The impact of high employee turnover rates

Out of 1,500 people interviewed in the Indeed survey, 36% said that more paid time off (PTO) would help combat feelings of burnout. However, when no changes occur in the workplace to support employees, they are likely to seek employment elsewhere.

Having a consistently high employee turnover rate at your company can impact your business and your bottom line in several ways. When an employee quits, companies can sometimes spend twice as much as that employee’s salary in recruiting, hiring and training a replacement. If the employee was client facing — such as a salesperson or an account manager — there is the risk that the client may discontinue business with your company or follow the employee to their next employer.

Increased employee turnover can also have a negative impact on those who stay behind. Workplace morale can dip and trust in the company’s management is sometimes questioned when a large number of employees leave the company in a short time frame. A high turnover rate can also make it difficult to hire and keep talent. When it comes to recruiting new talent into your company, those who notice a company has a high turnover rate may be reluctant to work with a company that sees so many employees leave.

Here’s how to calculate your employee turnover rate.

Why employees leave

There are numerous reasons an employee can be motivated to leave a company — from feeling burned out in their current role to feeling like the company no longer meets their needs. When an employee grows tired of their role within a company, they often start looking for a better opportunity elsewhere.

If a company isn’t able to offer the resources to establish a sufficient work/life balance, an employee may find it elsewhere with another employer. Something as simple as an improved commute or a different working environment can be very appealing to someone who is burnt out at their job.

Additionally, burnout may cause employees to have a lower opinion of their work and may impact or disrupt future contributions they could make to your company.

Related: How to Address Employee Absenteeism

How to reduce employee turnover

So, what can employers do to reduce the amount of employee turnover in their companies? These are a few actions you can take to improve employee satisfaction, reduce feelings of burnout and encourage your valuable workers to stay with your business.

Reducing employee turnover starts with the hiring process. By setting realistic expectations starting with the job description, conducting effective job interviews and providing the right level of support and autonomy once an employee is hired, you can reduce turnover.

1. Hire the right employees and manage expectations

The best way to make sure you have the right employees working for you is to find the right employees during in the hiring process. Taking the time to ensure the candidate is the kind of person who can add to the company culture can go a long way in making sure they are with your company for a long time. A candidate’s tenure with their prior employers in similar roles can be a clue as to how long they may stay at your company.

Additionally, clearly outline all work and salary expectations in the job description before the employee starts work with your company. Creating clear expectations for the role before they’re hired can help an employee be productive from the start. Feeling as though they are hired for their specific talents can help eliminate any anxiety they have about possibly taking on a role that is beyond their area of expertise.

2. Offer competitive salaries and benefits

Not only is it important to offer a competitive starting salary and benefits, but it’s also important to monitor the cost of labor and cost of living in your area to keep offering a competitive salary. Many employees leave companies in search of better pay, so if you adjust compensation to account for inflation, cost of living and a job well done, you’ll likely reduce compensation-related turnover.

3. Maintain frequent communication

Many managers rely on having open communication between themselves and the employees they oversee. An open line of communication is an easy way to know about problems or concerns your employees have long before the issues become unmanageable. It’s also a great way to offer feedback. Frequent contact with your employees will allow you to adjust what the company can offer to help meet their personal needs.

Additionally, employees should have frequent and regular sessions to review both their work performance and salary expectations. Conducting regular performance reviews can motivate candidates to keep up the good work. If your company is growing, the responsibilities of your most trusted employees may grow with it. Employees expect to be compensated fairly for their time and effort, especially if their job description changes.

Employees also like to feel heard. Try sending out employee satisfaction surveys to gauge how your employees are feeling and use that feedback to make changes, if necessary.

4. Outline defined career paths

If there’s not a clear and defined career path for employees, with established goals or changes in the title or salary, it can be difficult for an employee to see themselves with the company for the long term. Taking the time to outline a career path for each employee, including professional development and performance benchmarks, can go a long way toward reducing the turnover rate and keeping your staff motivated.

5. Assign special projects or offer incentives

Often, low morale can be resolved by assigning a unique project to an employee who may be considering leaving the company. Handing over the responsibility for a premium client or organizing an all-office event can go a long way in showing you appreciate and trust an employee. Additionally, a sales team may be motivated by a competitive incentive for a monthly or quarterly sales drive.

Here are 32 other incentives to consider offering employees.

6. Adjust company policies and/or workplace benefits

If low morale is contributing to your company’s employee turnover rate, it may be worth reassessing your company’s policies. Offering benefits that allow for work/life balance can go a long way in developing a sense of freedom and independence that can keep employees with your company longer. Allowing for flexible schedules, four-day workweeks, or remote/work from home solutions have been shown to increase productivity and can install a sense of trust with your employees.

Studies have shown that paid paternal leave for new parents goes a long way to increasing morale and increasing employee retention. Offering an open PTO policy to employees has also proven to be a potential solution in reducing turnover due to burnout.

7. Offer hybrid work options

Consider offering a hybrid work model to keep your employees happy and avoid turnover due to return-to-work policies. A hybrid model is flexible and gives employees the best of both worlds on their terms. It also allows you to have your staff in the office when necessary while helping them balance their personal life by working from home two or three days a week.

When implementing a hybrid work policy, work with your HR department to navigate the complexities of the arrangement and ensure equal opportunity for all employees. Make an effort to accommodate the needs of your staff in terms of working from home to make your company an attractive place to stay.

8. Research industry trends

As an employer, you can reduce employee turnover by researching relevant trends in your industry to see what might be enticing workers to leave their jobs. Are they leaving to start their own companies as entrepreneurs so there’s more freedom? Or are they being drawn to competitors because of better salary and benefits packages?

Understanding what other businesses in your field are offering their employees is essential to ensuring you’re satisfying employee needs at work. If your market research uncovers higher wages at other agencies or more PTO, consider offering your employees better incentives to keep them around.

As you plan your company’s finances, prioritize budgeting for these increases. Though offering more incentives may seem costly, the price of employee turnover is often much higher.

9. Conduct retention surveys and exit interviews

If you find your company is seeing an increase in the rate of turnover, it’s essential to put resources into finding out why. Send out a retention questionnaire to your staff, and ensure their identities remain anonymous so they can be truthful in their responses.

The survey should ask questions about employee satisfaction, issues they have with the current working environment, how interested they are in staying with the company long term and what the company is doing well. Having this data allows you, as the employer, to get a clear picture of how your staff feels in the workplace and whether you’re at risk of losing people due to dissatisfaction.

To encourage employees to participate, you can be transparent about the survey’s intentions, ensure they are concise and focused, share the findings and implement meaningful change. When employees see their input leading to improvements in the workplace, it builds trust and helps validate the effort they put into completing the survey.

Exit interviews should be held for workers who give their two weeks’ notice and move on to another company. These interviews should have a comfortable, professional tone that allows the departing employee to speak honestly about how they feel regarding their time with the company. The main information you need from an exit interview is to find out why they’re leaving. Is there a problem in your workplace that you need to address? Are other companies offering more competitive salaries or better company culture?

10. Focus on upskilling

If your company is experiencing high turnover rates, it’s probably time to make changes internally. Rather than hiring replacements who exhibit the exact same skill set as the people who are leaving for new opportunities, look for ways to encourage growth in the employees you already have. To retain your top performers, you must make them feel appreciated and add value to their work experience.

Encourage your employees to develop their skills and expand their professional capabilities by offering access to training, workshops or educational opportunities that align with their interests and the company’s needs. By implementing a continuing education program, you can make their daily work more engaging and rewarding while contributing to a workplace culture of growth and innovation.

You can also consider bringing new hires on board with less practical experience who are willing to learn. Invest resources in training them at the beginning with the goal of retaining them long term and offering them a chance to grow their careers within the company.

Read more: Upskilling Employees: Practical Tips

How employee turnover affects your bottom line

A high rate of employee turnover can have serious implications for your company. Not only is turnover expensive because you have to invest in hiring and training new employees, but it also affects your productivity.

The impact a high rate of turnover has on your bottom line means it’s essential to retain your top performers. Following market trends and investing in creating a better workplace for your staff are two of the best ways to mitigate turnover at your company.