Are you concerned about employee turnover? According to a recent survey, 96% of employees polled are looking for a new job in 2023.¹ It's a startling stat, but what does it mean? What is employee turnover, exactly, and why does it matter to you? Employee turnover refers to the process by which employees leave and are replaced by new hires. And if you run a business that employs others, you may have to deal with staff turnover at some point. Here we'll cover the basics of employee turnover, including what's behind it and how to use turnover rates to better understand the health of a business and its workplace culture.
A common definition of employee turnover is the loss of talent within the workforce over time. This can pertain to any employee departure, including:
It is often calculated as the number or percentage of employees who leave a company within a year. The U.S. Bureau of Labor Statistics reported some 72.3 million total separations in 2022. That's a relatively high turnover rate among the year's total employed workforce, including more than 158 million within the civilian labor force.
As an employer, you may be wondering what it means to have higher than average turnover. Put simply, if you experience a trend of top talent leaving you for other opportunities, you need to research why. Accomplish this by conducting exit interviews and periodic surveys related to how employees like the organization, training, and management styles.
When a company can’t maintain its desired average number of employees, there’s usually a reason. Common reasons why employees leave jobs and companies experience high turnover include:
Organizations that discover these causes of employee turnover can often address them by improving the following practices:
Employee turnover encompasses a broad range of voluntary and involuntary separation. Common scenarios include:
Staff turnover can be voluntary or involuntary. In cases of voluntary turnover, employees choose to separate for their own reasons. Involuntary turnover occurs when the employee would have preferred to stay, but the company chose to let them go. Reasons can range from instances of poor performance to company budgets or restructuring. Sometimes it's part of a company's larger layoff strategy. Many people liken voluntary vs. involuntary turnover to the difference between being fired vs. laid off, but the nuances abound.
There's a measurable cost to employee turnover. Businesses with high employee turnover rates are often impacted by increased hiring expenses, low morale, lost productivity, and diminishing workplace culture. In addition, remaining employees often must make up for employee departures by taking on more work. This can lead to excess overtime and related payroll expenses, as well as employee burnout. If those overwhelmed employees quit, businesses may lose top talent. And those who remain may need to compensate for poor work-life balance with more sick days and personal time off. These trends tend to be destructive to overall productivity, workplace culture, employee satisfaction, and company profits. According to a poll by Gallup, voluntary staff turnover alone costs U.S. businesses up to $1 trillion per year.
It's wise to learn how to calculate employee turnover within your own organization. Periodically assessing and measuring turnover trends can help determine the primary causes. With the insights gleaned, you and your human resources team can develop effective employee retention strategies to reduce employee turnover. Maintaining low employee turnover rates boils down to the relative basics. Hire talent who fits your company culture. Offer effective job training and career development opportunities so current employees can perform well and advance within your company. Lastly, to maintain your desired number of employees, take complaints against management seriously. Go beyond labor laws that address discrimination, harassment, and unfair treatment. Look also for instances of micromanagement, deliberate overwork, and disrespect. For ongoing news, tips and resources for HR, business, and career management, visit TriNet daily. 1 "Poll Results: New Year, New Career," Monster.com (https://learnmore.monster.com/poll-results-new-year-new-career)
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