HR and business leaders focus on retention for a reason. When you spend time and energy to attract, recruit, develop and retain employees, it can not only be very frustrating, but detrimental to business continuity when staff turnover is high. Staff turnover has a negative impact on an organisation’s performance, overall employee morale, and the bottom line.
In this article, we will cover how to perform a staff turnover calculation so you can know where your business stands based on benchmarks. We will also dig deeper into what causes staff turnover so you can proactively take action to reduce staff turnover before it reaches undesirable proportions.
Employee turnover is the percentage of employees who leave an organisation within a designated period of time. Staff turnover is usually calculated on an annual basis and reported as a percentage of total workforce numbers against the establishment.
Staff turnover covers both voluntary and involuntary leaves, which can include resignations, retirement and dismissals. When you calculate your staff turnover rates, the figure can offer insight beyond the amount of employees who leave. If staff turnover rates are high, then that could signal there are changes to be made within the organisation to better retain employees.
When calculating staff turnover, it is advisable to break it into categories of involuntary and voluntary so that you can gain more accurate insights into how to approach staff retention. In some cases, staff turnover will happen regardless of the actions you take, such as when employees retire.
When talking about staff turnover, another big term comes into play – staff attrition. Staff attrition is when you have an open position that you do not fill with a new employee. Staff attrition can happen by choice, circumstance or naturally over time as you may eliminate positions or as employees resign or retire.
In the workplace, turnover and attrition often get used interchangeable.
To summarize the difference, turnover refers to the number of people leaving. Attrition refers to the number of people leaving who are then not replaced. It’s generally a rule of thumb that an attrition rate of 10% is considered to be good.
When working by the numbers, here’s how they will differ:
Monster reports that the average employee turnover rate in the U.K. is 15%. However, this figure varies between industries. For example, legal, accountancy, local government, and education tend to have relatively low staff turnover rates.
Having a low staff turnover rate is typically seen as a good thing. But, even if your employee turnover rate is low, it’s still worthwhile to understand why some employees leave. To do so, you can conduct exit interviews as a starting point to ask your employees directly.
Keep in mind, not all employees are going to be honest in these interviews, especially if they have negative feelings about the workplace and don’t want to leave on “bad terms.”
Instead, you can also take stock of how employees are faring over time and on a consistent basis using an employee wellbeing tool. This way, you can notice patterns such as when teams feel overly anxious or overworked in real-time so you can take steps to address and adjust what your employees are experiencing.
High staff turnover is exactly what it sounds like – a large number (or percentage) of employees leaving your organisation in a set period of time.
If you find that your staff turnover rate is higher than the average in your region or industry, then you should take it seriously to understand why. Having high turnover can lead to increased costs, an at-risk reputation, and overall organisational inefficiency with more time needed to train new employees.
Staff turnover and ideal rates vary by industry, location, and tend to be situationally-based. Naturally, you’ll want to remain below the average turnover rate on the whole. That’s why it’s best to perform industry-specific research to find benchmarks that are most relevant to your specific business type.
That being said, there is one constant that is industry agnostic and worthwhile to focus on in any organisation, namely your employees’ mental wellbeing. Employees may leave to change careers, travel the world, or retire, which are going to happen regardless of what your organisation does.
But, if employees are leaving to go work for a competitor or because they seek a happier work environment, then those are elements you could potentially address and reverse before they leave.
A lot of what fuels staff turnover is employees' mental wellbeing and mental fitness. As such, organisations are taking a proactive approach and using employee wellbeing tools to gain such insights.
With the aid of these mental wellbeing platforms, organisational leaders and HR teams can spot what departments need extra support before it gets to the last straw of an employee quitting.
When you have your benchmark set, you can perform a staff turnover calculation using the following equation:
Monthly turnover % = (leavers / average number of employees) x 100
Annual turnover rate % = [total number of leavers / (beginning + ending number of employees)/2 ] x 100
The biggest question when addressing and calculating staff turnover is what causes it in the first place?
It could be a confluence of factors, so here’s a look at some common (and negative) reasons why employees choose to leave an organisation. As you’ll see, they all affect one’s emotional wellbeing, which is why so many businesses are recognising the importance of mental wellbeing and taking steps to care for it on behalf of their employees.
When employees run out of opportunities to grow and evolve, they may feel stagnant and frustrated. This can lead them to seek growth opportunities outside of your organisation.
A proper work/life balance is necessary for people to remain engaged and feel energised to work at their highest potential day in and day out. By overworking employees, you run the risk of causing burnout.
Every individual seeks to be seen and recognised for their efforts. Consider implementing staff recognition and reward programmes to honor those within your walls who are putting in the work and effort.
It could be the case that you have a highly-skilled individual within your organisation who isn’t in a role that aligns best with their capabilities and skills. In turn, the individual will feel demotivated and like they are stuck in a rut.
Poor management can cause employee dissatisfaction. Enable and support managers that are in tune and communicative with their team members.
One of the most quantifiable reasons why an employee leaves is due to poor compensation. If you are underpaying and overworking your team, it’s safe to say they will begin to look elsewhere for a better total reward package.
Workplace culture matters a lot when it comes to job satisfaction and employee engagement. Breed an environment that is transparent, honest, and promotes staff development. Toxic workplace culture has detrimental effects on an employee’s mental wellbeing. It can lead to anxiety, stress, and feelings of discontentment.
By using an employee wellbeing tool, you can spot when your departments or teams have a need before it’s too late since you gain insights into employee’s moods. This way, you can offer support to reverse a toxic workplace culture and create an environment that promotes employee satisfaction, a sense of security, and happiness.
When businesses and employees are aligned in their needs, goals, and desires, everything flows smoother. To reduce staff turnover, businesses can take a proactive front seat in the matter.
Here are some ways to reduce employee turnover rates:
If you have high turnover rates and are in a rush to hire people to fill positions, you may be focused on the short-term issue rather than the long-term goal.
Take time to hire for company culture, fit, and mental fitness. Be honest in the hiring process about expectations and needs, as well as what resources will be provided to employees.
To avoid stagnation, you can implement training and development programs so that your employees constantly have new and improved goals to work towards.
Offer timely rewards when you see employees and/or departments working at their highest potential and effort levels. It’s best to reward for capabilities over outcomes so that employees are motivated to do their best and collaborate rather than skip steps or compete for results.
Set boundaries and establish a culture that respects an employee’s life outside of work to support work/life balance. This way, you can reduce burnout and negative emotions arising that are associated with being overworked.
If your business can handle it, try to accommodate each individual’s work preferences and desired schedule. Flexible work can be remote, altering schedules, a hybrid set-up, and also involves monitoring workloads.
People often leave businesses because they feel that they are being treated unfairly by managers. Unfair treatment can be in regard to reward offerings or offering one person flexibility to work remotely but not another.
Employee wellbeing consists of multiple aspects, including biology, psychology, sociology, and spirituality.
You can provide resources like an employee wellbeing platform that comes equipped with training, exercises, and tools to help employees develop their own mental fitness and take stock of their mental wellbeing.
Employees who hone their mental fitness are able to address and overcome challenges, adapt to new situations, and are motivated to show up and do their best.
Make sure that employees feel seen and heard by conducting check-ins on a consistent and regular basis. Employees should be enabled to speak up when they have a need or issue to be addressed. If it’s the case that they’ve already decided to leave, you can utilise exit interviews to learn more about their experience.
Additionally, employee wellbeing platforms give employees a space to share their own feelings and reflect on how they are doing emotionally whenever they feel like it. With these insights, HR and management teams have insights to recognise when teams need extra support.
A focus on employee wellbeing can help to reduce staff turnover and create a work culture that values employees. Staff turnover not only affects an organisation’s way of working and productivity levels, but it also has financial effects.
When you think of staff turnover, you have to calculate the costs of:
Staff turnover is undoubtedly inevitable in any kind of business. The rate at which your organisation experiences staff turnover can be a signal of issues brewing or a marker of what you’re doing right.
As you look at your staff turnover rates, be sure to consider the reasons behind why people leave and what you can do to proactively prevent it from happening in the instances that are controllable.
One way to help reduce staff turnover is to focus on employee wellbeing and mental fitness. This way, you can support a team that is in tune with their mental wellbeing and can access tools and techniques to better support themselves (in both good times and bad).
That way, when they are going through periods of more work or potential stress, they know what to do to manage it in a healthy way and can come out stronger through the experience.
To find out how LUME can help your organisation to better understand and support the mental health of your employees, just fill in the form and we’ll be in touch.
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