You spent all your resources on attracting and retaining the best employees, but despite your best efforts, some employees are still leaving and trying to find workplaces that may better suit their needs.
While it’s normal for some of them to come and go due to incompatibility, it becomes a problem impossible to ignore when it happens too frequently.
And while you cannot control all employee exits, understanding employee churn and the reason behind resignations is vital for creating positive employee experiences and keeping your business afloat in today’s uncertain and competitive market.
So what is employee churn? What are the key factors that determine it? And how can you reduce it?
Learn the answer to all these questions—and more—in this article.
What Is an Employee Churn Rate?
Employee churn rate is a metric that estimates the number of employees leaving a company over a given period of time.
For example, an organization has 200 employees. In a month, the company fired five people, and ten left voluntarily.
In this case, the turnover rate would be 7.5%.
Sometimes referred to as employee turnover or employee attrition, the churn rate can be voluntary (resignation or retirement) or involuntary (layoffs).
The purpose of the churn rate is to help businesses:
- Find development opportunities
- Prevent an employee’s departure
- Keep top talent
So what factors determine high employee turnover rates?
Let’s discover them in the next section.
Key Factors Determining Employee Churn
When an employee leaves, there must be a reason.
It can be as simple as the employee moving to another city to be closer to their loved ones.
However, it goes deeper than that.
To prevent employee separations, learn about the factors determining attrition rates.
Overall job satisfaction
Job satisfaction is one of the most significant factors contributing to employee turnover.
Higher job satisfaction lowers retention rates and increases an employee’s productivity, effectiveness, and performance.
On the other hand, lower job satisfaction leads to disengaged employees, which decreases productivity and demotivates employees, often leading to them quitting.
There are a lot of factors that play a role in job satisfaction, such as:
- Offering challenging tasks
- Working conditions, such as annual salary, etc.
- Recognition and advancement opportunities
Not enough growth opportunities
According to a report, a lack of future career development is a crucial driver of high employee churn rates.
When there’s little or no room for growth, employees might seek other job opportunities elsewhere.
To avoid this, companies need to:
- Have a defined growth path for their team members
- Invest in training opportunities that develop an employee’s skills
- Use other initiatives, such as planned career breaks
The pandemic changed the way people work.
Now, employees feel the pressure of the “always on” work culture, especially with increased productivity expectations.
As a result, 77% of employees experienced burnout in their current work environment.
Burnout stems from feeling:
- Distanced from work or family
- Less meaningful to a company
- Emotionally or physically exhausted
A good work-life balance is crucial for employees. Not having one might cause them to quit.
All business leaders want a cooperative and harmonious work environment where employees work together toward one common goal: the company’s overall success.
However, it’s normal for some people to get along with each other better than others.
On the other hand, unhealthy relationships can create an unpleasant environment that makes employees feel unwelcome and negatively affects their performance, efficiency, and productivity.
As a result, many employees quit, contributing to your company’s churn rate.
Author’s Tip: Discover team-building activities that every employee will love!
Now that you know the factors that determine your churn rate, let’s see how you can measure it.
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How to Measure Churn Rates
As a result, it allows job seekers a glimpse into how your company would treat them and how long new hires usually stay with the organization.
Calculating employee churn helps you understand:
- If your recruitment efforts are moving in the right direction
- What you can do to improve your onboarding process
- Who is leaving and why
So how do you measure the churn rate?
Expressed as a percentage,
you divide the number of employees who resigned in a specific timeframe by the total number of employees in this timeframe, then multiply by 100.
Usually, companies measure it every month, but you can also calculate it yearly or quarterly.
What is your attrition rate?
If it’s high, follow us in the next section to discover how to lower the number and retain top talent in your organization.
How to Reduce Employee Churn Rates
Employee retention is vital for keeping existing employees on board for as long as possible while boosting morale and increasing engagement.
With that in mind, here are the secrets to reducing employee attrition rates.
Hire the right people
Employees also need to be excited about your organization’s mission.
For instance, you can use applicant tracking systems to identify the ideal candidate profile for the position while saving you precious time, money, and resources.
Author’s Tip: Celebrate an employee’s work anniversary with these amazing gifts!
Create a learning culture
As mentioned before, growth opportunities are vital for keeping employees invested in your company.
For this reason, you should create learning and development programs that help improve employee engagement and morale.
Companies with straightforward learning and development protocols allow their employees to pursue areas that interest them, which benefits the business overall.
To do this, you can put aside a budget for annual conferences and classes the employees can attend.
Author’s Tip: Make the initiative successful by ensuring the criteria are transparent and fair.
Encourage a healthy work-life balance
Employees crave a healthy work-life balance that makes it harder for them to leave.
To encourage this lifestyle, create a corporate wellness program.
Corporate wellness programs are plans that promote a culture of physical and mental health, successfully boosting employee morale, productivity, and engagement.
It also helps reduce churn and absenteeism while showing appreciation and support.
The plans usually focus on the following:
- Flexible arrangements for remote workers
- Exercise and physical activities
- Providing wellness gifts to employees
Provide feedback and recognition
The best method for reducing attrition is to show your workers how much you appreciate their efforts by celebrating their achievements.
You can do so through a recognition program or employee swag.
As a result, employees who receive company swag feel more valued in the workplace, which motivates them to be productive — which is ultimately the primary goal of any HR team.
Moreover, this public recognition drives results and influences an employee’s decision to stay at a company.
Create a culture of respect and communication
Lastly, you should treat employees respectfully and listen to what they say.
One study revealed that respect in the workplace is an essential factor in voluntary turnover, so you should find ways to cultivate and nurture it.
As a result, you can see higher employee retention rates, and workers will be healthier, happier, and on board for longer.
Here are some tips for fostering respect:
- Commend generosity, gratitude, and good behaviors
- Encourage open communication
- Conduct exit interviews to see where you can improve
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Now Over to You
Understanding why employees leave and what you can do to prevent this happening can greatly improve your retention rates.
Doing so will leave your company with motivated and focused employees who want to stick with you and be productive members who are assets to your company.
So start making better business decisions and improve your hiring process today.
Are you interested in exploring the vast human resources world?
Look inside our HR glossary to learn more about the different ways you can revolutionize your business.