Top Tips for How to Prevent Employee Turnover

Top Tips for How to Prevent Employee Turnover

There is no doubt that high employee turnover hurts a business’s bottom line. Oxford Economics estimates that the average cost to replace a lost employee is £30,000 – £25,000 of which relates to lost productivity as new recruits can take up to 28 weeks to get up to speed.  Figures drawn from retail, legal, accounting, advertising, IT and technology, suggest the combined cost over a year could be as much as £4.13bn.

When employees leave, the ripple effect can be felt not only on the balance sheet, but throughout the company. As well as lost knowledge, training costs, interviewing costs and recruitment costs, companies cannot afford to ignore the long-term implications high employee turnover has on the success of the business. As soon as an organisation takes the time to consider high churn rates, it starts to focus its narrative on compensation, benefits, training, development, engagement, and morale-boosting activities. This leads to a highly motivated and engaged workforce.

Today, it’s uncommon for an employee to remain at a company for more than 5 years. Statistics on churn for the UK are scant, but a US survey ( by the Bureau of Labor Statistics found that the average time an employee spent at a company in 2014 was three times higher (10 years versus 3 years) among employees between the ages of 55 and 64, than those between the ages of 25 to 34. Companies cannot prevent employees leaving for supposed ‘greener pastures’, but there are ways and means of preventing the inevitable. Factors such as lack of training, ineffective leadership, and employee communication can all pave the way to the exit door. Companies need to shift their focus to employees in order to be successful in the long run.

How to Prevent Employee Turnover

1. Lack of training

Employee retention strategies begin right from when the new employee steps through the door. So-called ‘onboarding’ – the process of introducing newcomers to their role and the culture of a company – is an important process as it ensures employees have the appropriate knowledge, skills and behaviors needed for long-term success. By introducing them to the mission and the values of the company, new arrivals can adopt company-wide practices more quickly. When a company implements a successful onboarding program, research by data science and tech company Aberdeen Group found, they experience 54% greater productivity and 50% greater retention.

But onboarding is only one component of the employee training picture. Once employees have been through the onboarding, and familiarise themselves with the company and their role, they may become disengaged due to lack of training opportunities. Employees today want to develop themselves into the best that they can be, expanding and polishing their skills, abilities and experiences – and there is a clear challenge ahead for companies to attract and retain the services of millennials, who have different expectations about their career trajectory and place of work than previous generations. PwC’s Millennials at work: reshaping the workplace found that progression was a top priority, with 52% choosing an employer based on the opportunities available, over 44% seeking competitive salaries. Some 71% of millennials wanted an overseas placement as part of their job. In addition, a healthy work-life balance was said to be important to 95% of those surveyed. In a separate survey by Go2HR, it was indicated that 40% of employees who receive poor job training leave their position within the first year.

Employees who feel restrained or get bored will eventually start looking elsewhere to fulfil their advancement needs. Well-trained employees help increase productivity and profitability because training helps solve the potential performance problems of the job. Employees who have undertaken training develop more rounded skills that in turn help them make more valuable contributions to the company.

2. Ineffective leadership

There is an oft-repeated maxim that employees don’t leave their jobs, but rather their managers. Leaders who do not create the right opportunities for their employees, who fail to communicate with them, and who don't appreciate them are often the story behind a high turnover rate.

Bad leadership can even be felt throughout an entire organisation. Corporate culture becomes a meaningless term where leaders claim it exists while employees shake their heads in frustration. In these circumstances, there is a lack of clear, consistent communication from leadership to the employees. As a result, the office is run by rumour mill, politics and gamesmanship. Employees are uncertain of the company’s goals and objectives for success and they have no idea how they fit into the picture, or what their level of importance is towards making it happen

Employees who feel comfortable with their leaders often feel more engaged and inspired. The right leader is someone who is able to inspire, motivate and coach their workforce. They often seek opportunities for their delegates and support them in their ongoing development in the workplace. When a company has good leaders, communication is daily and open. Every employee clearly understands the vision and the goals of the organisation, and everyone has input into how they can be improved. Employees also feel that they are important and that their job matters within the company.

3. Lack of communication

Communicating with employees, empowering them and creating a culture in which they can thrive are all fundamental elements when it comes to retention. But when important decisions are made by the C-suite, employees and management are generally left in the dark – another tendency that can sour relations to the point that employees wish to depart the company.

Sometimes having a lack of answers is what deters senior management from providing the information that employees feel they need. To combat this, it is preferable to create a structured communication process that informs, emphasises and affirms employees’ actions in the workplace.

Communicating is a skill that should come naturally, however it can be the hardest skill to learn. When managing employees, it’s important to keep all communication channels open. Being aware of the questions, concerns and fears temployees might have, and proactively communicating answers, will build transparency and trust, helping to keep retention low.

Tracking churn

Once a business is able to overcome the challenges that lead to churn, it becomes less necessary for employees to leave the organisation. But without understanding there whether or not there is an issue to solve, it’s a good idea to determine how high your staff turnover rate is in the first place.

One way of calculating turnover is by dividing the amount of people who left the organisation by the number of employees currently at the organisation over a given period (usually a year).

(number of people who left÷people currently employee)×100

For example: 14 people leave in 2015, and there are currently 250 people the organisation.

(14÷250)×100=5.6% turnover rate.

In the US in 2015, total employee turnover rate for all industries was 15.6%, with banking/finance higher at 17.2% and the highest figure, 29.3% recorded in hospitality.

According to a Gallup report, a company should aim to achieve no more than 10%. However, this figure was based on Jack Welch’s performance management system of stack ranking, which today is seen as old and outdated (even GE is throwing it out). In reality, if 10% of the high performers are leaving, the business ends up having a serious problem. One of the first things a company can do to understand their turnover rates in more detail is to track it by a performance quartile. To do this, clearly track turnover by each quarter. Set clear and objective measures of productivity. And determine which employees are performing the best in each department.

Regularly check people's engagement to understand how each individual is feeling towards their goals. Do this by implementing a fortnightly check in, where managers schedule a time for each one of their delegates to simply open up a continuous one-to-one dialogue. By doing this, employees will feel more comfortable about expressing the way they feel in the workplace. When managers do this, they are able to understand the flaws in the team and act on them in a timely manner. This allows a company to become more agile and quicker to respond to business threats. What's more, from the regular check in business leaders can understand their weaknesses, and determine what drives disengagement as it emerges.
When a company implements a continuous feedback tool (perhaps incorporating elements such as 360 analysis), it allows the business to start an engagement survey quickly, which then can draw immediate insights into the current health of the organisation. This allows those at the top to understand where their employees may feel they need more clarification or better business practices.


Steffen Maier is the co-founder of Impraise, a web-based and mobile solution for actionable, real-time feedback at work.