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Do you find yourself re-hiring and re-training for positions that you thought you just filled? Are you spending more money on hiring than usual? These might be signs of a high turnover rate at your company. Every company deals with turnover to some extent. There are two types: voluntary and involuntary. Voluntary turnover occurs when an employee willingly chooses to leave their position. Involuntary turnover occurs when an employee is terminated from their position. If one or both happen often, especially within the first 90 days of an employee’s time at your company, you may have a problem. The turnover rate can also be calculated by dividing the number of employees who leave your company by the average number of employees over a certain period of time. If this rate is above 10%, that can be considered high.
Signs and symptoms of high turnover:
- Losing employees: This may seem obvious, but if you are losing employees, particularly by voluntary turnover, this is likely a sign that something isn’t right. This is especially the case if you are losing employees to competitors.
- Re-hiring and re-training: If you find that you are hiring or training new employees for the same position often, you may have a high turnover rate.
- Spending more money on hiring: Hiring for the same position over and over can cost your company money. Hiring can be expensive, especially if you’re doing it often. Studies estimate that replacing an employee can cost 50-200% of their salary. If you find that you are spending more on hiring, you may have a turnover issue.
- Loss of productivity: Because employees are the backbone of companies, you may find that the general productivity in the company is lower. This could mean anything from not making the same amount of sales to not being able to output the usual amount of a product.
- Loss of customer satisfaction and profitability: Because employees can create long-lasting relationships with customers, you might find that your high turnover rate is causing a lack of customer satisfaction, leading to profit loss.
- Employee engagement: Employee engagement and satisfaction can drastically affect turnover. Low engagement can be a sign of a high turnover rate. Measuring engagement is vital and it can be done through surveys or feedback directly from employees.
A high turnover rate can cause big issues for a company, especially financially. Though you might be able to recognize that you have a high turnover rate, how might you pinpoint the problem area within your company? First, look for patterns and trends. Is there a department or specific manager that is connected to the majority of the turnover? Identifying the root cause can help resolve the larger problem. There are also some major areas that cause general turnover in companies that you might want to look out for.
What are some reasons for high turnover?
- Company culture: Company culture is the shared set of values, beliefs, and attitudes that both employees and customers adhere to. This can span everything from your workplace or office environment to diversity, inclusion, and belonging. If you are promoting a negative company culture, employees are more likely to find a workplace with an upheld, positive culture.
- Career path and training: Many employees expect that, even though they have been hired to do a specific job, they will continue to receive periodic training, and will find help in furthering their career. If your company doesn’t provide these benefits to employees, it might be time to think about a change.
- Management: Lack of management that can effectively communicate with and support your employees can really hurt your turnover rate. Because employees work directly for management, it is vital that your managing employees know how to work well with others, promoting a positive company culture, as well as communicating with and supporting employees that they manage.
- A mismatch between expectation and reality: If what you have advertised about your company, whether that be culture or job descriptions, doesn’t match what is actually going on at your company, employees may find that discouraging when joining your team. Make sure that expectations and reality align, especially when hiring new employees.
Turnover is a challenge that many companies face, but it doesn’t have to be a persistent problem. By identifying the signs early—whether it’s through high hiring costs, loss of productivity, or customer dissatisfaction—you can start to take action to address the underlying causes. Whether it’s improving company culture, refining management practices, or aligning expectations with reality, making even small changes can have a significant impact on retention.
If turnover is an issue for your company, take the time to pinpoint where the problem lies and implement strategic solutions that prioritize employee satisfaction and engagement. Not only will this boost retention, but it will also improve overall company performance and employee morale. After all, retaining great talent is key to maintaining a strong, successful business in the long run.