In any business staff come and go. Whether it’s because they’re moving on to pastures new, starting a family or retiring, it’s a normal part of business life. But when too many staff are leaving on a regular basis it can be become a problem for your business, affecting productivity, morale and ultimately company growth.
What is employee turnover?
Employee turnover is the proportion of employees that leave your organisation during a set period. This period is often a year and is normally expressed as a percentage of your total workforce. It can be as simple as including all workers who leave in a given year but it can be broken down further into voluntary or compulsory redundancies and resignation levels as well as the reasons for leaving to better help with people management.
How can I measure employee turnover?
The simplest way to measure your employee turnover is as a percentage of your total employee population in a given time period e.g. monthly or annually.
(Number leavers over given period x 100)/Average total number employed over given period
So if you employ 80 workers and 12 leave, then the calculation would be:
(12 x 100)/80 = 15% employee turnover rate
Depending on the number of employees, you can be more specific and separate it into planned turnover i.e. redundancies and retirements as well as unplanned resignations. In relation to unplanned resignations you may wish to break it down further, taking into account length of service with company, seniority, employee function, location and so on.
How do I measure the cost of employee turnover?
The cost of employee turnover will vary enormously from business to business. Some studies put it at around £30,000 per employee to find and recruit new staff and get them up to full productivity. For a senior position, that might be significantly more. For a casual position the figure is unlikely to be anywhere near that. You can start to build a picture of how much it is costing you by calculating a few simple procedures you’ll need to run.
- Cost of resignation – admin and HR costs
- Recruitment costs – advertising, admin costs of running recruitment, interviewing time, agency costs where applicable.
- Temporary staffing – cost of covering the post while the vacancy is open
- Onboarding – induction and training costs for your new employee.
- Productivity – If possible, measuring the productivity of the new employee in the first weeks or months until fully productive e.g. with targets, or KPIs.
What are the main causes of employee turnover?
Employee turnover isn’t always a bad thing – sometimes you can replace an unhappy member of staff with someone who is far more engaged and productive. However, if you notice a high turnover in your business it could be time to dig deeper and look at the reasons why before it adversely impacts your bottom line.
Overwhelmed with workload
Having too much work to do can be a major demotivating factor for employees. According to one study 70% of employees feel there aren’t enough hours to do their job and many quit for a better work/life balance. It’s also one of the top four things workers look for in a new job.
Make sure you’re giving employees time off when they need it, allow them to work flexibly and if you notice they’re overworked, consider bringing in more staff or freelancers to help cope.
Offered more money
Being offered a bigger salary is another major reason people leave. If you can match what they’re being offered, then you might be able to make them stay but if they’re not productive it might be better for you both if you part ways.
It costs a lot of money to replace workers so you’re better off reviewing their pay and giving them regular pay rises if you do want them to stay. One study found a 10% pay increase raises the chance of them staying by 1.5%.
Cultural fit is important and an area that is sometimes overlooked. But if your company culture is negative rather than positive, then expect to see a brain drain. If your employees are happy and the environment is good they are more likely to stay but if they’re miserable employee turnover will go up.
If you’re not sure how your employees feel, anonymous surveys can be a great way to get to the heart of any issue without employees fearing sanctions. Once you know where the issues lie you can take steps to improve them.
Lack of development opportunities
Salary is important but it’s not the only reason why people quit and if there is no opportunity for advancement they will also walk. According to a Gallup poll, 32% cited lack of promotional opportunities as one of the main reasons for leaving.
Employees want to develop professionally, gaining more skills and moving up the company ladder so make sure you have training programmes in place and an opportunity for them to advance.
Lack of recognition/reward
Don’t underestimate the power of saying thank you. Employees like to know their work matters and that it has purpose. Simply recognising that they are doing a good job can help employee retention. It doesn’t have to be expensive either – getting managers to say thank you, offering monthly rewards or even giving them a shout out on social media when they go above and beyond can all foster a better and more attractive working atmosphere.
Don’t get on with their boss
If a number of employees with the same boss all start to leave at the same time, then you can be pretty sure it is something to do with their relationship with him or her. Around 75% of people quit their jobs because of clashes with the boss so it’s up to you to make sure your management team is engaging people rather than pushing them away. Managers should be mentoring, training and inspiring people rather than micromanaging them and demotivating them.