What’s your current employee turnover rate? If it’s over 35.6%, it’s above average. And unless you’re actively trying to downsize your company, that suggests you’re paying a heavy price for that employee churn: in time, effort, and money.
In the UK, research by Oxford Economics and Unum found that the average cost of turnover per employee (earning £25,000 or more) is a hefty £30,614. For a company of only 150 people, this equates to a loss of £1.61 million per year.
Is this a price you want to be paying? If it’s not, consider this. The US-based Work Institute says that employers can prevent 77% of employee turnover. In other words, 77% of resignations are prompted by discontent with the individual’s current role, management, opportunities, or with the organisation itself.
If those organisational shortcomings were addressed – and fixed – your turnover would drop, dramatically. In fact, if you were that theoretical organisation of 150 people, you would save yourself £1,239,700.
To know how you can reduce turnover, you first need to understand the ‘why’. So, what are the common issues that prompt talent, particularly top talent, to leave?
Why does talent leave?
As a broad-brush overview, the top three reasons employees give when they quit are:
- Lack of professional growth
- Unclear role expectations
- Poor inclusion
So, it’s worth looking at your performance in each of these areas and asking these important questions:
- What do you offer your employees in terms of professional growth?
- Are there clear opportunities for career development within your organisation?
- Do you identify and encourage growth gigs?
- Do you offer mentoring and stretch opportunities?
When it comes to clarity of expectation:
- Do you use metrics to gauge what success looks like?
- Are those metrics SMART (specific, measurable, achievable, relevant, time-bound)?
- Who is assessing success and how are they communicating their ‘ask’?
- How genuinely inclusive is your organisation?
- Is your senior leadership committed to – and vocal about – building a truly diverse workplace, where everyone’s perspectives are welcome and valued?
- Are there tools and resources in place for identifying systemic bias, or for addressing barriers to inclusion?
These issues of growth, clarity of expectation, and inclusion aren’t add-on luxuries, or important only in those times when competition for talent is fierce. They play a crucial role in making your organisation a place that people want to be part of. And that’s what future-proofs your talent pipeline.
That’s not to discount economics. It’s undeniable that - in times when unemployment is higher - people will accept less. In the current cost of living crisis, the number of resignations has dropped year-on-year in the UK. While Q2 of 2022 saw a high of 442,000 resignations, that number dropped to 322,000 in Q1 of 2023.
But prioritising Reward at the expense of culture won’t retain the best talent – who have the experience and skills to shop around. And it won’t build the long-term loyalty and effort that underpins the most resilient organisations. When the market swings back in favour of employees, organisations that haven’t invested in their people will suffer.
Staying ahead of the curve
So, how do you stay ahead of the curve and position your organisation as a place to stay?
While growth, clarity, and inclusion are the headliners for talent retention, progressive organisations are also investing in other key parts of the employee experience:
A final thought
Every organisation is different. The most important step you can take towards reducing employee turnover is to understand the specific drivers affecting your workplace. That means collecting, ordering, and analysing feedback from current employees and from leavers. That can be done through listening activities, surveys, exit interviews and by gathering feedback on employee review sites like Glassdoor.
Equipped with that insight, you can invest in the improvements that will have the greatest impact on your workplace, using two-way communication to test and learn from your innovations, and adapting to maximise your results.
At Caburn Hope, we’re experts in these processes. If you’d like help strategizing or implementing any of the above, drop us a message.