7 Common (but Fixable) Causes of Employee Turnover

upset-woman

$16,061.76

That’s how much it takes to replace the average worker in the United States.

In today’s competitive job market, employee retention is one of the most pressing issues businesses face. By 2023, voluntary employee turnover is expected to rise to nearly 30%. As such, it’s more important than ever before for organizations of all sizes to have a strong employee retention plan.

“We now have more jobs than people to do them, which means our labor shortages are going to get worse.” —Johnny C. Taylor Jr., Society for Human Resource Management (SHRM) president and CEO

From compensation to workplace culture, most employee turnover is preventable. In this article, you’ll learn common causes for employee turnover, the impact it’s having on your business, and how to fix it.

employee turnover 8

The consequences of not investing in retention

It costs a lot to hire an employee. On top of salary expenses, there are also benefits to be paid and costs associated with recruiting and onboarding. When an employee leaves your organization, replacing them can be even more costly.

According to the Work Institute’s 2019 Retention Report, employee turnover costs businesses over $600 billion every year. They estimate that for each employee you lose, it will cost you up to 33% of their annual salary to replace them.

Estimated Costs to Replace an Employee by Annual Salary

Annual Employee Salary

Estimated Cost to Replace

$30,000

$9,900

$60,000

$19,800

$90,000

$29,700

$120,000

$39,600

 

While these figures may seem high, when you have to replace an employee, you don’t just have the costs of recruiting and onboarding. Your business has other real costs to account for.

Your replacement hire will likely have much lower productivity levels and make more mistakes while they get up-to-speed. This often leads to decreased profits and lower customer satisfaction ratings.

High employee turnover is also likely to affect your overall workplace engagement. When your employees lose a coworker, they may become discouraged and less engaged in their work. If not properly managed, this can have a negative impact on your organization’s workplace culture.

With employee turnover on the rise, it’s more important than ever to invest in employee retention to keep your turnover rates low.

 

Employee turnover rates

What is an employee turnover rate?

Your turnover rate is the figure that can give you an idea of how well your employee retention strategies are working. This rate reflects the number of employees who have left your company during any given time period. It typically doesn’t include employees who have been promoted, transferred, or have retired. The lower the rate, the better.

How do you calculate an employee turnover rate?

To calculate your organization’s employee turnover rate:

  • Divide the number of employees who have left your organization during a time period by the average number of employees during the same time period.

  • Multiply the number you calculated by 100 to figure out your turnover percentage.

What’s a good employee turnover rate?

Since turnover rates can vary significantly by industry, it’s difficult to identify what a “good” rate is. For example, while the average turnover rate is around 18%, the average turnover rate for the hospitality industry is over 70%.

employee turnover 2

The best way to gauge how well your organization is doing is to compare your turnover rates from year to year within your organization and within your industry. 

How to tell if your employee is about to quit

When an employee quits or you receive a call for a reference check, it’s often unexpected.  According to Robert Glazer, Acceleration Partners CEO, this often happens because “honest conversations are not encouraged on both sides.”

One way you can put an end to the surprise is with Glazer’s Mindful Transitions Program. This program encourages both the employer and employee to be open and honest about when the position isn’t a good fit. 

Sometimes, the problem can be solved. Other times, an employer or employee-initiated transition is more appropriate.

You can also watch for subtle signs that indicate your employee is unsatisfied in their current position. Research has shown there are specific behaviors and cues to watch for to prevent employee turnover.

employee turnover 6

Five signs that your employee may be ready to quit

1. Lower productivity

Your employees’ productivity usually reflects how engaged they are. The less engaged your employees are, the less productive they will usually be. If your employee’s productivity is steadily declining, it may be a sign that they have checked out and may quit in the near future.

2. Less of a team player

Team players are often easy to spot. They’re the ones always willing to share important information or lend a hand. They’re the problem-solvers and the ones who are willing to be flexible. On the other hand, employees who are withdrawn or not willing to chip-in can raise some red flags. If your employee isn’t a team player, they may be looking to leave your company soon.

3. Doing the minimum amount of work

Procrastination and doing enough just to get by can make your employee seem like a slacker. But in many instances, there is often more going on. This can also be a sign that your employee is ready to quit.

4. Less interested in building a relationship with their manager

Most employees want to have a strong relationship with their manager—whether it’s professional or on a personal level. A mutually respectful relationship takes continual effort from both parties. If one of your employees seems like they’ve lost interest or is making less of an effort to connect, they may be at risk for leaving your company.

5. Less willing to commit to long-term deadlines

When your employees commit to projects with long-term deadlines, it shows they plan to stick around. If one of your employees is hesitant to take on a long-term project, it may be because they don’t plan to be around for much longer.

What to do if your employee demonstrates pre-quitting behaviors

If your employee exhibits one or more of these signs, it doesn’t necessarily mean they are ready to quit. Start a friendly dialogue rather than accusing them of something. Consider doing a stay interview to discuss the situation and how they feel about your organization.

Regular employee feedback can also help you get the information you need and prevent turnover. TINYpulse offers weekly and biweekly pulse surveys to get honest and real-time employee feedback. This will allow you take early action before any problems take a toll on your business productivity.

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7 reasons your employees leave

01. Employees are worked to the bone

Our previous research revealed that nearly 70% of employees feel as though there aren’t enough hours in the week to do their jobs.

Having too much work on their plates week in and week out isn’t exactly motivating, to say the least. When employees are overworked, it often leads to higher-stress levels and employee burnout.

According to a CareerBuilder survey, 3 out of 5 employees say they are burned out in their current position. These overworked and burned out employees will often jump ship to join companies that understand the importance of work-life balance.

The Fix

To help reduce employee stress and decrease turnover, take a proactive approach. Make sure work is distributed evenly across your organization. If you're not sure whether your employees are overworked, the easiest way to find out is by asking them directly.

Use anonymous pulse surveys to figure out whether your employees feel they are responsible for too much work each week. If the bulk of your staff indicates they're overworked, it may be time to hire more employees—or at least bring freelancers into the mix.

02. Team members are treated differently

When the boss’s favorite employees get treated differently than everyone else, it’s only a matter of time before other workers get angry. You can’t let one employee make their own flexible schedule if no one else is given that privilege and expect there won’t be consequences.

These inequities can also go beyond just playing favorites—especially when unconscious biases come into play. Our unconscious biases can take a variety of forms and often unintentionally influence how we perceive and treat someone with a different background or gender. When left unchecked, these biases can cause favoritism and even discrimination.

The Fix

Make it a top priority to treat all of your employees the same. Don't play favorites. Take a look at your current policies to ensure they are equitable and consider how your actions may be negatively perceived by your employees.

For example, if your company doesn't have a remote working policy, you can't let one or two employees work from home while expecting everyone else to show up to the office. It's a surefire way to draw the ire of your staff.

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03. Workers like making money and want better benefits

Who doesn’t want to make more money? If your organization offers miserly salaries and hesitates to give raises, chances are your team members will constantly be on the lookout for an escape. Our recent research has shown that nearly 50% of employees would leave their organization for a 10% salary increase.

Although 50% seems alarming, the good news is that it is a significant decrease from the almost 90% in 2015. This also suggests that a good salary may not be enough to keep your employees from leaving.

Another top reason for employee turnover is that employees are looking for better benefits. According to an Aflac study, nearly 1 in 4 workers who are likely to look for a new job say that a benefit package shows their employer cares about them.

The Fix

Since it costs a lot of money to replace an employee, you are better off giving your workers regular raises and improving the benefits you offer. From traditional benefits like medical and 401(k)s to non-traditional ones like pet insurance and onsite childcare, the benefits you offer reflect how much you value your employees. 

You may also find salary transparency—the practice of letting each employee know what everyone else is making—helpful in keeping employees content.

04. Company culture is toxic

Workplace culture is strongly correlated with employee happiness. When workers love their company’s culture, they’re happier and more productive. When they dislike the company culture, they’re miserable and unmotivated.

Workplace culture affects everything from employee engagement to employee happiness. Employees who don't align well with their company’s culture are 12% less likely to see themselves staying with their current employer.

The Fix

Take a look around. Do your employees seem happy? Or do they seem to be going through the motions? If your culture leaves something to be desired, take proactive steps to improve it. An easy first step is to use pulse surveys to get feedback from your employees.

05. Employees hate their bosses 

If you notice that a lot of your employees who work under a specific manager are jumping ship more than others, your company might not be the cause. It’s probably because the manager is terrible. Remember, people quit their bosses—not their companies.

Trust and transparency are two of the biggest factors that influence how your employees feel about their bosses. According to the Harvard Business Review, more than 50% of employees do not have a high level of trust in their bosses. This can affect how well respected your employees feel and directly impacts employee retention.

The Fix

For starters, do your due diligence and make sure you hire the right managers in the first place. Just like you're invested in your employees' professional development, you also need to support managerial training initiatives. Finally, keep tabs on your managers to make sure they're doing a good job managing their teams.

06. There aren’t enough career development opportunities

Employees want to develop professionally. They want opportunities to advance their careers—not just crank out work for the sole benefit of their employer’s wallet.

Our research found that less than 30% of workers feel as though there are ample opportunities for development at their organizations. If you never offer your staff career development opportunities, don’t be surprised when there’s an exodus.

The Fix

Investing in your employees is essential if you want to improve your employee retention. According to a recent LinkedIn’s workplace learning report, 94% of employees would stay with a company longer if they invested in their career development.

Show your employees you care about their careers by offering adequate opportunities for growth. Start a mentoring program. Encourage your team to go to relevant conferences. Keep your doors open and make yourself available. Invest in training and development, and support your employees’ professional goals by having career conversations often during your one-on-one meetings. 

employee turnover 9

07. Employees aren’t recognized for their hard work

You can’t expect your employees to bust their tails on a daily basis if they feel they are taken for granted. With only 1 in 3 workers reporting that they receive regular recognition, it’s no surprise that not receiving recognition is one of the top reasons why employees leave a company.

This is especially true for women. Our research found that in most industries, women reported they receive less recognition than men when they do great work. This not only affects your employee retention. It also can lead to a less diverse workforce.

The Fix

Bolster your employee recognition program by showing appreciation in a genuine and sincere manner. Give credit where credit's due. Give your team the opportunity and encouragement to recognize one another so everyone is invested in the process.

Peer-to-peer recognition is an easy way to ensure employees are shown appreciation from their colleagues so they feel valued for their hard work. When they have a tool to make recognition easy, 44% of employees give regular peer-to-peer recognition.

What are your common turnover causes?

If your organization is experiencing high turnover, chances are you’re guilty of at least some of the above. The good news is that you have the ability to make changes that should encourage your employees to stick around for the long haul.

To get started, seek feedback from your employees and check in regularly. By using weekly and bi-weekly pulse surveys, you can get honest feedback in real time. This will help you identify the common causes of turnover your organization struggles with so you can make an action plan to address them.

Discover how pulse surveys help you identify issues before they drive your employees away.

 

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Andrew Sumitani

Andrew Sumitani

March 10, 2020

 

 

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