Topic:

What Is Employee Turnover

June 17, 2019
What Is Employee Turnover

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.

What is employee turnover?

A common definition of employee turnover is the loss of talent within the workforce over time. This can pertain to any employee departure, including:

  • Resignations.
  • Layoffs.
  • Terminations.
  • Retirements.
  • Location transfers.
  • Deaths.

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.

Understanding employee turnover

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.

Causes of employee turnover

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:

  • Lack of career growth and advancement opportunities.
  • Poor management from supervisors.
  • Lack of organizational fit. Employees may have the right skills, experience, and education but still not fit with the company’s culture, mission and values. Employees who feel out of place tend to lose motivation and sense of purpose. They may eventually begin to disengage, underperform, and express frustration with the company’s workflow processes, rules, and structure or hierarchy.
  • Lack of training, support, or resources necessary to do their jobs well.

Organizations that discover these causes of employee turnover can often address them by improving the following practices:

  • Hiring: Beyond hiring for skills, knowledge, and experience, seek a good organizational fit. This means identifying talented employees who you believe will also mesh well with your organization.
  • Employee onboarding: Research shows that employees who experience a structured onboarding process are likely to stay with an organization longer. A well-designed onboarding program tends to increase employee engagement and help new employees feel like a part of the team.
  • Commitment to employee training and development. Helping employees level up in skills and knowledge demonstrates support of their career development and advancement within the organization.
  • Mindful management. Some say that employees don’t quit jobs — they quit bad managers. Employees who feel trusted, valued, and respected tend to perform better and be less apt to seek employment elsewhere. Managers who are mindful of this have the ability to help promote healthy, positive professional work environments that employees desire.

Types of employee turnover

Employee turnover encompasses a broad range of voluntary and involuntary separation. Common scenarios include:

  • Firing: Employees are let go for specific reasons — or perhaps for no specified reason in at-will states.
  • Job abandonment: The employee walked out to never return. This includes any employee who doesn’t show up for a shift without calling for 3 days.
  • Layoffs: Employees are relieved of their positions due to changes within the company.
  • Military leave, enlistment, or other obligation.
  • Professional or educational pursuit, as in leaving for an alternative job offer, school, or to start a business.
  • Quitting and resignation: An employee voluntarily leaves the job for a specific reason or with no reason given.
  • Retirement: Employee reaches retirement age or terms and takes advantage of it.

Differences between voluntary and involuntary turnover

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.

Consequences of employee turnover

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.

What is employee turnover costing your company?

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)

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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