How high employee turnover hurts your company

December 30, 2021 - 12 min read

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What's employee turnover?

4 reasons for employee turnover

Start retaining your employees

What's employee turnover? 

Turnover is typically calculated by dividing the number of people who left the organization by the number of people currently working for it over a given period. For example, if seven people leave and there are currently 100 people in the organization:

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When people leave, the ripple effect can be felt throughout the company. Lost knowledge, interviewing, recruitment, and onboarding cost all add up, and companies cannot afford to ignore the long-term implications high employee turnover has on the success of the business.

Companies cannot prevent people from leaving for the ubiquitous greener pastures. After all, it’s natural for people to seek change after a certain amount of time. However, there are ways to foster greater loyalty within your workforce, thereby developing ambassadors.

4 reasons for high turnover 

1. Lack of training

Employee retention starts when a new hire steps through the door. Onboarding is an important part of their experience. This process ensures people have the necessary knowledge, insights, and tools needed to become successful in their roles.

By introducing them to the mission and the values of the company, new arrivals can begin to adopt and embody company practices straight away. Did you know that when a company implements a successful onboarding program, they experience 54 percent greater productivity and 50 percent greater retention.

But it should not end there. Once people become familiar with the company and their roles, training opportunities must be accessible.

If they suffer from a lack of training opportunities there is a strong risk that they will become disengaged. In fact, 40 percent of employees who receive poor training on the job leave their position within the first year.

People want to be challenged, learn, and grow, which is only natural. After all, they are looking for opportunities to develop, follow a career path, and become better at their jobs. If people feel that their role is not evolving and they stop learning, chances are their motivation will start to decrease as well.

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2. Lack of opportunity for mobility within the organization

To ensure people feel satisfied and accomplished in their jobs, it is not only important to provide training, but also opportunities for mobility within the organization.

For example, many people while assigned to a certain role within the organization (such as digital marketing) also have other traits (such as creativity) that aren’t necessarily exploited within their roles. Often, people believe that to explore these traits or to start using them at work they need to change jobs, but this is not necessarily true.

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By encouraging regular communication between managers and their direct reports, people can express the direction in which they want to take their careers and areas for growth they would like to explore. This enables managers to look out for opportunities within the organization that support people’s needs and ambitions.

When companies can support and encourage good relationships between managers and their team members, as well as provide opportunities for career growth and mobility, it helps them to retain the best talent. In return, they get dedicated team members who are willing and happy to go the extra mile at work.

3. Ineffective leadership

There is a long-standing belief that people don’t leave their jobs, but leave managers. Managers account for up to 70% of the variance of employee engagement scores. Leaders who are not able to create opportunities for their team, don't communicate regularly with them, and don't show appreciation, are likely to experience high turnover rates.

On the other hand, people who have regular meetings with their managers and feel their managers are invested in them are three times as likely to be engaged. These discussions shouldn’t just be a run-through of tasks and output of the week to be impactful.

It’s important to cultivate trust between team members and also between managers and their direct reports. If a culture of trust is established, people are more likely to openly speak to their managers when they’re feeling demotivated or lost at work. This allows managers to rectify the situation.

A great leader is someone who can inspire, motivate, and coach their workforce. They seek opportunities to help their reports reach their professional development goals.

When a company has effective leaders, communication is daily and open. Everyone clearly understands the vision and goals of the organization, and how they can contribute to achieving them.

To foster open communication and develop a culture of trust, managers can implement regular check-ins with their direct reports. This enables them to better understand their team members’ needs while focusing on regularly improving their coaching and leadership style.

4. Lack of purpose

Turnover can be infectious. When one person leaves, their colleagues will inevitably consider their reasons for staying.

While compensation is important, people aren’t just working for a salary. Along with wanting to develop and learn on the job, people also want to feel that what they’re doing is having an impact and contributing to something bigger than themselves.

They need to feel connected to the company's purpose and vision. Ensuring the company mission and values are communicated and understood by everyone is a good starting point. Fostering a culture of recognition and community can help to reinforce a sense of belonging. Here are three ways to do this:

The first is making sure to recognize people’s work on an individual level. It is not compulsory to go that extra mile, so when people do, it’s important to show appreciation. One study found that out of the 2,700 people surveyed, 45% hadn’t been recognized at work in over six months. Recognizing the work done promptly helps people to feel their work contributed to something bigger than them, and ultimately feel more engaged.

Regularly reminding people how their work contributes to the wider company objectives is also a good way of creating a sense of purpose. For example, staying late to help a client fix their access problems can contribute to the company’s brand image and customer satisfaction.

Finally, people naturally want to feel part of a larger community. What are the common values and traditions that tie everyone in your organization together? Spending time on creating an engaging company culture is one of the strongest ways to keep people wanting to work for you, even when others leave.

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Start retaining your employees 

One of the first things you can do to increase employee retention or get a pulse on the health of your organization is to hold regular engagement surveys. They enable you to identify and address factors like lack of development, ineffective leadership, and lack of purpose before they lead to high employee turnover.

With BetterUp, you can empower human transformation at scale. Consider ways you can strengthen your organization's mental fitness with tools like one-on-one coaching

It’s time to tackle employee turnover head-on. Get started — and see what positive change you can make in your organization. 

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Published December 30, 2021

Maggie Wooll

Managing Editor

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