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Causes of Employee Turnover and How to Prevent High Turnover

Employee turnover is an inevitable part of business, but it’s often also a significant expense. When you’re trying to minimize unnecessary costs and improve your organizational culture, it’s an important area to target — improving staff retention can achieve both of these goals. What exactly causes employee turnover, though, and how can an organization take steps to prevent it? Whether you’re a large, midsized corporation or a small employer, developing a retention strategy can help your business grow and thrive. Read on for more information on developing and implementing your own employee retention strategy.

What Is Employee Turnover and Why Is It Bad?

Employee turnover refers to the continual loss of high-quality staff from your workforce. This can happen when employees quit, get terminated, retire, or are laid off — but the term most commonly refers to employees’ voluntary departures. Why is it bad, then, if an employee quits? In addition to the cost and time spent interviewing new candidates and training a new hire, a high employee turnover often indicates opportunities for improving manager skills, organizational culture, and most often the need for better development. In other words, it can be a symptom of bigger issues.

What Is a Good Employee Turnover Rate?

So what is a “good” employee turnover rate? The answer to this question varies widely depending on what industry you’re in and what kind of positions you primarily staff. The average annual turnover rate for an organization is reported to be between 18% and 20%, and the majority of that turnover is from voluntary employee resignations. Some industries tend to have higher turnover, though, such as retail and hospitality. While it’s important that you keep your goals in context and align your target employee retention rate with your industry averages, it is even more critical that you focus on your own company. Regardless of how your peers perform, your biggest focus should be on whether your own turnover rate is declining.

Leading Causes of Employee Turnover and How to Reduce It

A wide range of factors causes employee turnover. Employees may be driven to seek out better opportunities over time and look for positions that offer better schedules, managers, work-life balance, or development opportunities. Dissatisfaction in all of these areas can be a reason for a high turnover rate at your company. If you’re looking for more insight into the exact reasons for turnover, third-party exit interviews can be a great resource for getting feedback on the real reasons why employees are quitting. Departing employees can provide details about their decision to leave, and you can benefit from the information.

Lack of Employee Purpose

Though we all go to work with the objective of earning a living, we also want to find meaning and enjoyment in what we do. Unfortunately, many employees come to work and find it ultimately unfulfilling, and, unsurprisingly, this often leads to a high turnover rate. If your employees feel they lack purpose in their position, they’re likely to seek out better opportunities sooner rather than later. You can prevent this outcome by working with your employees to integrate their skills and interests more effectively into their jobs.

Poor Compensation

In addition to a sense of purpose, employees want fair compensation that reflects their skills, experience, and commitment. Although only one in ten employees leave for pay reasons, some companies lose high-quality employees because they are unable or unwilling to offer compensation that meets their employees’ needs and expectations. If you want to attract and retain the top talent in your industry, you need to offer compensation that’s competitive.

Being Overworked

Work-life balance is more important than ever, but unfortunately, it’s also more unattainable than ever. Employees often feel pressured to be available and on-call at all times, which often leads to burnout and can cause turnover. How can you save employees from feeling overworked and stressed? Make a point to check in with your staff members and seek feedback about their workload. If they indicate that it’s too much, listen to them, and look for solutions.

Little to No Feedback or Recognition

Employees want to receive feedback, coaching, and recognition, but managers often fail to have meaningful conversations with their staff. This lack of engagement can create an environment where there’s distance between management and staff, which in turn, can minimize your retention rate. It’s imperative for your managers and your employees to schedule feedback sessions and deliver constructive guidance regarding performance. Remember that listening to your employees and acting on their feedback is an important part of employee satisfaction and retention.

No Opportunity for Growth or Development

Along with a lack of feedback, many organizations suffer from a lack of advancement or development for hard-working employees. When a staff member is genuinely invested in their job and their organization, they will naturally want to take on more responsibilities and pursue the chance to learn new skills. When these opportunities are lacking, employees may look for jobs that offer better prospects for development and advancement. It’s your responsibility to invest in your staff members, challenge them, and provide them with opportunities for professional growth.

Toxic or Negative Culture

In some severe cases, employees are driven away by an organizational culture that’s toxic or negative. Workplace bullying and harassment, or even mundane negativity, can be a significant drain on employees who want to work in a positive, upbeat environment. If you notice a culture problem like this emerging and do nothing to counter it, you’ll likely see some of your best staff members fleeing in search of a happier workplace. It is important to understand team dynamics. Remember that one bad apple can spoil the bunch. 

Develop a Retention Strategy That Works

Developing a retention strategy is the best way to minimize turnover and keep the best staff in your workforce. Retention strategies aren’t one-size-fits-all, though. You need an approach as unique as your company and your employees. Work Institute partners with companies to create data-based solutions to the most common workplace problems. Whether you’re battling high turnover, a lack of promising recruits, or leadership issues, we can help you find your bearings and emerge stronger than ever. Call us at (615) 777-6400 or reach out to us online to get started and schedule a consultation.


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