4 key reasons for high employee turnover, and how to solve it
Employee turnover is an indicator of how frequently employees are leaving your organization, voluntarily or involuntarily. The costs associated with high staff turnover can be substantial, impacting not just the financial bottom line but also team morale and productivity.
Many organizations prioritize reducing employee turnover in today’s world of work. But to effectively address this issue, it’s crucial to understand its root causes and explore strategies for improvement.
This blog post delves into the key factors behind high employee turnover and outlines actionable steps for CHROs aiming to reduce turnover and build organizational resilience.
What is staff turnover?
Employee turnover encapsulates the rate at which organizations lose and gain staff. It's an unavoidable part of business, with a natural ebb and flow essential for injecting fresh ideas and energy into the workforce.
When turnover rates climb too high, the repercussions extend far beyond mere numbers. The financial strain of recruiting, hiring, and training replacements is immediate and quantifiable, often running into thousands per departing employee. But the consequences don't stop at a financial loss.
High turnover erodes the fabric of a team, diluting the pool of experience and knowledge vital for innovation and effective problem-solving. The continuity of projects is jeopardized, with remaining employees frequently shouldering increased workloads, leading to burnout and further turnover in a self-perpetuating cycle.
The impact also manifests in the subtler realms of morale and organizational culture. A revolving door of staff members can foster an environment of uncertainty and insecurity, undermining trust in leadership and dampening the collective spirit essential for a cohesive, motivated team.
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Key drivers of high staff turnover
Here are four key drivers of high staff turnover that many companies can avoid by embracing a digital and data-driven approach to HR processes.
1. A lack of employee engagement
This can stem from insufficient recognition and a feeling of disconnect from the company's vision and objectives. When employees do not see the value of their contributions or understand how they fit into the larger picture, their commitment and enthusiasm wane, leading them to seek opportunities elsewhere.
2. Inadequate compensation
In a competitive job market, employees are more informed than ever about industry standards for wages and benefits. Competitive compensation packages are crucial for retaining talent, as employees may feel undervalued without them and be more open to offers from competitors.
3. Limited opportunities for growth and advancement
A career path that appears stagnant or unclear can discourage employees and push them to look for external opportunities where they perceive greater potential for professional development.
4. Poor management practices
These management shortcomings, characterized by a lack of clear communication, inconsistent feedback, and inadequate support, can lead to a toxic work culture characterized by mistrust, conflict, and low morale. When employees operate in such an environment, their engagement and satisfaction plummet, significantly increasing the risk of turnover.
According to a recent UNLEASH report, exit interviews (63%) are the most common method for gathering staff feedback, and only 31% of businesses maintain a continuous feedback loop with people managers.
Strategies for reducing employee turnover
To effectively tackle the issue of high employee turnover, organizations must adopt a multifaceted approach that targets the root causes directly. A pivotal strategy involves:
Enhancing employee engagement
Gathering feedback through employee polls and pulse surveys can provide valuable insights into employee satisfaction and engagement. These tools can help identify areas for improvement and ensure that recognition programs and feedback sessions effectively meet employees' needs.
Better compensation and benefits
It is crucial to offer fair, competitive, benchmarked compensation and benefits that align with the evolving needs of the workforce. This includes flexible and remote working arrangements, health and wellness programs, and comprehensive training and retirement plans.
Development opportunities
To enable employees to envision their future within the company and actively work towards it, it is key to create accessible pathways with clear objectives that align with the company strategy for career advancement through mentorship programs, professional development courses, and transparent promotion criteria.
Investment in leadership
Well-trained managers can enhance employee retention by creating a supportive and engaging workplace environment. Effective communication, empathy, and conflict-resolution skills are critical components of successful management.
UNLEASH reports that a continuous feedback loop provides “the chance to strengthen employee-manager relationships and align management practices with the wider mission of the organization.”
A positive and inclusive work culture
Celebrate diversity and ensure all voices are heard. This can be achieved through team-building activities, open forums, and anti-discrimination policies.
By embracing these strategies, organizations can significantly reduce employee turnover and create a more stable, satisfied, and productive workforce.
The role of digital transformation and organizational resilience in reducing turnover
Digital transformation plays a key role in reducing employee turnover by enhancing efficiency, communication, and innovation.
Digital HR tools streamline workflows, while dynamic skills tracking helps match employees with roles that fit their evolving competencies, creating opportunities for growth and internal mobility. Data analytics further supports this by offering insights into employee engagement and satisfaction trends, enabling proactive improvements.
Simultaneously, building organizational resilience is essential to combat turnover, particularly during challenges like market fluctuations or skill shortages. Flexible work arrangements, skill development programs, and employee support systems form the foundation for resilience.
Open communication fosters transparency, allowing leaders to address concerns in real-time and strengthen trust. Together, these efforts enhance retention by balancing operational stability with employee well-being.
How Unit4 can help you tackle employee turnover
Unit4’s HCM solution simplifies workforce management by providing an integrated, centralized system to track employee data, skills, and progress.
The Core HR offering combined with FP&A enables workforce planning, aligning skills with growth goals while optimizing budgets.
Unit4 Talent Management enhances engagement with tools that connect data, facilitate objective tracking, and enable meaningful one-on-one conversations. The performance management features support workforce development, continuous learning, and building high-performing teams through improved feedback and goal alignment.
With Unit4’s people analytics tool organization can gain actionable insights, detect issues quickly, and empower managers with smart recommendations to drive retention and growth.
Learn more about today’s talent conundrum and how digital tools can help, watch our webinar with experts on the topic! To learn more about Unit4’s HCM and Talent Management solutions, visit our webpage, talk to sales, or experience a tailored demo – today!
Further reading & resources
