What is staff turnover and how can you reduce it?

Staff turnover, also known as employee turnover, is the percentage of employees leaving your organisation during a certain period of time. If you have a particularly high or low staff turnover, or if employees are leaving due to happiness at work, it highlights that it’s time to make some important changes to your business.

Frequently having to replace employees who have left the company can become a big problem. A high staff turnover can impact productivity and morale but can also lead to issues with company growth and success. When staff frequently leave your business, people will assume your organisation isn’t a good place to work. This could also lead to potential employees hearing bad things about your company from past or frustrated employees, meaning a high staff turnover could also hold you back from hiring top talent in the future.

Having low staff turnover is generally nothing to worry about, however if too few people are leaving it can hinder creativity. New staff members bring fresh ideas and experience to the team which helps to support growth.

How can you calculate staff turnover?

It's normal to measure staff turnover by year. If you want to see how your staff turnover is doing, you can measure it through the simple calculation below:

1. Work out the average number of employees in a year. To do this, add together the number of employees at the start of the year and the number of employees at the end of the year. Divide this figure by 2 to find the average.
   
   
2. Now divide the total number of leavers in a year by the average number of employees in a year.
   
   
3. Multiply this number by 100.

The answer is your yearly staff turnover as a percentage. According to SHRM’s 2017 Human Capital Benchmarking Report, the average overall turnover rate in 2016 was 18%, so you may want to compare your staff turnover rate to this number. Another great option is to, where possible, try to benchmark this figure against those of similar employers, to establish whether your level of turnover is acceptable for your industry.

What is the cost of staff turnover?

The cost of staff turnover will vary between industries and roles but a high staff turnover will always be more expensive than a low staff turnover. To calculate the cost of staff turnover for your business, you should look at the following factors:

Covering the vacancy until it’s filled

When a staff member leaves it can be difficult to fill the role immediately. This can result in additional costs to pay for temporary staff, or overtime to existing staff members who pick up the work.

Recruitment costs

Hiring new employees costs money. Whether you’re using a recruitment agency or placing an advert online, it can become costly. The more often you have to go through the recruitment process, the more these costs build-up for your business.

Onboarding costs

Bringing on new staff means that you will need to conduct both inductions and training, costing not only money, but your time too.

Loss of productivity

No matter how brilliant your new member of staff is, it will take time for them to be producing the same level of work as the person they replaced. New starters have to become familiar with the systems and processes and learn how best to operate in the company. This leads to a loss of productivity for a certain amount of time, and in turn, means an extra cost until they are fully up to speed.

What are the main causes of employee turnover?

As we’ve mentioned above, high employee turnover impacts both your time and money, but it can also have huge impacts on staff morale, productivity and can damage your reputation as an employer. If you are experiencing an issue with high staff turnover, you need to start by looking at what’s happening within your business.

The main causes of staff turnover include:

1. Lack of development opportunities or growth

Good employees want to know that they can grow their skills and continue on a successful career path within your business. If you don’t prioritise, or even offer, development and growth for your employees, they will begin to feel that there is a lack of opportunities within your business. This will lead them to look elsewhere for the chance to improve their prospects.

Read next: Simple learning and development strategies to catapult your employees to success

2. Lack of recognition or reward

No one likes to feel as though they are working hard for very little recognition. You shouldn’t expect employees, who are getting very little appreciation or thanks in return for their contributions to stick around. There’s plenty more fish in the sea, and your employees will want to see if they can get the recognition they deserve elsewhere.

3. Overwhelming workloads

Many things can affect workloads - maybe you have gone through a particularly busy period and picked up more business, or possibly some employees have left so you need the remaining staff to pick up extra tasks or even work more hours. But eventually, if this continues without any benefits or sign of change, overworked employees will look for different prospects with companies that understand the importance of work/life balance.

4. Poor company culture

We spend so much of our time at work, it’s vital that we feel happy there. If employees don’t feel happy within their company’s culture and don’t feel that they have built a relationship with their co-workers they are more likely to be unproductive, disengaged, and ultimately, more likely to leave.

5. Employees don’t get on with their bosses

If employees under a certain manager are having more problems or leaving more frequently, it pinpoints a very specific area for concern.

Managers have a huge impact on the daily life of those beneath them, but at the end of the day, they are just people too. Without proper training and help, managers left alone and untrained can cause very big issues further down the chain.

How do you reduce staff turnover?

1. Listen to employees and act on their feedback

How can you manage and solve a problem if you don’t know what the problem is? Getting clear and frequent feedback from employees ensures that you know about any issues as soon as they arise and can provide a solution before it escalates any further.

As a business leader or HR member, employees might find it difficult to be honest about their issues face-to-face. We recommend finding a confidential, pulse survey tool that allows you to automatically check-in and follow up with your employees at regular intervals. This will allow you to give your employees a voice and stay on top of how your employees are feeling about the business. It means if any employees are experiencing any issues or concerns, you'll catch them early and can make the changes necessary to improve their time at work. Happy employees are more likely to stay so ultimately, this will work to reduce staff turnover.

2. Perfect your hiring process

One very important element in reducing staff turnover is to make sure that you are bringing in the right people for the job in the first place. Of course in the hiring process you are looking for people with the right skills for the task, but you also need to make sure that they have similar values to your company and are a great culture fit. If employees don’t match your company’s culture, then it’s unlikely that they will stick around.

3. Make sure your employees feel appreciated

Employees won’t stay in a business if they don’t feel that their hard work is being noticed or rewarded - your employees need encouragement and recognition. When employees do a good job, you need to show them that you appreciate it.

This doesn’t have to just come from above, recognition for a good job is best when it is given by the whole team, ensuring that all employees get a regular boost. Perkbox Recognition allows everyone in the company to reward and showcase exceptional contributions.

To give recognition, everyone can simply pick who they would like to recognise, tell the story and post it so all can see. If you want to go one step further, you can also incentivise performance. Whether your budget is big or small - you can simply pick your reward from the selection of top-brand items and hit send to give your employees an even bigger boost.

By knowing that people notice their hard work, team members feel appreciated and will be more engaged and motivated for the future.

4. Provide professional development

Professional development doesn’t have to be expensive. It can be as simple as providing opportunities for people to share their knowledge on the job via training sessions, presentations or mentoring others. On the other hand, if you want to offer more formal development, you can offer a learning budget to put towards courses that your employees are interested in, encourage the attendance of conferences or set up external training.

This will not only help them with their day-to-day work but also allow employees to gain extra skills to help them move forward in their career. This means they don’t only feel that they are putting something into the role, but they are getting as much out of it too.

5. Ensure a good work-life balance

Help your employees to enjoy their time both in and outside of work. Allow for flexible working schedules - whether that is flexible start and finishing times, or allowing employees to work from home. By showing that you care about their personal priorities too, it shows that you trust them and want them to be happy in all areas of their life - which will ultimately lead them to be happier at work, too.

Looking for more information into how you can reduce staff turnover?

The bottom line is, the problems associated with collecting and analysing any issues that employees may be having in the business, are much easier to tackle than you might have realised. By collecting more frequent data you can stop any problems in their tracks.

In Summary

Staff turnover is the percentage of employees leaving your organisation during a certain period of time. 

It's important to measure and monitor your staff turnover as if it is particularly high, it means that it's time to make some changes to your business. A high staff turnover becomes expensive and impacts morale, but can also stunt company growth and success. 

The main causes of staff turnover are: 

• Lack of development opportunities or growth
• Lack of recognition or reward
• Too much work and a lack of work/life balance
• Poor company culture 
• Conflict between employees and their bosses

You can reduce a high staff turnover rate by acting on employee feedback, creating a strong recruitment process, rewarding employees for hard work, providing opportunities for learning and development and prioritising employee wellbeing.