51% of global employees are actively searching for new work - or plan to start looking in the near future. This means there’s a widening pool of candidates you could impress. But at the same time, it also means your people could be at risk of leaving too.
High turnover is a real issue for many businesses, because of the prohibitive cost of hiring. The Society for Human Resource Management (SHRM) says it costs $4,683 on average to hire new staff members. That’s on top of the opportunity cost of losing institutional knowledge and experiencing a dip in productivity.
So, how do you understand the reason behind your turnover rate and better support employees to stay in their roles? In this article, we discuss:
- The impact of employee turnover
- The difference between turnover and attrition
- 6 strategies for retaining employees
Give your team an L&D tool they actually use: Employees get self-directed learning, high-quality learning providers, and total budget clarity with Learnerbly. Find out more
❌ The dangers of employee turnover
Employees come and go, but turnover can become an issue if it’s too high. High turnover rates could also be a warning sign that there’s something wrong with your hiring process or company culture.
Let’s say you’re in the gaming industry experiencing high turnover. The reason your devs are leaving at a fast pace could be because there’s no end to highly paid jobs in the industry and the grass was simply greener elsewhere. Or, they could be looking for development opportunities they haven’t found in their current role.
Either way, constantly replacing employees is a bad use of time, energy, and resources. Meanwhile, the remaining team members often end up covering extra work while new hires get up to speed, which could lead to burnout and… more departures. Before things get worse, it’s time to focus on retention strategies.
🤔 Employee turnover vs. employee attrition: What’s the difference and does it matter?
Turnover and attrition are terms that often get misunderstood and even used interchangeably. Knowing the difference can help people leaders build more strategic hiring and retention strategies.
- Staff turnover refers to the rate at which a role is vacated but the employee is replaced. It could include both voluntary and involuntary departures. Some level of staff turnover is natural and manageable.
- Staff attrition refers to employees that leave an organization over time without being replaced. A high attrition rate means that people are leaving more quickly than you’re hiring and your organization is shrinking.
A certain level of employee attrition is expected. But if your organization suffers from high rates of unplanned staff attrition, this could strain the remaining team. That’s why reducing high rates of turnover should be a priority.
🧠 Between 2022 and 2023, most US companies experienced between 3-10% turnover. It’s normal to see turnover at your company, as well as fluctuations in turnover from time to time.
📏 Measuring employee turnover
Employee turnover rate = (Number of total employee departures / Average number of employees during a period) x 100
Between 2022 and 2023, the average rate of staff turnover in the US was 17.3%. But, of course, this will differ between industries and job types - so it’s important to set a benchmark that’s specific to your industry.
As well as measuring overall employee turnover, you might find it useful to track:
- Voluntary turnover rate: The percentage of people who choose to leave the company of their own accord. A high rate could indicate a lack of progression opportunities, a problem with your company culture, or poor people management.
- Involuntary turnover rate: The percentage of people who are made redundant. A high rate could be a symptom of a restructure - or deeper issues with your hiring, onboarding, and training processes.
- Cost-per-hire: The average cost of recruiting a single employee. This metric will help you understand the impact of your staff turnover rate and plan your hiring budget.
- Time-to-hire: The average time it takes to fill a vacancy, from the day a candidate applies to the day they accept an offer. If your time-to-hire is too long, there may be inefficiencies in your selection process. The longer a position goes unfilled, the longer it’ll take for the team to reach full productivity again.
- Employee net promoter score (eNPS): How likely people are to recommend your company as an employer. A low eNPS could indicate low employee satisfaction, which often then leads to further turnover.
These metrics will help you improve your hiring and retention strategies and set departmental KPIs. Additionally, comparing different results can give you a richer understanding of employee satisfaction and proactively solve cultural or operational issues.
💡Ready for more formulas? Find out how to calculate key turnover and attrition metrics.
⚡ 6 strategies for reducing employee turnover
To keep turnover rates low, it’s important to invest in boosting employee satisfaction. In turn, this feeds into your employee value proposition (EVP), which is what encourages people to take a job and what keeps them in the role long term.
Defining your EVP can help make vacancies look more appealing to potential candidates. But it can also help keep turnover low, by reinforcing all the reasons to stay within the organization.
Here are 6 strategies to get you started:
1. Stronger feedback processes
It’s easy for people to become “checked out” at work if they don’t feel valued or encouraged to grow. Continuous feedback is essential to keep employees engaged with their work and motivated to succeed. It’s also the best way to show them how to succeed, which leads to higher productivity and performance.
Useful feedback is specific, actionable, and clear. It’s not enough just to say “good job” or “this needs work.” Managers need to know how to point out specific areas of success and improvement, and to map this feedback onto broader developmental goals. Having frequent career and development conversations can help managers proactively plan career goals to avoid poor employee engagement from arising in the first place.
But managers may need support and upskilling to provide constructive feedback, especially if they’ve been promoted from individual contributor roles. Giving them the right training and tools to do their job properly will help make people across the organization feel better supported and more engaged at work.
2. Transparent compensation and benefits
While pay isn’t the only reason that people choose to take on a new role, it will always play an important role. But often, making the case for higher salaries can be a difficult one.
if your C-suite needs convincing to consider higher salaries, tell them that 56% of people would consider changing jobs for better pay - even if they’re satisfied with all other aspects of their existing job. But even if you can’t justify raises, there are several other meaningful steps a people team can take:
- Practice salary benchmarking: On many recruitment sites and even LinkedIn, people can see how their salaries compare to others in similar roles. Researching typical salaries according to industry will help you set benchmarks to aim for at the next pay review. If you do think people need to be compensated more highly at your organization, this data will support your case.
- Increase transparency around pay bands: 67% of US employees would like more transparent pay practices. Establishing clear pay bands not only improves clarity around compensation, but it provides defined progression pathways when more tangible promotions aren’t available.
- Introduce unique perks: More than ever, companies are competing to offer appealing perks like unlimited paid time off, a co-working allowance, or wellbeing subscriptions.
3. Clear career progression pathways
63% of people who quit a job in 2021 said they left because of low pay and a lack of advancement opportunities. It’s understandable that employees want to feel like their hard work will pay off, so it’s important that managers can communicate the progression opportunities on offer.
To do this, managers and employees should work together to create a structured progression plan that identifies the employee’s career goal and the skills required to get there. This plan should include relevant training and specific performance targets. It’s also helpful to develop a framework to gradually increase responsibilities so employees can practice the skills they need to move into more challenging roles.
Regular career conversations will help employees feel as though the company is invested in their progress, which could keep people engaged in their roles for longer. If budgets permit, linking performance targets to pay bands could also motivate teams further.
“Employees [need], along with meaning and sense of connection, the idea that they're moving forward and that they're going to contribute to both the company and their own career.” - Nathalie McGrath, co-founder of The People Design House.
💡 Save yourself months of effort. Get the career framework template for establishing a high-performance culture and building transparent salary bands.
4. Learner-centric L&D programs
Often, we see organizations stagnating with traditional top-down learning approaches and very low rates of learning and development (L&D) engagement. This traditional corporate approach to L&D doesn’t work because it’s too prescriptive; it doesn’t account for the diverse objectives, skills, and career goals of your workforce.
Of course, a software engineer and a marketing manager will have different career goals. But perhaps more importantly, two software engineers and two marketing managers can have radically different skills and goals as well. Effective L&D requires putting your people in the driving seat so they can choose their own learning priorities.
That doesn’t mean managers can’t have a say. But it helps to approach this as a collaborative exercise, where the employee is an active participant in setting their own learning targets.
Another way to encourage self-directed learning is to provide visible learning budgets and give people access to an L&D marketplace, like Learnerbly.
When employees can see what’s theirs to spend, they’re more engaged with their learning. In return, they end up learning more valuable, relevant content. Learnerbly offers access to multi-modal resources like books, courses, subscriptions, and coaches, meaning employees can complete their learning goals in a way that best suits them.
5. Work-life balance and flexible hours
Gallup reports record highs of employee stress, with 44% of employees saying they feel “a lot of stress” at work. Making just a few tweaks to your working culture could make a huge difference here. Kel Hartmann, Chief People Officer at Flywire, advises avoiding burnout at all costs.
One way to do this is to let people set their own work schedules, or at least allow some flexibility for them to work when they’re most productive. It’s also vital to encourage people to take breaks and occasionally enjoy, as Kel describes it, “digital disconnect.” But managers must lead by example. “If your execs work twelve hours a day and never take time off, your employees will think they have to do the same - and that’s not good for anybody,” she says.
“When it comes to burnout, training will help people leaders spot the warning signs. These situations require empathy - managers should try to understand why people are disengaged and find proactive solutions.” - Kel Hartmann, Chief People Officer at Flywire.
6. Engagement metrics and monitoring
Alongside monitoring the turnover metrics mentioned earlier, we recommend actively seeking employee feedback. Do this via anonymous surveys and 1:1s with managers or people leaders so you can identify the causes behind your turnover rate. This will help you understand people’s goals and priorities so you can improve the workplace culture and organically reduce turnover.
Not only that, but tracking a mixture of qualitative and quantitative data will support you as you create your people strategy, get buy-in from execs, and iterate on your plans.
“It helps to demonstrate how your people strategy will contribute to your exec’s goals and to have the numbers to back that up,” says Kel. She recommends finding out what your C-suite cares about most, whether that’s raising the company’s reputation, hitting sales KPIs, or boosting employee retention.
Use the data you’ve gathered to show how your strategy will actually help achieve those goals. As Kel says, “If you can’t demonstrate the ROI of what you’re suggesting, you can’t expect others to buy in.”
💡Get more bang for your L&D buck. Watch the webinar to find out how you can increase the ROI of learning budgets
🤝 Engaged employees are easier to retain
Turnover can be a drain on company resources and even harm morale if left unchecked. The good thing is you still have an opportunity to find out exactly what’s driving people to leave and use that information to improve your people strategy.
Investing in a strong L&D program can also help upskill employees at all levels while giving them the tools they need to map their learning objectives onto their career goals. That’s why we recommend self-directed learning using an L&D marketplace like Learnerbly.
Investing in your employees through engagement programs like L&D strategies, listening exercises, or compensation schemes will raise engagement, define your EVP, and keep people in their jobs for longer.
In 2023, people teams everywhere are working hard to improve employee engagement, define their EVP, and ultimately hold on to the talented people that make up their company. With the right learning provider, together with the best practices we’ve laid out in this blog, you’ll be well on the way to achieving just that.
Give your team an L&D tool they actually use: Employees get self-directed learning, high-quality learning providers, and total budget clarity with Learnerbly. Find out Frequently asked questions about reducing employee turnover
📉 Reducing employee turnover: Frequently asked questions
❓ Why reduce employee turnover?
Reducing employee turnover is only necessary when you experience unusually high turnover in your organization or industry. In these cases, it’s important to reduce turnover because hiring is incredibly costly for your organization. High rates of turnover can also result in a loss of institutional knowledge, as experienced employees leave, which causes strain on those remaining.
❓ How do you improve staff retention?
You can improve staff retention by first understanding what the underlying causes of turnover are. Try and avoid making assumptions about this. Instead, you can use anonymous feedback surveys with a mix of quantitative and qualitative data to gauge what people are struggling with at your organization. Then, you can use this information to plan your people strategy.
❓ How does Learnerbly help improve employee retention?
Improving your L&D strategy with a tool like Learnerbly could help employees feel valued at your organization. Learnerbly is an L&D marketplace that gives employees access to over 200 quality learning providers. This multimodal platform has courses, books, eLearning subscriptions, and coaches to suit all their learning preferences and objectives. Since implementation, our clients have seen learning engagement soar by 40-60%. Learn more.