Causes of Employee Turnover

With talent being among a company’s most valuable assets, employers and HR pros must understand and address the causes of employee turnover.

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high turnover rates are costly and can be a massive detriment to small businesses

Ask any Human Resources manager about their company’s greatest asset, and they’re likely to give you the same answer: Talent. Whether you work for a small business or a multinational corporation, your business can’t run without good employees.

Unfortunately, many companies are facing challenges that lead them to suffer low employee retention rates. Voluntary turnover rates are a persistent problem because many workers are unhappy with their jobs. In fact, 77% of employees in a Deloitte survey said they’ve experienced burnout at their current job.¹ This is just one of several primary contributors to high employee turnover.

Regardless of the reason, a dissatisfied employee isn’t going to stay in a job they resent. Instead, top talent will move onto greener pastures — perhaps a competitor — leaving their former employer with the high costs associated with turnover. Collectively, employees leaving their organizations cost U.S. businesses billions every year.

Here we’ll cover common causes of employee turnover and what employers and HR teams can do to reduce turnover rates.

Absence of career development opportunities

One of the top reasons why employees are disappointed with their jobs is due to a lack of career advancement opportunities. People don’t like being stuck in a dead-end position. Typically they want to experience growth opportunities for attaining skills and moving ahead in their careers. Generally this raises employee engagement, motivation, and morale, the lack of which are catalysts for increased employee turnover.

Unfortunately for many, their only chance for a promotion or raise is to change employers. (According to the U.S. Bureau of Labor Statistics, in January 2022 the median number of years specified workers had been with their company was only 4.1.)

The solution is to give employees the professional development opportunities they crave. To do this, your company should focus on 3 things:

  • Make succession planning a regular part of your management process.
  • Offer leadership skills training and other professional development opportunities.
  • Provide regular pay raises.

Also try to establish upward movement opportunities internally so employees have something to strive for in your organization. Show top talent reasons they should stay.

Poor organizational culture

Companies that pay attention to their organizational cultural issues often find there are several common core problems:

  • Higher levels of employee burnout.
  • Toxic cultural elements or work environment.
  • Poor work-life balance.
  • Loss of top talent.

Fixing company culture is no easy task to undertake, but it’s a necessary one. To start, consider adjusting organizational structures, varying routines, and promoting a healthy work-life balance. Build from there.

Lack of proactive hiring

Sometimes companies, especially smaller ones, put off hiring for a position to save a few dollars. The problem with this is that delaying hiring rather than filling vacant positions can become a pattern. In time, several positions need to be filled. And if the company is growing, there is no way to keep things in balance.

Consequently, existing employees must pick up the slack. The resulting overwork can lower productivity. When employees have to work long hours to complete their jobs, they actually get less done. Furthermore, it’s easy to overestimate the amount of work technology can automate. Often, managers or owners don’t check in with their team members to see if they’re struggling more than expected.

Inadequate compensation and benefits

One way to practically guarantee high staff turnover is to turn a blind eye to your compensation packages. When economic pressures hit, one of the first places decision makers look to cut is the salary and benefits budget.

But companies hurt themselves when employees become discouraged. And this can degrade company culture. If you want to reduce employee turnover, don’t cut compensation; find other budget changes to make. Continuing to invest in your staff will yield rewards, including lower employee turnover rates and stronger productivity from team members.

Limited flexibility in the workplace

A healthy work-life balance has become increasingly important to today’s employees. Without it, job satisfaction tends to plummet. Low job satisfaction leads to higher company turnover rate. Consider offering flexibility in the form of remote work options, hybrid work schedules, and flexible hours. Empower employees to work in ways that promote a healthy lifestyle and bolster their ability to be productive.

Poor management or leadership

Low job satisfaction and a dissatisfying employee experience are often linked to poor management or leadership. If the decision makers of a business aren’t invested in providing their best, why would their employees want to be?

To decrease employee turnover rates, employers sometimes need to look within and make changes in their actions, behaviors, and philosophies.

In addition to providing better policies, improving upon leadership also means cleaning up a company culture, showing appreciation, and eliminating poor working conditions.

Overcome the causes of employee turnover: Invest in your employees and they’ll invest in you

High employee turnover rates affect employers of every size. Regardless of the type of organization you run, you can’t operate without stellar employees. It’s no wonder that reducing turnover rates is a top priority in human resource management.

Replacing employees is expensive, and turnover costs add up quickly. It’s best to retain employees who suit the organization well. Seeking employee retention strategies to address the underlying causes of staff turnover offers better outcomes.

Business management has its challenges. And we have solutions. Visit Workest daily for ongoing HR, workforce planning, and business management tips and resources.

1 “Workplace Burnout Survey,” Deloitte

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