The days of people sticking with a job for life are pretty much gone. 50 years ago, you’d often hear, “Sue’s been with us for 40 years,” as she retires and is gifted a carriage clock. These days, there’s much more movement in the job market as people hop from one role to another throughout their career.
Bringing fresh talent into your business can have advantages – a new energy, different perspective and skillsets for example. But if you notice one employee leaves after another, then you may have a problem with staff turnover.
It’s important to keep an eye on your employee turnover rate and to have a benchmark of what’s a good or bad employee retention rate. Armed with that knowledge, you can take steps to identify internal issues and fix any problems causing a high turnover rate.
What is Employee Turnover?
The employee turnover rate shows how many employees are leaving a company. It’s the percentage of the total number of employees who’ve left the company within a set period of time. It’s an important non-financial KPI for your business.
The formula to calculate your staff turnover percentage is:
Turnover = (employees who left ÷ average number of employees) x 100
There are two main types of employee turnover:
1. Voluntary turnover: employees who willingly leave their jobs through retirement or resignation
2. Involuntary turnover: employees who are asked to leave by their employers, be that redundancy or dismissal. This includes layoffs due to a company restructure or relocation (consequently involuntary turnover due to layoffs can’t be included in a company’s attrition rate).
What is a Normal Staff Turnover Rate?
According to the Chartered Institute of Personnel and Development (CIPD), 2024 is a more normalised period for staff turnover than we’ve seen in recent years. The Spring 2024 national average annual turnover rate in the UK is 16%.
During the pandemic, most employees stayed in their roles and average employee turnover rates fell. Furlough was a key reason. Why would you leave when you’re getting paid not to? Post-pandemic, people started to move jobs again and staff turnover rates increased.
How does your staff turnover rate compare to the national average? Is it lower or higher?
- Low turnover rate: lower than 16%, the national average
- High turnover rate: higher than 16%, the national average.
It’s also worth comparing your turnover rate to the industry average as some sectors have higher rates than others. According to the CIPD, hospitality has the highest staff turnover rate at a staggering 52% (Jan 2022-Dec 2023). Agriculture and retail follow at 45% and 42% respectively. At the other end of the scale, public administration and defence has a 25% employee turnover rate. The finance and insurance industry is at 27%.
What Causes High Employee Turnover?
A high turnover rate can have a negative impact on your bottom line. The recruitment process can be costly, especially when you have to repeat it frequently. In fact, the cost of replacing an employee is about 6 to 9 months’ salary. Improving employee retention rates can reduce those overall turnover costs.
It’s important to monitor your overall turnover rate regularly as it’s a definite red flag when you see those metrics rise. The most common reasons for this are:
- Lack of career development opportunities
- Bad recruitment decisions
- Low salary
- Unappealing company culture
- Lack of flexible working options
- Feeling overworked and under-appreciated
- Bullying, harassment or discrimination
- Poor performance
- Organisational restructure.
How Can You Maintain a Good Employee Turnover Rate?
If you’re seeing high employee turnover rates, the first thing you should do is find out why staff are leaving. The best way to do that? Ask them. Hold exit interviews and gather staff feedback. Actively listen to their reasons for leaving. Understanding why there’s poor employee satisfaction and low employee morale is powerful information. Use this to improve the employee experience at your company and boost employee engagement.
There are proven initiatives that can help with this:
Encourage staff feedback: provide opportunities for people to share their thoughts and feelings. It could be a simple suggestion box, a Human Resources open door policy or a staff rep to turn to.
Reward achievements: celebrate the wins, big and small, within your company. That’s not just recognising the top performers, but also cheering on those who have made a positive impact.
Social events: make time for staff socials. This can be a good way for new employees to meet and get to know others. Quizzes and activities away from the daily work environment are good team bonding initiatives.
Salary and benefits: ensure you offer competitive wages if you want to attract top talent. Benefits like flexible working, discounts and pension contributions appeal to potential new hires as well as encouraging staff retention.
Training and development: this shouldn’t just be at the onboarding stage. Supporting people to enhance their learning and gain new skills benefits them and the business overall.
Retaining your high performing employees is particularly important. Attractive employee retention strategies like those mentioned above will contribute to this. It’s important to make these employees feel like they have an exciting future with your business. One which will offer them career development and progression. This must be a strategic goal and KPI for your HR professionals.
Take Steps to Improve Employee Retention in Your Business
What’s the employee turnover rate in your business? Would you like to improve it? You don’t have to do it alone. I have loads of experience in this area and I can help you.
Make your business attractive to top talent and nurture high performing employees. My coaching sessions can equip you with effective strategies to improve your business and benefit your teams. Contact me to find out more.
