Reducing the cost of turnover (and retaining your high performers) is possible if you understand why it’s happening.
Turnover is a costly reality of doing business, but why you’re losing headcount should never be a mystery. When employees leave the company, their departure is either voluntary (quitting, retiring) or involuntary (termination, layoff). High voluntary turnover is often due to workplace policies, and high involuntary turnover can be a result of poor training. Reducing the cost of turnover (and maintaining a stable workforce) is possible if you understand why it’s happening.
Why do workers leave jobs?
Voluntary turnover happens for a variety of reasons. We can look to two sources for insight: national and industry trends and your own employee data.
At its most basic level, employees quit jobs because they’re unhappy. Unhappiness spans the gamut, but frequently cited reasons include: substandard pay and benefits, lack of growth potential, lack of leadership integrity, poor management, no flexibility, and no work/life balance.
*Ernst & Young, 2015
Using Your Data
Trends are helpful in certain industries, but most businesses will have better luck de-mystifying turnover by analyzing their own data. To determine why you’re losing employees, segment your voluntary turnover rate into multiple categories with explanations. For instance:
- age and skill level of employee
- duration of employment
- promotions and pay growth
- relationship with manager
Is attrition higher in certain categories? By detecting patterns, you can make predictions and intervene to hang onto your top performers in high turnover categories.
What does turnover cost?
Turnover affects both human and economic resources. Direct and indirect costs can adversely impact your budget and workforce. The cost to replace an employee is, on estimate, equal to about 20% of the employee’s salary. (It increases with an employee’s compensation and skill level.) Turnover’s impact on your people is particularly perilous—one departure can trigger a domino effect.
What’s the ideal rate of turnover?
Companies typically have an attrition rate of between 7-12%, but there’s no universal, ideal turnover rate. However, you can quantify your high performers and low performers and aim to keep turnover within these ratios.
Are your top performers happy?
Happiness means different things to different people, but you can (and should) find out what it means to your people. Platforms like TinyPulse can help you assess your employees’ engagement. Follow up with Business Intelligence from Zenefits to get actionable insights.
Get more than the pulse.
By examining metrics like Attrition Rate and Engagement Rate, you can recognize (and take action on) at-risk employees. Once you’ve identified your high performers and low performers, you can use analytics to:
- Increase the inward flow of high performers.
- Decrease the outward flow of high performers.
- Increase the outward flow of low performers.
Keep employees happy.
Once you know the reason(s) for high performer turnover and the employees who may be at risk, take a look inward—at your own policies. Where do you stand on the 7 Ways to Boost Employee Happiness? How about these 7 Steps for Building a Company Employees Believe In? Happiness may be hard to measure, but it’s not impossible. By analyzing your employee data and examining your business practices, you can boost employee engagement, and keep your top performers.
Need some help managing other challenges? Consult The Executive Guide to Growing Your Business.