that employees are distracted, thinking perhaps about finding other work
- less cooperation – employees who don’t feel engaged tend not to share their insights with co-workers or make a joint effort to improve results
- less and less effort into maintaining personal and professional relationships – chances are they’re thinking about leaving your company
- reluctance to commit to deadlines and long-term goals – if employees are hesitant about participating in a long-term project, then it’s possible they’re thinking about greener pastures
Responding to a sudden departure
If you’re already dealing with a sudden departure, and you’re looking to fill an opening as quickly as possible from within your organization, then AG5’s skills management software can really help. Our tool allows you to pull information on everyone’s knowledge and skills from a central database. What’s more, you can update this information from the work floor in real time.
Watch how AG5’s software works:
Looking to get to grips with your workforce’s skills, then read this article about getting started with skills matrices. Chances are that after a while you’ll want to take your skills management system to the next level. Feel free to get in touch or schedule a live demo.
Tackle high staff turnover now!
High staff turnover is bad news for your business, operationally and financially. Luckily, it’s a problem you can solve taking the right approach and using the right tools. Find out why staff leave to work elsewhere and keep an eye out for the signals that flag an imminent departure. This can help you create a corporate culture where people feel appreciated, happy, and comfortable.