Understanding high employee turnover

By November 3, 2023 No Comments

Employee turnover, the revolving door of talent in and out of organisations, poses significant challenges to maintaining a stable and productive workforce. In this article, we will explore the root causes and review effective strategies for reducing high employee turnover. Understanding employee turnover and implementing actionable strategies to sustainably deal with it will help foster a workplace culture that promotes long-term satisfaction and engagement.

The main cause of employee turnover

Identifying the root causes of employee turnover is the first step in developing effective retention strategies. 

Lack of career development opportunities, inadequate compensation, poor work-life balance, communication issues, and an unhealthy work environment are common culprits.

The Employee Turnover Formula


The employee turnover formula is a metric that quantifies the rate at which employees leave an organisation over a specific period. 

The formula is calculated by taking the number of employees who left during a given time frame, dividing it by the average number of employees during that same period, and multiplying by 100 to express the result as a percentage. 

The employee turnover formula is often expressed as:

This formula provides a numerical representation of the percentage of employees who have left the organisation, offering a clear picture of workforce stability.

Is Employee Turnover Good or Bad?


The perception of employee turnover as either good or bad depends on various factors, including the industry, the reasons behind the turnover, and the organisation’s overall objectives. 

In some cases, a certain level of turnover can be beneficial, bringing in fresh perspectives and skills. 

However, excessive or unplanned turnover can be detrimental, leading to increased recruitment costs (these costs can vary depending on the industry and job level, but they are typically estimated to be between 50% and 200% of the employee’s annual salary), disruptions in workflow, and a potential loss of institutional knowledge. 

Ultimately, the key lies in maintaining a balance. Strategic turnover, where employees leave and are replaced with individuals who bring new skills and ideas, can contribute to organisational growth. 

On the other hand, high turnover driven by poor culture, dissatisfaction or poor work conditions may signal underlying issues that need to be addressed for long-term organisational health and success.

According to the Society for Human Resource Management’s (SHRM) 2023 Annual Workforce HR Trends Survey, the top five reasons employees leave their jobs are:

  1. Compensation and benefits (50%)
  2. Lack of advancement opportunities (34%)
  3. Work-life balance (33%)
  4. Poor management (30%)
  5. Lack of recognition and appreciation (28%)

Understanding the causes of employee turnover is a multifaceted process that requires a thorough examination of various factors.

6 Actionable Tips To Deal With Employee Turnover 


Conducting Exit Interviews


Exit interviews are invaluable tools for gaining insights into why employees choose to leave an organisation. According to a study by the Work Institute, 77% of turnovers are preventable, and exit interviews provide an opportunity to identify these issues. 

By creating a supportive and confidential environment, organisations can encourage departing employees to share candid feedback about their experiences.

Analysing Employee Surveys


Employee surveys play a crucial role in understanding the underlying factors contributing to turnover. 

According to Gallup, organisations with high employee engagement have 59% lower turnover rates. Survey data can reveal patterns, sentiments, and areas of dissatisfaction that might be driving employees away. 

Pay attention to metrics such as job satisfaction, work-life balance, and perceptions of leadership.


Examining Compensation and Benefits


Compensation is a significant factor influencing employee retention. The WorldatWork survey found that 92% of organisations use base salary as a factor in determining total rewards strategy. 

Analyse your compensation packages in comparison to industry standards to ensure they are competitive. 

Additionally, consider benefits, as a Glassdoor survey revealed that 79% of employees would prefer new or additional benefits to a pay increase.

Evaluating Work-Life Balance


Work-life balance is a key determinant of employee satisfaction and turnover. A Harvard Business Review study found that employees who believe they have a healthy work-life balance are 21% more likely to stay with their current employer. 

Examine workload, flexibility, and support mechanisms to ensure employees can maintain a healthy balance between work and personal life.


Addressing Career Development Opportunities


A lack of career development opportunities is a common reason for employee turnover. 

According to the LinkedIn 2022 Workplace Learning Report, 72% agree that learning and development has become a more strategic function at their organisation.  

Implementing training programs, mentorship initiatives, and clear career paths can contribute to employee engagement and retention.


Identifying Leadership and Communication Issues


Poor leadership and communication are often cited as contributing factors to turnover. According to a survey by Interact, 69% of managers are uncomfortable communicating with employees. 

Evaluate leadership styles, communication channels, and the overall organisational culture to ensure a supportive and transparent environment.

As a key takeaway, utilise exit interviews, employee surveys, and data on compensation, work-life balance, career development, leadership, and communication to gain a holistic understanding. 

By addressing these factors, organisations can implement targeted strategies to reduce turnover, enhance employee satisfaction, and foster a more stable and resilient workforce.


Creating a Positive Work Culture


A positive work culture is a cornerstone of employee retention. Fostering open communication, recognising and rewarding contributions, providing professional development opportunities, and promoting work-life balance contribute to a workplace where employees feel valued and motivated to stay.

Creating a positive work culture is essential for fostering a productive and fulfilling workplace. 

How to Create a Positive Work Culture


Clear Values and Mission


Establish and communicate clear values and a compelling mission. When employees understand and resonate with the core purpose of the organisation, it creates a sense of shared identity and direction.


Open Communication


Promote open and transparent communication at all levels. Encourage feedback, active listening, and the free exchange of ideas. 

This is essential for cultivating trust, fostering collaboration, and enhancing overall workplace satisfaction. 

Leadership plays a pivotal role in establishing a culture of open communication. Leaders should lead by example, being transparent about organisational goals, challenges, and decisions. 

Regular updates through various channels, such as meetings and newsletters, are crucial in keeping employees informed about organisational changes and developments.

Encouraging two-way communication is equally important. Establish formal and informal feedback channels where employees can express their opinions, concerns, and suggestions. An open-door policy, where employees feel comfortable approaching leadership with questions or concerns, fosters trust and openness.

Leveraging technology wisely enhances real-time information sharing. Digital communication platforms, such as messaging apps and project management software, can facilitate collaboration and transparency. 

Anonymous feedback mechanisms can also be implemented to encourage honest input, especially in situations where employees may be hesitant to voice their opinions openly.

Clarifying expectations is another crucial aspect. Establish clear communication guidelines and expectations, including protocols for sharing information, responding to emails, and using communication tools.

Transparency in decision-making processes, where the rationale behind decisions is communicated, helps employees feel included in the organisational processes.

Recognition and Appreciation

Regularly acknowledge and appreciate employees for their contributions. Recognition can be formal or informal, but it should be consistent and sincere. Feeling valued enhances job satisfaction and motivation.

Employee Involvement

Involve employees in decision-making processes when possible. This not only empowers them but also creates a sense of ownership and commitment to the organisation’s success.

Work-Life Balance

Support work-life balance by offering flexible schedules, remote work options, and initiatives that promote overall well-being. A healthy balance contributes to employee satisfaction and reduces burnout.

Professional Development Opportunities

Provide opportunities for professional growth and development. This can include training programs, workshops, mentorship, and clear career progression paths. Investing in employees’ skills and knowledge boosts morale and commitment.

Team Building Activities

Organise team-building activities that go beyond traditional work settings. Team-building fosters positive relationships, collaboration, and a sense of camaraderie among employees.

Diversity and Inclusion

Cultivate a diverse and inclusive workplace. Embrace diversity of thought, background, and experiences. An inclusive culture promotes creativity, innovation, and a positive atmosphere.

Flexible and Positive Leadership

Encourage leadership styles that are flexible, positive, and supportive. Leaders who inspire and motivate, rather than command and control, contribute significantly to a positive work culture.

Conflict Resolution

Establish effective conflict resolution mechanisms. Conflicts are inevitable, but addressing them promptly and constructively prevents negativity from festering and affecting the overall culture.

Celebrating Success

Celebrate both individual and collective successes. Recognising achievements, big or small, reinforces a positive culture and motivates employees to continue striving for excellence.

Physical Work Environment

Ensure a comfortable and conducive physical work environment. Factors such as lighting, ergonomics, noise reduction and aesthetics can impact employees’ well-being and contribute to a positive atmosphere.

To Sum It Up 

In the pursuit of a stable and thriving workforce, organisations must address the multifaceted challenge of high employee turnover. 

Understanding the root causes is a foundational step, involving insightful exit interviews to unveil patterns and trends. 

By fostering a positive work culture, improving compensation and benefits, and enhancing recruitment and onboarding processes, organisations can create an environment where employees feel valued and committed. 

Investing in employee development, actively monitoring engagement, and cultivating a retention-focused leadership team further solidify the foundation for a resilient and loyal workforce.

As a whole, a strategic combination of these elements is crucial for mitigating the costly effects of high turnover. Recognise the impact of transparent communication, inclusive practices, and leadership accountability. This contributes to a holistic approach that not only retains employees but propels the organisation towards sustained success. 

Through these proactive measures, businesses can keep high turnover-induced costs low and foster a workplace where employees thrive, creating a positive ripple effect on overall productivity and organisational well-being.