Employee turnover can be a significant challenge within retention management, affecting the stability and productivity of any workplace. Picture this: you've spent time and resources hiring and training a new employee, only to see them leave shortly after joining. This situation can be frustrating and costly for any business. This blog post is key to your success if you want to understand and prevent employee turnover.
To help you understand and prevent employee turnover, Giftpack offers a unique solution: Make Employee Appreciation Easier. This tool can play a crucial role in improving employee retention rates by fostering a positive work environment and showing your team members that they are valued and appreciated.
What Is Employee Turnover?
Employee turnover is a critical metric for organizations to track, as it can provide insights into a company's overall health and culture. When employees leave a company, it can be for various reasons. Understanding the causes of employee turnover can help organizations make strategic decisions to retain their top talent and reduce costly turnover rates. There are several common reasons employees may leave a company, which we discuss further in the post.
What Is A Good Employee Turnover Rate?
Employee turnover rates are an essential metric for any business. Employee turnover rate is critical because it can help you identify problems and provide solutions. The statistics on employee turnover rates can be alarming, but they can provide valuable information to help companies improve retention strategies. If you don't know how many employees are leaving or why, fixing their reasons is challenging.
Understanding the "Why"
If you have a high employee turnover rate, you will be able to identify the causes and implement measures to reduce it. Employee turnover rates are influenced by various factors, including the economy, organizational culture, and even geographic location. It is an essential metric because it can provide valuable information about why employees leave and how the turnover rate affects the company.
Setting Benchmarks and Defining "Normal"
While turnover rates will differ by industry and location, the general consensus is that 18% is a good benchmark for average annual employee turnover. Of that, approximately 6% should be expected due to involuntary turnover. It is important to remember that the ideal turnover rate will differ between companies, industries, roles, and locations.
Beyond Averages
For instance, an acceptable turnover rate for a startup will not be the same as that of a Fortune 500 company. Some have even suggested that a 10% turnover rate is a healthy benchmark. The average turnover rate should simply be a guide to keep in mind what is realistic while setting goals that accurately reflect the state of your company.
Related Reading
• Employee Retention In Healthcare • Employee Retention Committee • Employee Retention Challenges • Employee Retention Bonus • Employee Retention Surveys • Employee Retention Strategies • How To Retain High Potential Employees
3 Ways A High Turnover Rate Affects Your Business?
The implications of employee turnover are significant and generally go much further than just needing to fill open positions. There are many repercussions to having a revolving door of staff. Results can include lost productivity, increased disruption, and diminished employee engagement.
1. Impact on Team Morale
Beyond financial loss and productivity decline, high turnover rates can deeply impact employee morale and productivity. There can be a psychological component when remaining employees suddenly need to pick up the slack and manage increased workloads, and job satisfaction can take a hit when additional responsibilities don’t translate to an increase in compensation.
2. Disrupted Workflow
When experienced team members leave an organization, workflow disruption often leads to knowledge gaps that are difficult to fill. New hires will likely need time to acclimate to company culture and job responsibilities before resuming former productivity levels.
3. Increased Recruitment Costs
Each time a new hire is brought on board, it costs companies advertising fees that target new talent, administrative processing fees, orientation and training programs, and more. This makes hiring a new employee to take their place the greatest turnover cost. Built In says the average cost of replacing an hourly employee is $1,500. And this number only scratches the surface, as certain positions will cost more to replace. There’s also a cost associated with reduced efficiency and productivity during transition periods between old and new employees.
Tailoring Corporate Gifting for Maximum Impact
At Giftpack, our driving force is to simplify the corporate gifting process while maximizing the impact of each gift. Utilizing our custom AI algorithm, we create highly customized scenario swag box options for you. We deliver globally and have an extremely user-friendly platform. We curate the most fitting gifts from a vast catalog of over 3.5 million products worldwide (which is ever-increasing).
By carefully considering an individual's basic demographics, preferences, social media activity, and digital footprint, we tailor each gift selection process regardless if the recipient is an employee, a customer, a VIP client, a friend, or a family member. With a wide range of locally and globally sourced gifts, we ensure that personalized gifting is accessible and achievable on a large scale, delivering meaningful connections across the globe.
Make employee appreciation easier with Giftpack — try Giftpack for free today.
Related Reading
• Benefits Of Employee Retention • Employee Retention Plan Sample • How To Retain Young Employees • How To Reduce Employee Turnover • Innovative Employee Retention Strategies • Causes Of Staff Turnover • Attracting And Retaining Talent • Companies With Best Employee Retention Programs • What Is Employee Retention • Employee Retention Rate • Employee Retention Ideas • Employee Retention Strategy • Employee Retention Plan
17 Known Causes Of Employee Turnover
1. Pay and Benefits
Employee compensation is often a top reason for voluntary turnover. This is usually due to a lower-than-expected annual salary or a lack of raises. Inadequate employee benefits can also cause your talent to leave for better opportunities.
According to a Pew Research Center survey, 63% of workers quit their jobs in 2021 due to low pay. 43% said poor benefits or a lack of benefits were factors in their departure. To retain your employees, you need to stay updated on what your competitors are offering their employees. If your contenders offer a more comprehensive benefits package or a more competitive salary, they'll entice your employees to apply.
Establishing yearly cost-of-living wage increases and offering benefits is a great way to keep your employees engaged and improve employee satisfaction.
2. Burnout
A job is important, but it often isn't everything to your employees. Your employees have a life outside your organization and shouldn't spend all their free time working. If your employees constantly put in overtime, don’t take breaks, or never go on a vacation, their work-life balance will suffer.
While this can lead to employee turnover, it can also have other adverse effects. Burnout can also cause physical and mental health issues, such as depression and heart problems. To avoid employee burnout, you can offer breaks, paid time off (PTO), or flexible schedules. You should also set realistic expectations for your employees.
3. Lack of Flexibility
Even before the pandemic, work redesign initiatives revealed a positive relationship between flexibility and voluntary turnover. For instance, Best Buy implemented flexibility in working hours, which reduced turnover by up to 90% and increased productivity by up to 41%.
COVID-19 caused massive disruption to our work, prompting almost all organizations to switch to remote work. Although many have returned to the office, the disruption isn’t over as more workers clamor for hybrid work—a model where workers can choose to work out of the office or from home. According to Microsoft’s Work Trend Index, flexible work is here to stay, and an approach to hybrid work is crucial for attracting the best talent and retaining existing workers. With more than 70% of workers preferring flexible work options, any current employer that fails to provide these options sees an increase in worker attrition.
4. Overwork
When team members are required or feel obligated to work long hours or overtime, they may experience burnout and mental or physical fatigue. This can lead to reduced productivity and increased dissatisfaction. Conditions like long working hours, poor work-life balance, and excess responsibilities can contribute to overwork.
These are some ways to avoid overwork:
• Reasonable time expectations • Realistic and manageable goals • Breaks between shifts and tasks
5. Lack of Employee Recognition
Employee recognition is the timely formal or informal acknowledgment of a worker’s behavior or effort that aligns with the organization's goals and values. Recognition has plenty of benefits. Everyone wants a pat on the back for a job well done, and workers respond positively to such commendation and the accompanying recognition.
So, it’s unsurprising that bad managers who fail to recognize employees’ efforts and hard work have high turnover rates. Aside from recognizing good performers, employers must also lift workers who aren't performing their best. With tools like Nectar, you should be able to spot potentially underperforming workers, give them the support they need, and see more great performers on your team.
6. Incompatibilities between team members and management
Sometimes, managers and team members may not get along or collaborate well, and not effectively addressing these incompatibilities can lead to team member dissatisfaction for leaders and team members alike.
Assessing how and why management and team members conflict can help organizations identify teams that can be reorganized to have people with similar or complementary personalities, work styles, skills, and interests. A sense of belonging and respect between team members and managers can improve communication, efficiency, and overall satisfaction.
7. Poor onboarding process
Onboarding is a way to prepare new hires for success by providing them with all the information and resources they need to do their jobs effectively. However, some organizations fail to achieve this goal.
According to the Society for Human Resource Management (SHRM), the absence of an onboarding process results in lower productivity and higher employee turnover. While most organizations want new hires to feel welcomed, culture integration only accounts for 27% of onboarding processes. To avoid a high new hire turnover rate, your hiring process and onboarding process should help new hires feel welcomed and prepared. Introduce your new employees to their co-workers and show them around. Answer any questions they may have, and inform them of any employee perks or benefits.
8. Absence of mentoring programs
Mentors are promoted five times as often as those not enrolled in mentorship programs. Their retention rates are also much higher than those without formal programs. One of the top reasons employees leave jobs is lack of career advancement.
Mentoring programs are a fantastic way to attract talent and accelerate the growth of existing employees. We at Together know starting and launching a mentoring program is no easy task. We’ve outlined the step-by-step process to start a mentorship program, but we also have a mentoring platform that manages everything from registration to pairing and reporting. You can get started for free or get a personalized demo to see if it’s right for your organization.
9. Absence of true diversity, inclusion, and belonging
78% of the workforce says that diversity, equity, and inclusion are important in the workplace. A study from Momentive also found that organizations that prioritize diversity, inclusion, and belonging are more likely to have advancement opportunities available to their staff. This is obviously an area of great concern for the majority of the workforce and, therefore, should be prioritized to continue reflecting employee desires.
10. Job Insecurity
Research by Glassdoor revealed that business outlook is a significant driver of employee attrition. Companies with a good outlook are more likely to retain their workers because they offer workers an expanding set of opportunities. On the other hand, struggling businesses will have difficulty keeping their workers.
Job Security as a Core Factor in Employee Retention
This research is corroborated by Winckworth Sherwood’s report, which surveyed 1,004 employees and discovered that 51% see job security as a fundamental reason for staying with their employer. Job security is one of the critical things employees consider when assessing an organization's culture. Employees are more likely to be dissatisfied with the organization if their job is insecure.
How Job Cuts Lead to Turnover
Unsurprisingly, job insecurity is one of the causes of employee turnover. If an organization is prone to reorganization and layoffs, workers will feel like they're standing on shaky ground. This feeling will cause them to look for better opportunities constantly. Previous layoffs leave more work on the shoulders of remaining workers, easily leading to work overload and burnout.
11. Lack of growth and progression
Lack of growth and progression is one of the main factors affecting turnover. According to a report from Gallup, 87% of millennials shared that opportunities for growth and development are one of the most important factors for career satisfaction. Roughly 70% of professionals in other generations echoed the sentiment.
The Drive for Professional Growth
Ambitious professionals are not content to secure a good job and collect paychecks until retirement. Many modern workers have career plans and desire to advance within their fields. Plus, professionals who keep their skills sharp typically spend less time unemployed if unexpectedly laid off.
Keeping Employees Engaged Through Learning
Calling a career a “dead-end job” is one of the most devastating professional insults. Human beings crave progress and aim for continuous professional improvement. Employees who stop learning, growing, and setting higher goals become bored, restless, anxious and are likely to seek new opportunities elsewhere.
12. No innovation
Meaningful work is a necessary condition for job satisfaction. Many employees long to contribute to society, solve complex problems, and affect change. Generating new ideas and ushering in the future is an enticing prospect. When companies fail to innovate and evolve, bright employees feel stagnated. Top talent may leave organizations for the chance to engineer a new product, find a company, or launch a service. If companies fail to innovate, employees may wonder about future job security, as companies who fail to evolve rarely continue to dominate the market.
13. Inconsistent management styles
Managers and supervisors ensure that teams set and meet goals, have the resources and training they need, and receive constructive feedback. Sometimes, these leaders can be inconsistent in giving feedback to and disciplining team members. This can lead to team members feeling unsupported, unfairly disciplined, and unsure of how they can improve their roles, impacting team member satisfaction and turnover rates.
When team members see that managers and supervisors use the same standards of evaluation and discipline for all team members, they are more likely to feel like equal members of the team. In addition, consistent and regular feedback gives team members direction and purpose, which can help them feel supported and encouraged to succeed.
14. Bad managers
Plenty has been written about toxic managers—people who take credit for others’ ideas, play favorites, and even abuse their reports. Companies definitely need to weed these people out. Less obvious are managers who are simply bad at their jobs.
Many of the top reasons for turnover—poor compensation or work-life balance, little training, and scant career advancement opportunities—hinge on the manager, so HR teams need to identify supervisors who flat-out lack the competence to manage people and either transition them to new roles or provide support and training.
Good managers see themselves as career developers; they know their employees well enough to uncover their skills and motivations.
15. Lack of employee purpose
36% of employees were found to be actively engaged and enthusiastic about their workplaces. If workers feel no passion or connection to their workplace and job duties, they will not hesitate to look for other opportunities that may promise greener pastures. Getting your employees involved through mentorship or team-building events can help combat this.
16. Bad work culture
The aforementioned bad work culture can lead to deteriorating employee mental health and burnout, ultimately pushing workers toward other companies. Turnover due to toxic work cultures is estimated to have cost companies $223 billion over the past five years.
17. Absence of mentoring programs
Mentors are promoted five times as often as those not enrolled in mentorship programs. Their retention rates are also much higher than those without formal programs. One of the top reasons employees leave jobs is lack of career advancement.
Mentoring programs are a fantastic way to attract talent and accelerate the growth of existing employees. We at Together know starting and launching a mentoring program is no easy task. We’ve outlined the step-by-step process to start a mentorship program, but we also have a mentoring platform that manages everything from registration to pairing and reporting. You can get started for free or get a personalized demo to see if it’s right for your organization. Starting a mentoring program may not be a silver bullet for employee retention, but it’s close.
9 Effective Strategies To Prevent High Employee Turnover And Reduce Hiring Cost
1. Focus on the hiring process
Choosing the right candidate for the position is critical to employee retention. If an employee isn’t a good fit for their role, they’re more likely to leave your organization regardless of other retention strategies you use. Focus on the hiring process by creating a job description clearly describing the expected qualifications, skills, and experience for the position and your workplace environment and culture. By creating a clear impression of what working at your organization looks like, you’re more likely to attract candidates who are a great fit and deter those who aren’t.
2. Build employee engagement
According to studies, only 21% of employees say they’re very engaged, and disengaged employees cost the U.S. over $450 billion annually in lost productivity. Failing to give employees a voice brings down engagement. Using an engagement platform that helps you ask the right questions to reveal how employees truly feel about their role, team, and manager.
Instead of long annual surveys that aren’t actionable, try pulse surveys, which are short sets of questions sent regularly to measure employee engagement in real time. Outside of surveys, HR chatbots are a great way to create an always-on channel for employee feedback.
- Get recognition and rewards right
Employees who feel appreciated work harder and stay longer, but over 80% of American employees say they don’t feel recognized or rewarded. Building a culture of recognition requires frequent, specific acknowledgment. The Brandon Hall Group found that companies that recognize employees multiple times a month are 41% more likely to see increased employee retention and 34% more likely to see increased engagement.
To make consistent recognition a reality, prioritize social recognition and monetary rewards by using a recognition platform that lets employees — in-office, remote, and offline — accumulate and redeem points for rewards that matter to them.
4. Provide professional development opportunities
Offering professional development opportunities is a powerful strategy for employee retention, as it establishes a clear link between learning, growth, and loyalty. One survey showed that 94% of employees would stay with their current employer if they invested in long-term learning. In addition to formal training, mentorship programs can play a pivotal role in employee retention.
Pairing employees with experienced mentors facilitates knowledge transfer and creates a supportive environment for personal and professional growth. Stretch assignments, challenging tasks beyond an employee’s usual responsibilities, offer opportunities for skill development and can be a powerful motivator.
5. Offer flexible work arrangements
Following the pandemic, people have started redefining their priorities, and many employees now value remote or more flexible working methods. Working flexible hours to accommodate childcare or attending a hospital appointment in the middle of the day will make employees feel like their needs are accommodated and considered and that they are more in control of their time, even if they still work the same number of hours.
6. Pay attention to communication
In any relationship, it's important to pay attention to what's being said and what's not. Communication is at the heart of what makes teams work effectively. It empowers colleagues to collaborate, helps workplaces run smoothly, and eases issues when they arise. Investing time in developing your communication skills can go a long way towards resolving (and preventing) the issues that lead to poor retention and high turnover.
7. Offer Competitive Base Salaries or Hourly Wages
Offering a wage worthy of sacrifice and hard work should be the top priority when making your employees feel their work is valued. Proper compensation is far and away more important than any other item on this list; you will not retain employees effectively unless you pay them what their time is worth.
8. Plan regular team-building activities
Team-building activities can involve training or just a lunch out together. These events promote bonding and improve communication. Having these events regularly can make team members feel more welcome, connected, and like a team or group of friends, which can improve company culture, overall team member satisfaction, and retention.
9. Set realistic yet ambitious goals for the organization
In reviewing team members' job descriptions and current duties, be sure to assess whether their goals are attainable within how much time they're given to reach them and with the resources they have. This can help your organization better allocate work to team members, possibly reducing overwork and burnout.
How Do You Calculate Employee Turnover?
To calculate your employee turnover rate, add up the number of employees lost in a specific period of time. You'll also want to gather the average number of total employees.
The turnover calculation goes as follows:
Subtract the number of any temporary or seasonal employees from each amount. Typically, employee turnover rates don't include temporary workers. They can skew your numbers. Now, divide the sum of employees who left by the average number of employees at your organization. Move the decimal two places (or multiply by 100) to get your turnover rate.
Related Reading
• Employee Retention Metrics • Reduce Attrition • Causes Of Low Employee Morale • Employee Retention Survey Questions • Creative Ways To Retain Employees • Fun Employee Retention Ideas • Employee Retention Software • Employee Burnout Solutions
Build A Meaningful Employee Recognition Program With Ease With Giftpack
Giftpack, with its groundbreaking AI algorithm, is transforming how companies approach corporate gifting. Giftpack enables businesses to foster meaningful connections with employees, customers, and clients by leveraging personalized gifting tailored to individual preferences and profiles. This innovative approach can significantly impact employee retention rates by creating a culture of appreciation and recognition within organizations.
With Giftpack, companies can easily demonstrate their commitment to employees' well-being and satisfaction, thereby reducing turnover rates and enhancing employee engagement.
Make your gifting efficient and improve employee attrition rates with Giftpack AI
Visit our product page to unlock the power of personalized employee appreciation gifts.
