Employee turnover: How to boost morale and retain talent
See how an intranet works
Learn how an intranet works with this short video.
Quick jump to
- What is employee turnover?
- Voluntary turnover vs. involuntary turnover
- Why do employees quit their jobs?
- How do you calculate employee turnover rate?
- What’s a high employee turnover rate?
- What’s the impact of high employee turnover?
- How can you reduce employee turnover?
- Reduce employee turnover and retain talent with Happeo
8 mins read
Mon, Aug 7, '23
Dubbed the year of “the great resignation,” over 50.5 million people quit their jobs in 2022, an increase from 47.8 million in 2021.
In hindsight, these delayed resignations would likely occur in 2020 under normal conditions. Unfortunately, many companies suffer financial losses due to high turnover costs — the average expense of losing an employee is one-half to two times the employee's salary.
If your company is still experiencing high turnover rates, this post is for you. We’ll cover employee turnover, why it’s a critical HR metric to track, and what you can do to boost morale and keep your best employees longer.
What is employee turnover?
Employee turnover is an HR metric that provides insight into how many people leave your organization in a given period.
Analyzing various retention and loss data can help you better predict and measure employee turnover. Organizations using "people analytics” — optimizing business and management decisions using employee data — experience 82% higher profitability over three years.
Voluntary turnover vs. involuntary turnover
Two essential types of employee turnover to consider are voluntary and involuntary turnover rates.
- Involuntary turnover occurs when an employer terminates an employee's contract. Common reasons for involuntary turnover include poor performance, toxic behavior, or not extending a contract past the probation period.
- Voluntary turnover occurs when employees resign. There are far more reasons that can contribute to voluntary resignation. The biggest threats to a company are when employees leave due to toxic culture or accessing better opportunities elsewhere.
In general, voluntary turnover is undesirable for any organization. Through exit surveys and interviews, you can discover why people leave voluntarily and reduce this type of turnover.
This guide will focus on resolving and minimizing voluntary turnover, as it presents the most significant risk to a business.
Why do employees quit their jobs?
There are many reasons why employees quit their jobs. Exit surveys and interviews can help you identify them. Here are six of the most common reasons:
Toxic culture or bad management
Voluntary employee turnover often results from poor management and toxic cultures. These environments can result in employees feeling alienated and disrespected. A disturbing statistic reveals that over 82% of employees are willing to quit their jobs because of incompetent management or a hostile work environment characterized by high stress, inflexibility, and fear of failure.
Another major cause of voluntary turnover is job insecurity. It's common for employees to leave their company when they perceive their future as uncertain or unstable, putting job security and professional growth first. The resulting instability may further strain the remaining workforce.
High levels of innovation
It may seem counterintuitive, but high levels of innovation can lead to higher turnover rates. Innovation requires employees to work long hours, at a fast pace, and under great stress, which makes it difficult to maintain long-term. Employees with compromised work-life balances and increased workloads may reconsider their employment during times of mass resignations.
Lack of recognition
An underappreciated workforce can significantly contribute to high turnover rates. Employees desire recognition for their hard work, and when companies fail to distinguish between high and low performers, it can lead to increased attrition.
Engaged employees are less likely to seek new opportunities. Overworking, however, can result in burnout and higher turnover. Employee retention relies on companies creating a culture of engagement without overloading their workforce. Increasing responsibilities without increasing compensation, job status, or title can be seen as punishment.
You may need a more substantial onboarding process if you notice many new hires leaving. Research shows around one-third of new hires quit in the first 90 days on average. A high turnover rate may result if your company doesn’t provide clear guidelines around their responsibilities, practical training, and helpful team members to show them the ropes.
How do you calculate employee turnover rate?
You can calculate employee turnover by using the following formula:
Employee turnover rate = [number of employees who have left the organization over a period / total number of employees in the organization at the start of that period] x 100
Although this formula typically measures overall turnover, you can also measure voluntary turnover by adjusting the numbers accordingly.
What’s a high employee turnover rate?
The average employee turnover rate is 3.5%. However, employee turnover rates differ between industries, types of roles, and organizations. Retail, hospitality, and events are examples of industries with high turnover rates. Casual or less skilled workers may also have a higher turnover rate.
What’s the impact of high employee turnover?
Turnover rates are often an indication of deeper issues that require attention, which can cause long-term adverse effects and have devastating effects on the organization. Among these impacts are:
Morale is often an issue in companies with high turnover rates. Low morale may actually cause high turnover, as 1 in 4 workers leave jobs due to mental stress. Or, after a spell of high turnover, the remaining employees may experience a loss of morale due to increased pressure and responsibility, leading to more resignations.
If many vital people leave, the remaining workers may need help finding information or completing tasks. A higher absenteeism rate may result from the increased pressure on the remaining workforce to perform with fewer people.
Loss of talent and knowledge
If key talent, long-term employees, and leaders leave a company, they often take a great deal of intellectual property with them, leaving behind a knowledge void that isn’t easy to fill.
Losing key talent and managers is expensive. On average, a single employee resignation can cost one-half to two times the employee’s salary to replace. These costs are also significantly higher for senior and highly-skilled positions.
Negative employer reputation
High turnover rates often reflect poorly on a company and detract potential applicants for future roles. For a company to remain desirable and competitive in the job market, it’s critical to maintain a positive employer brand that attracts top talent.
How can you reduce employee turnover?
High turnover is a problem in many different ways. Using Happeo, HR departments can easily boost employee engagement and target some factors contributing to high turnover.
Here are our top tips for reducing high employee turnover rates, boosting morale, and retaining key talent.
Transparency between employers and employees is an essential element that fosters trust within a workforce. However, maintaining transparency can be challenging without the right tools in place.
With Happeo, employees can find one another easily, make cross-team connections and open the door to two-way communication for both in-office and remote teams. Also, managers can make it easier for their teams to book meetings or reach out when they need help.
Proactively manage changes
When your company changes, turnover may increase. However, clear communication and management can help reduce feelings of insecurity. For example, with Happeo, you can share new organizational charts with all stakeholders during restructures. You can also seamlessly keep all employees up-to-date on mergers, acquisitions, and other significant changes through one dashboard.
Check out how Happy Horizons turned to Happeo for smooth mergers and acquisitions without a high turnover.
Get serious about work-life balance
If you run a highly innovative company or are in the midst of growth, workers may burn out quickly. Using intranet surveys is a powerful way to keep tabs on the pulse of your workforce’s mental health and work-life balance. You can also easily track analytics and remind employees to take time off to rest and recharge.
Recognize employees for their accomplishments
Key motivators like recognition and appreciation have a direct impact on employee experience. With a modern intranet like Happeo, you can easily share feedback and acknowledge hard work. From the same interface, you can share feedback, shoutouts, and other forms of recognition within specific project documents or team channels.
Engage your organization
Creating stronger connections in hybrid and remote environments can be challenging. With Happeo, you can use powerful search, DMs, schedules, and quick links to start video calls to connect. Emojis, GIFs, photos, and videos allow anyone to respond quickly. In addition, employees spend up to 9.3 hours a week looking for information, so making it easy to share and find information helps engagement and productivity.
Improve your onboarding
Around 43% of new employees say their day-to-day role isn’t what they thought it would be. Such feedback indicates a mismatch between the job description and the expectations set during onboarding.
To improve your onboarding experience, consider creating a consistent, documented experience for every employee with a tool like Happeo. You can centralize:
- Training materials
- Onboarding checklists
- Job descriptions
- Org charts
- Communication across the entire company
With an employee onboarding template, employees can find what they need quickly and easily.
Reduce employee turnover and retain talent with Happeo
Retaining your best employees is critical for smooth and competitive business operations. The longer employees stay with your organization, the more profitable they become.
However, keeping employees engaged and satisfied with their day-to-day work can be challenging. Tools like Happeo can significantly ease this process, reducing turnover, retaining talent, and revolutionizing how in-office, hybrid, and remote teams work and connect.
Check out how other HR teams use Happeo to successfully retain their best talent, and request a demo to see it yourself.