Employee turnover is a major concern for any organization. Whether you run a small business or a large corporation, the rate at which employees leave and are replaced can have a significant impact on your bottom line.

High employee turnover not only disrupts productivity, but also comes with high costs associated with recruitment, training, and lost productivity.

In this article, we’ll explore what employee turnover means and look at the different types of employee turnover. 

We’ll also see the reasons employees leave their jobs, and provide tips on how to reduce staff turnover.

What Is Employee Turnover?

It can be divided into two types: 

1. Voluntary
2. Involuntary

The annual turnover rate is calculated by dividing the number of employee exits in a year by the average number of employees during that same period. Using this benchmark, companies can monitor employee turnover and identify areas for improvement using retention strategies.

Reducing high employee turnover should be a top priority for any company. When companies know what causes people to leave their roles, they can proactively address these issues and implement initiatives that promote employee engagement, satisfaction, and well-being.

Voluntary turnover

Voluntary turnover is when an employee leaves a company of their own accord, normally because they have found a new job. The top reasons are usually career growth, work-life balance, or better pay.

A high voluntary turnover rate can be a sign of problems in a company’s work environment or management style.

It is important for companies to understand the reasons why employees leave voluntarily in order to improve retention strategies and reduce the costs associated with high turnover rates. 

One way to address voluntary turnover is to hold exit interviews with departing employees and ask them for feedback on what worked well and what needs to be improved. 

At the same time, companies must always create development opportunities that align with employees’ career goals, provide regular feedback and recognition for good performance, promote work-life balance initiatives, and offer competitive benefits packages.

Involuntary turnover

Involuntary turnover happens when an employer terminates an employee’s contract due to poor performance, layoffs, or other organizational changes.

This type of turnover can have a negative impact on both the employees who are leaving and those who remain within the organization.

For those who leave, this can be a stressful and difficult experience that can affect their confidence in future job prospects. 

Those who stay may feel anxious about job security and uncertain about what changes may come next, affecting their employee experience.

Involuntary turnover cannot always be avoided, but employers can take steps to minimize the impact on employees—for example, by offering support such as career coaching or outplacement services to ease the transition for departing employees.

6 Causes of Employee Turnover

Employee turnover can have a significant impact on your business, and it’s essential to identify the underlying causes. Here are six reasons why employees may leave their jobs:

• Poor management is one of the most common reasons for high employee turnover rates. When managers fail to provide guidance or support, employees may feel undervalued and unappreciated.
• Limited career growth opportunities can also lead to high employee turnover rates. Employees want professional development opportunities that will help them advance in their careers.
• Inadequate work-life balance can cause burnout and stress among employees. If workers don’t have enough time to spend with family or pursue hobbies outside of work, they’re more likely to quit.
• Low employee satisfaction due to a lack of engagement or initiative from higher-ups is another reason for employee churn. Workers who aren’t motivated by their tasks are likely to start looking elsewhere.
• Insufficient pay or benefits packages are often cited as key factors contributing to an increased rate of staff turnover at companies across industries.
• Finally, company culture plays a major role in keeping top talent happy. A toxic environment where bullying or harassment occurs regularly could prompt good employees to go out the door quickly.

If these root causes are identified and addressed through effective HR management strategies—such as annual salary reviews and the introduction of flexible working arrangements to improve work-life balance—employee turnover can be greatly reduced.

How to Reduce Employee Turnover

Low employee turnover is important for any company that wants to maintain its top talent, productivity, and bottom line. Here are some tips on how to reduce employee turnover:

Tip #1: Create a culture that focuses on employee well-being

When employees feel supported and valued, they are more likely to stay with the company long-term. Here are some tips on how to create a workplace culture that focuses on employee well-being.

First of all, emphasize work-life balance by offering flexible hours and remote work options when possible. This way, employees can take care of their personal commitments while meeting their professional obligations.

Moreover, provide opportunities for career development and growth. Encourage employees to pursue professional development courses or attend industry conferences to improve their skills and knowledge.

Last but not least, encourage open communication between management and staff members so everyone feels comfortable voicing feedback or concerns. 

Pro Tip: Regular check-ins can help identify issues before they snowball into larger problems.

Tip #2: Hire the right candidates

It’s not just about finding someone with the required skills and qualifications, but also about finding people who fit well into the company culture.

To attract top performers, it’s important to create clear and compelling job descriptions that accurately reflect the position’s responsibilities and requirements. This way, only qualified applicants should apply for the role.

During interviews, focus on behavioral questions that allow you to assess a candidate’s work style, communication skills, and problem-solving abilities. It’s also important to evaluate their potential cultural fit by asking questions about company values and workplace culture.

Furthermore, during the hiring process, don’t neglect soft skills, such as emotional intelligence, adaptability, and teamwork. These qualities are often indicators of how well a person will integrate into your team. 

Tip #3: Make your employees feel heard and appreciated

Always make new employees feel heard and appreciated, starting at the onboarding stage. Employees who feel valued are more likely to stay with a company, as they are less likely to be seeking validation elsewhere.

To ensure that your employees feel heard and appreciated, it’s important to provide opportunities for feedback and act on it where possible. If an employee raises a concern or suggests an improvement, acknowledge their input and take appropriate action.

Another way to show appreciation is through recognition programs. These can include bonuses or awards for exceptional performance, but even small gestures like thank-you notes or public acknowledgments can go a long way.

Celebrating personal milestones such as birthdays or work anniversaries can help foster a sense of community in the workplace and show how much you value your employees.

Tip #4: Create a solid company culture

Creating a solid company culture is one of the most effective ways to reduce employee turnover and retain top talent. Your company’s culture should reflect its values, mission, and goals. It should also be inclusive and give your employees a sense of belonging.

To create a strong culture, make sure you involve your employees in the process. Ask for their input on what they would like to see in the workplace and how they can help build a positive work environment. 

Leading by example is also important. Set clear expectations for behavior, communication, and performance that align with your company’s values. Promote accountability at all levels of the organization.

Consider offering perks or benefits that promote employee wellness, such as wellness programs or flexible scheduling. By prioritizing your employees’ needs outside of work, you show them that you care about their overall well-being, which leads to higher employee retention.

Tip #5: Encourage learning and development

Encouraging learning and development initiatives within your workplace culture is essential for keeping employees engaged, motivated, and happy. It’s also a great way to improve employee retention as well as enhance the overall knowledge base of your company.

You can do this by offering training programs or courses that are relevant to your employees’ job roles, or by providing mentorship or coaching opportunities for high-performing employees who want to grow within the company and need guidance on career advancement or specific skills.

It’s also important to recognize and reward employees who take an active interest in self-improvement. Acknowledge those who have completed certifications, taken on additional responsibilities, or gone above and beyond in their efforts.

Tip #6: Analyze and solve existing turnover issues

Conduct exit interviews with employees who are leaving the company voluntarily to identify common themes behind their departures. Additionally, consider surveying your current employees to gather feedback on areas that need improvement.

Once you’ve identified the root causes of turnover in your organization, take action to address them. 

This could involve:

• changes in management or leadership practices
• improving communication channels between managers and employees
• streamlining processes for tasks like performance reviews and promotions
• offering more opportunities for professional development.

Author’s Note: Always track your progress and keep tabs on key metrics like retention rate and average tenure at the company; these numbers will tell you whether your initiatives are having an impact.

Tip #7: Provide job flexibility

By providing job flexibility, you can greatly improve your employee retention rates and reduce turnover costs. 

Offering options like remote work or flexible schedules not only shows that you trust your employees to manage their own time but also creates a more accommodating work environment.

Solving existing turnover issues isn’t a one-time fix. It requires ongoing effort and attention; but, by staying vigilant about potential problems and taking proactive steps to address them, companies can create a more stable workforce that is invested in its success over the long term.

Now Over to You

Reducing employee turnover is an ongoing process, one that requires constant attention and effort. 

Implementing these tips, such as creating a positive company culture, offering career development opportunities, and addressing existing turnover issues, will lead to a happier workforce and higher productivity.

To explore other HR terms, visit our HR Glossary. And remember to share it with your HR team members if you find it useful!