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What Is Employee Turnover, and Why Does It Happen

Advaitaa RaviAdvaitaa Ravi

Want to know What Is Employee Turnover? Here it is. It is the number of employees who leave your firm over a given period of time. Read to explore more

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August 4, 2022
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What Is Employee Turnover, and Why Does It Happen
HR's CORNER
What Is Employee Turnover, and Why Does It Happen
HR's CORNER

Whether you’re a 📈 Fortune 500 company or a rising star 💫, your team is the one who helps take your business to greater heights. Naturally, you want to hire the creme de la creme of talent. And since your team members are the engine that keeps your company running, you want to ensure they actually want to stick around.

That brings us to employee turnover. Every employer's goal is to hire excellent employees who perform well and stay with the company in the years to come. But all this depends on how successfully a company hires, onboards, manages, and 🎁 rewards its people. From recruitment to when an employee leaves, all phases are fundamental to success.

Quick Summary

In this article about employee turnover, you will learn:

  • 🤔 What is employee turnover?
  • 5️⃣ What are the top 5 reasons for high employee turnover?
  • 👇 How to reduce the employee turnover ratio?

🤔 What Is Employee Turnover?🤔

Employee turnover or employee turnover rate is the number of employees or the percentage of employees who leave your company over a given period of time.

You can split employee turnover into two categories: voluntary and involuntary turnover. Voluntary turnover is when an employee leaves an organization on their own accord. Involuntary turnover is when the employer terminates an employee

Voluntary turnover is difficult to control as they’re an unforeseen consequence. However, you can keep involuntary turnover at a minimum by hiring people you want to keep around.  

While turnover rates indicate deeper issues, keep in mind that employee turnover is, and always will be, part and parcel of business. 

How To Calculate Turnover Rate?

You need 3 numbers to calculate the employee turnover rate:

a) The number of active employees at the start of the month (A),

b) The number of active employees at the end of the month (B),

c) The number of employees who left during that month (C).

You have to add your starting and ending workforces and divide the sum by 2, you will get your average workforce, Avg = [A+B]/2.

The number of departing employees should now be divided by your average employee count. To calculate your final turnover %, multiply it by 100, [C/Avg]*100.

5️⃣ What Are The Top 5 Reasons For High Employee Turnover? 5️⃣

For you to assess the true cost of employee turnover, first you must understand the various facets of your business that contribute to high employee turnover rates. While this differs from business to business and industry to industry, there are a few common grounds that you cannot overlook. 

1. 👌🏼 Company culture 

A bedrock of employee experience other than roles and responsibilities is company culture. While you may not see it, your staff can identify a company culture that’s toxic ☠️ from miles away. 

Read More: How To Drive Culture Change In An Organization (2022)

And employees will not be true-blue 🔵 to employers who don’t take the effort to bring about a change. In fact, a large chunk of employees who left their organization cite culture as the leading cause for leaving their job. 

A certain rate of employee turnover is passable, but extremely high turnover rates denote your culture needs fixing and leaders must act swiftly. ⏩ 

Workplace Culture Playbook
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Workplace Culture Playbook

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2. 🗣️ One-way communication

Employees want and deserve to have their voices heard 💬. Two-way communication between managers to team members helps foster a positive work culture.

Whether team strategy or company performance, when you don’t include employees, naturally they felt left out. Taking employee feedback into consideration reduces voluntary turnover.  

3. 〰️ Lack of opportunities to grow  

A major reason for high employee turnover is a career plateau. When employees find that there’s no room or opportunities for development or continuous learning, they’re bound to leave. Most employees are looking to grow and advance, so you’ll lose out on this set of talent.

Tip: Leaders, help your employees by playing to their strengths, provide and act on feedback as well as give employees room to develop. This will help reduce voluntary turnover.

4. 🔱 Managers and leadership  

Team members directly report to managers who work with them regularly. Hence, they have a significant effect on overall employee engagement. When employees don’t receive the support they expect, they consider leaving.

Managers and leaders today must make team members feel valued. It’s the easiest way to reduce employee turnover.  

Employee Engagement Handbook
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Employee Engagement Handbook

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5. 🛑 Unclear job expectations 

Often, while it may not be visible, unclear job expectations are a serious source of stress for countless employees. Not just during the initial few weeks, but throughout the course of their career. Unless you communicate job expectations clearly, employees will decide to look for other, more fulfilling opportunities

👇🏼 How To Reduce The Employee Turnover Ratio? 👇🏼

If you’re facing high employee turnover, remember, it’s the little things that matter. Of course, implementing a pay raise across the organization is a major bonus, however, the impact is not long-lasting

Instead, offer a stipend for wellness so employees can care for their mental health or flexible working hours for better work-life balance. What ensues these small things is a notable upward trend in employee engagement. And engaged employees don’t want to leave - they stay on. 

We have good news. Like health concerns that you can care for with preventive care, you can prevent employee turnover too. 

The following simple yet effective strategies reduce employee turnover and improve retention.    

1. ✖️ Enhance your benefits package 

Now more than ever, benefits like remote work opportunities, flexible schedules, or health benefits matter more. The benefits and perks you offer form a core element of your employee value proposition (EVP) and directly reflect your employer branding and company culture

Of course, salaries are one aspect to win over employees, but this won’t keep them in your system for long. You must invest in your employees by giving them things like generous PTO, strong healthcare benefits, and more. 

Employer Branding Playbook
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Employer Branding Playbook

Your roadmap to effectively implement winning strategies to retain the best employees!

Tip: Collect information during stay and exit interviews so you can refine the benefits you offer and give employees what they actually want.

Offering benefits shows you care and is an excellent way to earn their trust. Such a reputation helps retain as well as attract the best talent.  

Get Best Employee Benefits Today

2. 😄 Pulse on how your employees feel  

Do you know if your employees are happy and engaged? If you answered yes, do you really know, or is it just an assumption? Rather than assuming - a big mistake, use regular check-ins or feedback forms to keep a check on how your employees feel.

Whether it’s employee engagement surveys, stay interviews, peer feedback, etc. you can keep a tab on employees.  

Once you know how your employees feel, you can work towards improving their experience, thus reducing the rate of turnover while simultaneously boosting engagement.  

3. 🔄️ Conduct exit interviews 

There’s one solution to employee turnover you’re missing and one that’s often overlooked - exit interviews. An exit interview is your opportunity to ask employees what went wrong and why they left.   

As they’re on their way out, you can expect them to provide honest feedback and be more candid about their grievances. You must put this information to use and amend your organization’s ways and improve them so employees what to stick around.     

4. ✔️ Optimize candidate selection 

Hiring in this tight labor market is definitely a challenge, which makes it all the more important to optimize your selection process rather than taking anyone who applies on board. 

There are certain instances where you can train people to develop skills to become successful. However, it makes more sense to look for the right characteristics when you’re hiring. 

What you can do is clearly narrate the traits and skills potential candidates must possess. You can also make use of tools like personality questionnaires or pre-employment assessments to really weed out the good ones. 

5. 💪 Prioritize wellness

Why wellness? Because a healthy mind and body help employees produce better work. 

Surely, you’ve heard of Maslow's Hierarchy of Needs. His theory illustrates the importance of both mental and physical wellbeing, especially in the context of work. 

As a leader, if you help your employees realize their full potential, you’re enabling them to operate so they’re always giving their 100%. However, when their basic needs are unmet, it’s impossible for them to reach higher levels of performance.

They’re constantly focusing on fulfilling their basic needs rather than focusing on what matters. 

So, how can you support wellbeing in your workplace? Offer mental health consults, preventive care, employee wellness session, financial wellbeing workshops, stop overworking your employees, and more. 

🚫 Put An End To Employee Turnover 🚫

Employee turnover impacts several aspects of a business, including the bottom line. No doubt that employee turnover costs organizations a hefty sum. However, tackling employee turnover should be more than saving money. It’s also a signal that your organization is not empowering employees to come to work every day. 

As a business, you want to make sure you accomplish your mission. For that, you need a committed and motivated team who are willing to reach their full potential. And the foundation is building rapport and trust with your workforce. 

Health benefits go a long way in creating an experience that employees value, making them want to stay back with you

Are you ready to give your workforce the benefits they deserve? ❤️ Then Loop is your go-to partner. Let’s talk today!

What Is Employee Turnover, and Why Does It Happen
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What Is Employee Turnover, and Why Does It Happen

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