High Employee Turnover: What It Is & How to Reduce It

You hire great people, train them well, and treat them fairly.

But they still quit.

Why?

It’s not just annoying. It’s also expensive.

Replacing an employee can cost up to 213% of their salary, according to a study by the Center for American Progress.

That’s a lot of money down the drain.

But what if you could keep your best people for years?

What if you could build a loyal, productive, and happy team that grows your business faster than ever?

It’s possible.

In this blog post, I’m going to show you what high employee turnover is, why it happens, and how to prevent it. And I’ll give you the steps to create a culture of retention in your own company.

Let’s dive in.

What is High Employee Turnover?

High turnover is when employees leave your organization at an excessive or inflated rate. This rate may depend on the industry and the type of work.

For example, according to the U.S. Bureau of Labor Statistics, the average annual turnover rate in 2020 was 57.3% for the accommodation and food services industry, but only 9.1% for the federal government sector.

Is a High Employee Turnover Rate Bad?

You already know that high employee turnover means that a lot of your employees are leaving your company.

But is that really a bad thing?

There are hundreds of reasons people quit, like chasing their dreams or wanting more flexibility, or maybe they’re not the right fit for your culture after all.

What’s the big deal?

Right?

No.

High employee turnover is bad for your business. Very bad.

In fact, it can have devastating effects on your bottom line, your reputation, and your growth. Here are some of the reasons why high employee turnover is bad for your business:

It Costs You a Ton of Money

According to a study by the Center for American Progress, replacing an employee can cost anywhere from 16% to 213% of their annual salary, depending on their level and role.

That means if you lose a manager who makes $80,000 a year, you could end up paying up to $170,400 to find and train a replacement.

That’s money that could be spent on marketing, product development, customer service, or other revenue-generating activities.

It Wastes Your Time and Resources

Every time an employee leaves, you have to go through the whole hiring process again.

You’ve to post job ads, screen resumes, conduct interviews, and make offers.

You’ve to onboard, train, and coach the new hire until they’re fully productive.

That’s time and resources that could be spent on managing, leading, and growing your team.

It Lowers Your Quality and Productivity

When you lose an experienced employee, you lose their knowledge, skills, and expertise.

They have valuable insights and connections that are hard to replace. They know how to handle complex situations and solve problems.

They can mentor and guide others.

A new employee may not have the same level of competence and confidence. They may make mistakes, miss deadlines, or deliver subpar work.

It Hurts Your Morale and Performance

High employee turnover can affect the motivation and productivity of your remaining employees.

They may feel overworked, stressed, or insecure.

They may wonder why their co-workers are leaving and if they should follow suit.

They may lose trust in your leadership and vision.

They may also struggle to work with new team members who have different styles and expectations.

It Damages Your Reputation and Customer Satisfaction

High employee turnover can also hurt your image and reputation in the market.

It can signal that your company is unstable, unreliable, or unattractive.

It can make it harder to attract and retain top talent and customers.

It can also impact the quality and consistency of your products and services.

Customers may not like dealing with new or inexperienced employees who don’t know their needs or preferences.

What Causes High Employee Turnover

There are many possible reasons why employees quit their jobs.

Some of them are personal, such as relocation, retirement, or family issues.

Some of them are professional, such as career change, better offer, or education.

And some of them are related to your company, such as culture, compensation, or management.

In this chapter, I’ll focus on the last category: the causes of high employee turnover that are within your control.

These are the factors that you can influence and improve to retain your best talent.

Here are 10 common causes of high employee turnover and how to prevent them:

Overwork

When employees are required or feel obligated to work long hours or overtime, they may experience burnout and fatigue.

This can lead to reduced productivity and satisfaction.

To prevent overwork, you should set reasonable expectations, assign manageable goals, and encourage breaks and vacations.

Lack of Recognition

When employees don’t receive feedback, praise, or rewards for their work, they may feel unappreciated and undervalued.

This can lead to low morale and motivation.

To prevent a lack of recognition, you should acknowledge your employees’ achievements, celebrate their milestones, and offer incentives and bonuses.

Poor Management

When employees have ineffective or inconsistent managers, they may feel frustrated and confused.

They may not have clear direction, support, or communication.

They may also face micromanagement, favoritism, or harassment.

To prevent poor management, you should train your managers on leadership skills, provide regular feedback, and foster a culture of trust and respect.

Low Compensation

When employees are paid below the market rate or below their expectations, they may feel dissatisfied and underpaid.

They may also struggle to meet their financial needs and goals.

They may look for better-paying opportunities elsewhere.

To prevent low compensation, you should research the market rate, offer competitive salaries and benefits, and conduct regular reviews and raises.

Lack of Growth

When employees don’t have opportunities to learn new skills, take on new challenges, or advance their careers, they may feel bored and stagnant.

They may not see a future with your company.

They may seek more fulfilling and exciting opportunities elsewhere.

To prevent lack of growth, you should provide training and development programs, create career paths and promotions, and encourage innovation and creativity.

Poor Culture

When employees don’t fit in with your company’s values, vision, or mission, they may feel alienated and disconnected.

They may not share your company’s goals or purpose.

They may also face conflicts or disagreements with their co-workers or leaders.

To prevent poor culture, you should define and communicate your company’s culture, hire for cultural fit, and promote diversity and inclusion.

Lack of Autonomy

When employees don’t have control over their work, schedule, or environment, they may feel restricted and powerless.

They may not be able to work in a way that suits their preferences or needs.

They may also feel that their opinions or ideas are not heard or valued.

To prevent lack of autonomy, you should empower your employees to make decisions, set their own goals, and choose their own tools and methods.

Lack of Balance

When employees don’t have enough time or flexibility to balance their work and personal life, they may feel stressed and overwhelmed.

They may not be able to attend to their health, family, or hobbies.

They may also face burnout or health issues.

To prevent lack of balance, you should offer flexible work arrangements, such as remote work or flexible hours; provide wellness programs; and respect your employees’ boundaries.

Lack of Alignment

When employees don’t understand how their work contributes to your company’s objectives or impacts your customers’ lives; they may feel disconnected and unengaged.

They may not see the meaning or value of their work.

They may also lack a sense of direction or purpose.

To prevent a lack of alignment; you should communicate your company’s vision; mission; and goals; show how each employee’s role fits into the big picture; and share customer feedback; testimonials; and stories.

Lack of Challenge

When employees don’t have enough variety; complexity; or difficulty in their work; they may feel bored and uninterested.

They may not be able to use their full potential or talents.

They may also lose their passion or curiosity for their work.

To prevent lack of challenge; you should assign diverse; challenging; and meaningful tasks; solicit feedback; suggestions; and ideas from your employees; and encourage experimentation; risk-taking; and learning from failures.

As you can see; there are many causes of high employee turnover that you can address and improve.

By doing so; you can increase your employee retention; satisfaction; and performance.

How Do You Deal With High Employee Turnover?

How can you stop your employees from leaving?

How can you keep them happy, loyal, and productive?

The good news is, there are proven strategies to deal with high employee turnover.

Here they are:

Analyze Your Turnover Rate

The first step is to measure and monitor your turnover rate.

You need to know how many employees are leaving, when, why, and from which departments or roles.

You also need to compare your turnover rate with the industry average and your competitors.

This will help you identify the problem areas and the root causes of your turnover.

Improve Your Hiring Process

The second step is to review and improve your hiring process.

You need to make sure you’re attracting and selecting the right candidates for your company.

You need to assess their skills, fit, and motivation.

You also need to set clear expectations and communicate your company’s culture, values, and goals.

This will help you reduce the mismatch and the turnover of new hires.

Enhance Your Onboarding and Training

The third step is to enhance your onboarding and training programs.

You need to make sure your new employees have a smooth and positive transition into your company.

You need to provide them with the necessary resources, tools, and support.

You also need to train them on their roles, responsibilities, and expectations.

This will help them feel confident, competent, and engaged.

Offer Competitive Compensation and Benefits

The fourth step is to offer competitive compensation and benefits to your employees.

You need to make sure you’re paying them fairly and according to the market rate.

You also need to provide them with attractive benefits, such as health insurance, retirement plan, bonuses, or perks.

This will help them feel valued, appreciated, and rewarded.

Provide Feedback and Recognition

The fifth step is to provide feedback and recognition to your employees.

You need to make sure you’re giving them constructive and timely feedback on their performance.

You also need to recognize and celebrate their achievements, milestones, and contributions.

This will help them feel motivated, inspired, and proud.

Create Opportunities for Growth and Development

The sixth step is to create opportunities for growth and development for your employees.

You need to make sure you’re providing them with challenging and meaningful work that matches their skills, interests, and goals.

You also need to offer them training, coaching, mentoring, or education programs that help them learn new skills, acquire new knowledge, or advance their careers.

This will help them feel fulfilled, challenged, and ambitious.

Foster a Positive Work Culture

The seventh step is to foster a positive work culture in your company.

You need to make sure you’re creating a work environment that is supportive, respectful, and inclusive.

You also need to promote a work culture that is aligned with your company’s vision, mission, and values.

This will help them feel connected, engaged, and loyal.

Empower Your Employees With Autonomy and Flexibility

The eighth step is to empower your employees with autonomy and flexibility.

You need to make sure you’re giving them the freedom and responsibility to make decisions, set goals, and choose methods that suit their work style and preferences.

You also need to offer them flexible work arrangements that allow them to balance their work and personal life.

This will help them feel trusted, empowered, and satisfied.

Communicate Clearly and Often

The ninth step is to communicate clearly and often with your employees.

You need to make sure you’re keeping them informed of any changes, updates, or news that affect their work or the company.

You also need to listen to their feedback, suggestions, or concerns; answer their questions; or address their issues.

This will help them feel involved; informed; and respected.

Conduct Exit Interviews and Surveys

The tenth step is to conduct exit interviews or surveys with your departing employees.

You need to make sure you’re understanding why they are leaving; what they liked or disliked about working for you; or what they would change or improve in your company.

You also need to thank them for their service; wish them well; or ask for referrals if appropriate.

This will help you gather valuable insights; improve your retention strategies; or maintain good relationships.

Conclusion

High employee turnover is a common and costly problem for many businesses. It can hurt your productivity, morale, and reputation.

But it doesn't have to be that way.

You can reduce your employee turnover rate by understanding the root causes, addressing them effectively, and creating a culture of retention.

By doing so, you'll not only save money and time, but also attract and retain the best talent in your industry.

You'll have a loyal, engaged, and happy team that will help you grow your business faster than ever.

So don't wait.

Start implementing these strategies today and see the difference they make.

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