Learn about the causes of high staff turnover, how to calculate your churn rate and various practical strategies to improve staff retention
Over the course of the last year, how many employees have left your workplace? A Microsoft study found that 41% of the global workforce is considering leaving their employer this year, and job vacancies in the UK soared to an all-time high in July with available posts surpassing one million for the first time.
The increase in turnover is partly due to employees wanting more from their employer. A recent US survey found almost half of employees have said they would look for a new employer rather than give up the ability to work from home, proving the need for employers to provide flexible working arrangements. Employers also need to take notice of the fact that younger generations are increasingly concerned with factors beyond salary alone – employees want to work for an organisation with a strong culture and social purpose, which invests in its people and champions diverse hiring, social mobility, and inclusivity in the workplace, rather than just offering a high salary.
Here, we share some of the main reasons for high staff turnover, explain how you calculate it, and point out some of the ways you can retain staff.
What is employee turnover?
Employee turnover – which is measured as a rate and sometimes called attrition – is the proportion of employees who leave an organisation over a year, expressed as a percentage of total workforce numbers.
It is the voluntary (eg resignations, retirement, not returning from family leave) or involuntary (eg dismissal, death, redundancy) loss of an employee which causes an organisation to recruit new talent and fill the position.
By tracking your employee turnover, you can use the data to help identify where there are trends and to understand what might be causing employees to leave and how you might reduce or prevent it moving forward. It can also help you focus on ways to improve staff retention and the employee experience.
Calculating staff turnover rate
When calculating your turnover rate, you first look at a set period of time – usually a calendar year or the last twelve months – and you need to identify the numbers for the three points below:
- The number of employees who left in the time period (including both voluntary and involuntary leave)
- The number of employees at the beginning of the period
- The number of employees at the end of the period
Take the number of employees at the beginning of the period and add it to the number of employees at the end of the period. Dividing this figure by 2 will give you the average employee count.
You then calculate your employee turnover using this simple formula:
Turnover = (Employees who left ÷ Average number of employees) x 100
While this figure provides a percentage figure of employees who have left (voluntarily and involuntarily), it can also be useful for HR teams to calculate voluntary and involuntary turnover rates separately if they want to see the difference between the two. You might find it helpful to calculate more detailed turnover figures which look at turnover for senior positions or turnover in different functions or locations of the business – this can help you highlight where turnover is higher, and address and improve issues before looking elsewhere in the organisation.
To ensure your hiring strategy and onboarding processes are working, it is highly recommended that you look at the turnover of employees who leave within the first year of employment. A high turnover within this period is usually an indication that there is an issue with your recruitment or onboarding process.
What’s a good staff turnover rate?
The UK average employee turnover rate is approximately 15% a year, but varies drastically between industries.
Many organisations aim for an employee turnover rate of 10% or less, however, it’s important for your organisation to identify a turnover rate that you feel is appropriate for your industry and organisation. It’s valuable to benchmark how you are performing against your peers as well as your organisation’s performance in previous years. It’s also worth noting that it is healthy to have some employee turnover so your organisation can benefit from new skills and experience gained outside of your company.
Reasons for high staff turnover
There are many reasons for high staff turnover. According to Indeed, employees may leave their current job if they want greater responsibilities and more of a challenge. They may also leave if they want to live somewhere else – and therefore need a job closer to their new location – or if they want to feel more valued.
Other common reasons for high staff turnover include:
Heavy workload
A heavy workload can lead to employees feeling stressed and experiencing burnout at work. Pressure to meet deadlines might not always be feasible for employees, but if managers fail to understand this, employees may feel overwhelmed and leave for the sake of their mental health.
Poor management
When managers are difficult to work with, employees aren’t likely to feel comfortable at work. Micromanaging creates a culture that inhibits innovative thinking, creativity, and autonomy, which employees can only tolerate for a short time before leaving. If managers are unprepared for their role or if a manager has poor people skills, employees may struggle to work under this leadership and leave the workplace, as mentioned by CIO.
Toxic workplace culture
If employees face bullying at work, they don’t have any friendships or managers don’t clearly communicate with staff, employees won’t be engaged or happy at work. When employees are happy at work and have at least one good friend there, research has found they will be seven times more engaged in their job, and more likely to stay.
No career progression
Employees want opportunities for promotions and career progression at work. If they don’t receive such opportunities and are stuck in the same role for a long period of time, they’re likely to be bored and move to another company where they can excel, learn new skills, and build their resumes.
Lack of flexibility
A lack of flexibility in the working hours and location is a relatively new reason for employee turnover. A 2020 study found that 61% of employees prefer being fully remote. If employers are unable to provide remote working opportunities and require employees to follow strict working hours and location, employees will, instead, join an organisation which offers them this flexibility in today’s world of hybrid working.
Employees mis-sold a role
Our talent manager, Lucy O’Callaghan, says one of the key reasons for high staff turnover in their first year is employees being mis-sold their role.
“If an employee comes to an organisation where they were promised the world before their start date, and then they don’t get what they were promised, they will immediately be disengaged at work and want to leave.”
Poor onboarding experience
Elliott Gill, our people manager, adds that a poor onboarding experience could lead to high turnover.
“If organisations and managers don’t properly introduce employees to the company, including the culture and the values and expectations, there could be misunderstandings and new employees might feel lost and alienated in three to four months’ time.”
Signs that an employee is about to quit
From taking longer breaks to a lack of commitment to long-term projects, there are signs you need to look out for which indicate your employee is about to quit.
If employees are updating their LinkedIn page and working on achieving new skills/qualifications, this may be a sign that they want to prove themselves as the best fit to other potential employers.
Researchers at Harvard Business Review state that you should look out for employees who are contributing less during meetings – in person or over video call – and who are less interested in their career progression, are less productive, and who may be taking more absences or breaks.
However, while these signs may indicate that employees want to leave, they can also indicate that employees are just disengaged at work and need to be motivated.
“We all go through phases where we’re disengaged because the work we’re doing might not be fulfilling, or because the pandemic has exhausted us,” says Gill. As a result, “it’s important to consider the context of work before you decide that certain signs may be an indication that an employee is considering leaving.”
O’Callaghan adds that rather than looking for signs that show employees might be leaving, organisations should actively seek these signs out.
“Managers should be having regular one to ones with employees. If you notice a difference in an employee’s communication style, or if they’re not logging on promptly every day, take the time to talk to them. Look for opportunities to have conversations before those signs start appearing. If you’ve got scheduled times where you can actually have open and honest conversations, employees will feel encouraged to share their concerns.”
How to reduce staff turnover
Open communication
Clear communication with employees is crucial if you want to reduce employee turnover. Managers should arrange one-to-one catch-ups with employees – or involve HR to do so if the manager doesn’t feel it’s appropriate for any reason – to find out how employees are feeling and to discover what they are looking for in order to keep them engaged and happy at work. These meetings should focus on the career progression path for employees so that they know they have the opportunity to work toward bigger and better roles and should be the time for employees to voice any concerns around work (eg facing bullying or harassment or being overworked).
During one-to-one meetings, managers should also ask employees if they are happy with their working arrangement, or if they would prefer to work remotely – if they say they want to work remotely part-time, you should look at what you can do to make this possible.
When catching up with employees, Gill says: “It’s important for managers to just be honest about where the organisation is heading so that employees don’t feel excluded from the bigger picture.”
Provide better pay and benefits
Gill says: “Pay and benefits are also a significant part of retaining your workforce, and employees who feel significantly undervalued for the knowledge, skills and experience that they bring, are going to be at a higher risk of leaving. So HR must be advocates of regular benchmarking of total rewards packages, as well as making sure benefits and policies align with your current and future workforce.”
Tell employees that they matter
Acknowledging the hard work of employees is also critical in reducing turnover.
“Recognising the human element of your staff is important. Telling employees well done and creating a culture of care can show employees that you value them,” says O’Callaghan.
She adds: “Employees are now coming into work with a better view of work/life balance, and they know the importance of being valued at work. They want to feel valued but to also add value, and they want to have an experience that they can better themselves with.
“The generation that is working now aren’t afraid to move jobs if they don’t feel like they’re being paid enough or that they’re getting or giving enough value in their job.”
Hire the right talent
By making better hiring decisions in the first place, managers can help reduce turnover. The less appropriate the candidate is for the job, the more likely it is they’ll leave sooner rather than later. As a result, managers should take more time if needed when hiring in order to find the best fit for their team and organisation.
Improve company culture
Creating a supportive and fun company culture can also help reduce staff turnover. Employees want to work for an organisation where they can connect with colleagues and enjoy themselves in an environment that isn’t toxic. By organising social events, managers can bring teams together and create stronger bonds between colleagues – these bonds can persuade employees to stay when they may be thinking about leaving.
To better manage absences and reduce staff turnover, you can turn to HR software like ours. Our HR software makes it easier for employees to keep their own information up-to-date, including managing their own absences. The greater visibility and control this provides managers means teams are less likely to be left understaffed with overlapping absences. Employees can also use the sentiment analysis tool within our HR software to rate their daily mood, giving HR and managers a better indication of how staff are feeling.
With our HR software, HR teams and managers can view, verify, and report on absence, sickness, and holiday. Reports can be automated to present instant analytics and trends on your absence data, enabling you to identify areas that require improvement, and design interventions that will reduce the cost of staff absence, and in turn, reduce staff turnover. Our HR software also includes talent management functionality, helping managers to identify individuals with high potential, as well as those who might be a future flight risk.
Our HR software also integrates seamlessly with our LMS which enables organisations to deliver engaging, personalised learning journeys to develop their people and progress their careers.