What can we learn from employee turnover?

Cited by the Society for Human Resource Management as the number one concern for almost half of HR leaders, the cost and disruption of lost talent means retention and turnover is a headache.

Not a simple one, either. It’s one of those complex headaches with innumerable interconnecting factors, some known, many subtle, and all in a constant state of change. So where do we start?

Calculate your turnover

What is your employee turnover rate for the last year? You can work this out with a simple calculation:

How many people left x 100 / the average total headcount over the same period.

The result is your turnover percentage.

Is my turnover acceptable?

Most UK articles quote between 15-20% as an average, although recent research shared by the CIPD found the average churn for UK workers is a staggering 35%.

However, the number varies from sector to sector. If you’re an employee in agriculture or the public sector, for instance, you’re less likely to churn than if you’re in hospitality, technology or creative sectors.

The cost of leavers

The true cost of employee turnover is a hotly debated issue, and varies between industries, employers and roles. There are estimates that the average staff turnover costs between £14,800 and £22,200 per employee, while other research puts the figure between a third and two thirds of the employee’s annual salary.

It’s a murky question, with no real areas of black and white.

Not all turnover is bad, obviously. If the churning 35% are also your worst performers, it may even have a business benefit. Conversely, if you’re consistently losing top talent, you have a serious problem.

Factoring in direct recruitment costs – advertising, agency fees, interviewing time – onboarding and lost productivity, it’s not difficult to see how the cost adds up. And there are lots of hidden costs that will never appear on a spreadsheet. The knock-on impact on those that remain. The investment of time in that person, their knowledge and skills, the contacts and relationships they’ve forged within your organisations and with customers.

Bottom line, the less unwanted employee turnover you can achieve, the better:

Work-life balance

A few years ago, Jack MA, founder of the Chinese internet retail giant Alibaba, made waves with his comments about the Chinese work practice of ‘996’. Referring to the practice, in which employees work from 9am to 9pm, six days a week, he said it should be considered a ‘blessing’. Those who don’t work long hours, ‘won’t taste the happiness and rewards of hard work’, he said.

His comments dismayed work-life balance campaigners, in a climate where workplace mental health is a burning topic, and where recent research among US and UK workers suggests that the vast majority of employees face stress at work, while a quarter expected that they would burn out within 12 months.

“We’re under the misguided presumption that more work leads to more productivity when the opposite is actually true—chronic stress eats away at any chance for a productive workplace, or high employee engagement,” says Dr. Leah Weiss, author and professor at Stanford University. “Chronic stress undermines culture and leads to fatigue, anxiety, and confusion about priorities.”

Are you employees overloaded? Are they on burnout? Does your workplace have a culture of presenteeism? There’s an easy way to find out. Ask them.

Pay

Salary is a commonly mentioned factor in many resignations, often, given high-employment rate, a higher offer from a competing prospective employer. There’s some evidence to suggest that the more closely pay is linked to job performance, like in a sales role, the more likely that employee is to leave, particularly where perceptions of unfairness are allowed to seep in.

But money isn’t everything when it comes to retaining most employees. Short of entering into a potentially costly bidding war, it’s believed that the overall rewards package can have more impact on turnover than base salary alone, like non-monetary perks, health and wellbeing options, training and career development – paid leave, childcare support, education.

Offering rich and personalised rewards and benefits, tailored to the various demographics that make up your workforce, can have a dramatic impact on engagement and turnover.

Opportunity

If people aren’t growing, they’re stagnating. If they’re not challenged, they’re bored. If they can’t see a future path for themselves with their current employer, they’ll leave.

Allen Associates reported that one-third (33%) of UK employees said they wanted to leave their job due to a lack of opportunity for career progression

This is one of the easiest shortcomings to address. Learning, development and career progression can be baked into the employee experience from the word go, objectives and pathways set as part of the onboarding process.

Management

“People don’t leave employers, they leave people.”

Most of us know this in our bones. People leave managers when they feel things are not being handled fairly. They leave when they feel an employer has reneged or failed to deliver what was promised. They leave negativity, instability, despondency.

Good managers make expectations absolutely clear. They communicate constantly to ensure their team members understand why tasks are important, how they fit into the wider organisational objectives. They give their team a voice in how this is achieved.

Line management creates culture.

But research from the TUC suggests that almost a third of UK workers feel uncomfortable approaching their line manager about problems at work, while a whopping 45% said that their line manager did not have a positive impact on morale.

According to Gallup, management is the catalyst in 75% of employee resignations.

Are your managers trained? Are they closely monitored? Are they supported? Do they have the tools they need to keep track of the needs, performance and development of their team?

We need better management, either by hiring them or – more likely – by improving the ones we have. Line managers need leaderships skills like coaching, communication and emotional intelligence. They need to be able to build relationships and trust. Good management can have a transformative impact on morale, engagement, productivity and turnover.

Create a reliable picture:

• Ensure your people data platform supports effective turnover reporting
• Calculate how you compare to your industry benchmark
• Identify specific teams or departments where turnover is high.
• Are there specific demographics, roles or specialisations that are particularly at risk? These are the areas that should be addressed first
• Ask leavers. Have someone other than their soon-to-be-ex line manager conduct structured exit interviews
• Go for complete candour, this is some of the richest engagement insight it’s possible to obtain