High turnover rates affect businesses by increasing operational challenges and financial costs due to frequent hiring and training. This article analyzes the impact of high employee turnover and strategies to manage it.
By Brad Nakase, Attorney
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High turnover has advantages and disadvantages. For example, you want your turnover to skyrocket in terms of sales value. On the other hand, you want to avoid excessive personnel turnover. In addition to the additional strain and responsibility for the rest of the team, there is the evident operational bother of recruiting and finding a replacement.
However, the effects of frequent personnel turnover extend beyond annoyances to operations. Employee morale and productivity are impacted when individuals leave the firm frequently, which eventually affects the goods and services offered by the business. Thus, excessive turnover also comes at a huge financial expense.
According to studies, replacing an employee costs a company between six and nine months’ income. However, exact figures vary by country and type of work. And that only accounts for turnover’s direct costs. There are still the costs associated with advertising, interview charges, training and onboarding, etc.
In this article, we’ll look closely at significant staff turnover. We’ll discuss causes, high turnover job examples, and turnover rates.
High turnover: definition
When we talk about (high) turnover in HR, we’re talking about how many employees are leaving the company. These departing workers typically need to be replaced by new hires. A common cause of employee turnover is inadequate hiring practices and ineffective management.
Employee turnover occurs as a result of firing employees, people quitting to choose a better position, or workers feeling they couldn’t further their careers at your organization.
A high turnover rate indicates that during a given period of time, more employees than is typical for your industry have left the company. A high turnover rate may or may not be considered as such, depending on the industry. The anticipated turnover rates vary by country and industry. For instance, in the UK, sales and marketing professionals had the highest turnover rate at 31%. However, in the US, hotels (300%) and staffing (352%) are the sectors with the largest turnover rates.
Numerous sources provide average turnover rates broken down by industry (and nation). Therefore, looking at the statistics is a very simple approach to see how your company is performing; if your number is (far) above average, you most likely need to address a high turnover rate.
You must first be able to compute your turnover rate to compare it with the industry average. This is more complicated than you may imagine. If you search for “how to calculate employee turnover,” you’ll find several formulae. Visit Analytics in HR’s article, How to Calculate Employee Turnover Rate, for a comprehensive explanation and best practices for employee turnover measurement.
Three scientists compiled all the previous research on employee turnover in 2000. This led to a meta-analysis including more than 60,000 workers. The infographic below presents their findings (click on the picture to magnify). It demonstrates the factors influencing employee attrition and what makes it possible to be high. A few of these variables will be clarified below.
Stress
Stress is a major factor in people quitting their jobs. Workplaces with high stress levels typically have more employee turnover than those with lower stress levels.
Demographics
There is a substantial correlation between turnover intentions and demographic characteristics. For example, those who are married or have kids are less likely to move out than those who are single or have no kids.
Job content
This pertains to the experiences that employees have at work. The degree of regularity associated with the job—a high level of routine is typically associated with a higher turnover rate—and the potential for advancement—if an employee thinks they have the chance to advance, they are less likely to quit—are factors that come into play here.
Now that we’ve examined why employees leave their positions, let’s look at some high-turnover job examples. The precise percentages vary by nation and sector, but the following jobs have a “guaranteed” high turnover:
Call center agents, jobs in education, customer service representatives, and childcare are some professions that are frequently mentioned as having a high turnover rate.
Ultimately, we want to know how to lower employee turnover, don’t we? This is how everything improves: the caliber of your goods and services, staff morale and output, etc.
However, what is the best way to lower turnover? Here are three methods for doing so.
This has so many components that it could easily stand alone as an article. I will, however, provide you with some instances to assist you in understanding how changing your hiring approach might lower employee turnover.
You are free to tweak your hiring process as much as you like. You won’t be able to hire or retain workers if you don’t provide them with a competitive whole package. It doesn’t always follow that you have to offer the highest compensation. It does, however, include providing enticing extra benefits and competitive employee compensation.
What you can provide will determine what these advantages are. Additional perks include health insurance, paid parental leave, free lunch, limitless holidays, and flexible work schedules.
When giving someone a competitive offer, it’s crucial to consider what matters most to them. For example, a new mother may value certain benefits differently than someone who has graduated from college.
Of course, there are many possible interpretations for this. However, in this instance, the focus is on your staff members’ professional growth and learning possibilities. Most of today’s workers and job seekers want to advance their careers and (digital) abilities.
Tell them the truth right away, that is, when they apply. Regarding professional growth, what can they anticipate from you as an employer? Are there chances to go up the ladder, and if so, how long will it take, and what are the requirements? And what do they anticipate from you?
Learning is another factor in this. Workers are becoming increasingly interested in the educational options their firm provides (or does not provide).
Indeed, according to a recently published study, employees who are satisfied with the learning opportunities provided by their employer are 21% less likely to have departed for a new position during the previous five years.
The effects of high employee turnover are felt strongly by your staff and your company. Even though (natural) turnover will always exist in your business, which is in some ways a good thing, it’s critical to understand what causes it and, more significantly, how to lower it.
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