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.
In this article we're digging deeper into what employee turnover is, how you can measure it and why people actually leave in the first place.
What is employee turnover?
Employee turnover is the proportion of employees that leave your organisation during a set period - usually a year.
Employee turnover can be very top-level, simply representing all workers who have left in a given year.
But it can be broken down further into things like voluntary or compulsory redundancies and reasons for leaving. These insights can help employers put things in place to lessen turnover in the future.
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.
The formula is:
(Number leavers over given period x 100)/Average total number employed over given period
So, if you employ 80 workers over a year and 12 leave, then the calculation would be:
(12 x 100)/80 = 15% employee turnover rate
As mentioned previously, you can be more specific and separate this into reasons for leaving for more a more accurate report.
With unplanned resignations, you may want to break this down even further, taking into account length of service with company, seniority, employee function, location and so on.
How do I measure the cost of people leaving?
The cost of employee turnover will vary enormously from business to business.
A recent study put it at around $18,982 per employee to find and recruit new staff and get them up to full productivity.
For a senior position, this loss could be a lot higher, whereas 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 your business by adding up things like:
- Cost of resignation – admin and HR costs
- Recruitment costs – advertising, costs of running recruitment, interviewing time, agency costs etc.
- Temporary staffing – cost of covering the post while the vacancy is open
- Onboarding – induction and training costs for your new employee
- Productivity loss
6 reasons why employees leave their jobs
Employee turnover isn’t always a bad thing – if the person leaving wasn't the right fit for the role, you may find you get someone far more suitable through the door to take their place.
However, if you notice a high turnover rate in your business, it could be time to dig deeper and look at the reasons why people leave. Overlook this and your bottom line could take a nasty hit.
Here are 6 reasons why people may hand their notice in and pack up their desks.
1. Their workloads are too much
Having too much work to do can be a major demotivating factor for anyone.
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.
Make sure you're encouraging your people to take their full holiday allowance, allow them to work flexibly and if you notice they’re overworked, consider bringing in more staff or freelancers to help cope.
2. They were 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 persuade them to stay, but if the quality of their work or productivity doesn't match the rise in pay, it may not be the best decision for the business.
But, with the amount it costs to replace workers, you’re better off reviewing their pay annually and giving them regular pay rises if you do want them to stay.
One study by Glassdoor found that a 10% pay increase raises the chance of them staying by 1.5%.
3. Company culture
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 high turnover rate.
If your employees are happy, the environment is good and they feel valued, they're more likely to stay put.
If you’re not sure how your employees feel, anonymous satisfaction surveys can be a great way to find out how people really feel and get to the heart of issues quickly. Once you know where the issues with your culture lie, you can take steps to improve them.
4. Lack of development opportunities
Salary is important, but it’s not the only reason people quit. If there's no opportunity for progression, 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, gain more skills and progress up the company ladder - so make sure you provide them with adequate opportunities so they don't feel like they're in a dead-end job.
5. 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.
Breathe's Kudos tool was designed for exactly that - giving praise and recognising a job well done.
6. They didn'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 them.
Around 75% of people quit their jobs because of clashes with their 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.