According to a Work Institute report, employee turnover costs U.S. companies nearly $900 billion a year. What can HR professionals do to make excessive turnover a problem of the past?

This article explores some of the most common reasons for employee turnover and ways to prevent it. Let’s get started!

I. What is employee turnover?

Employee turnover refers to the rate at which employees leave a company within a certain period, typically measured annually. There are different types of employee turnover:

• Voluntary turnover: When an employee chooses to leave the company, such as resigning for a new job or personal reasons.

• Involuntary turnover: When the employer decides to terminate an employee, often due to performance issues or layoffs.

• Functional turnover: When the departure of an employee is seen as beneficial for the company, such as when a low performer leaves.

• Dysfunctional turnover: When the company loses high-performing or valuable employees, which negatively impacts the organization.

• Attrition: Often used interchangeably with employee turnover, attrition refers to the gradual reduction in staff, typically through retirements or voluntary resignations, without actively replacing those employees.

Employee turnover can be measured for the entire company or by department, team, demographic groups, and other subcategories within the organization.

To calculate employee turnover rate, organizations typically divide the number of employees who leave during a specific period by the average number of employees during that same period. For example, if a company has 1,000 employees and 100 employees leave during the year, the turnover rate would be 10%.

II. Why need to understand the reason the reasons for employee turnover

Employee turnover is something every business needs to pay attention to. If you can understand why your employees are leaving, you can take steps to address the issues, improve retention, and create a more positive work environment. Here’s why it's crucial to really dig into turnover data:

1. Preventing Unwanted Turnover

When you know why employees are leaving, you can do something about it. For instance, exit interviews often show that employees leave because their compensation doesn’t match the market rate. If this is the case, you can start reviewing and adjusting your salary packages to ensure they’re competitive. Addressing these issues early on can help you reduce turnover and keep good people around.

2. Saving Costs

It’s expensive to replace an employee. In fact, it can cost anywhere from one to two times the employee’s annual salary just to recruit and train someone new. Plus, when people leave, you lose valuable knowledge and productivity, and employee morale can take a hit too. All of this adds up to significant costs for your business. By addressing turnover, you can save a lot of money in the long run.

3. Building a Stable Workforce

A stable workforce leads to a more positive work culture. When turnover is high, it can create more stress for the employees who remain, as they often have to pick up the slack. This can affect their morale and productivity. On the other hand, reducing turnover helps maintain continuity in your teams, preserves company knowledge, and contributes to long-term growth. Stability can lead to a more effective and motivated workforce.

4. Creating Targeted Retention Strategies

Knowing the reasons behind turnover allows you to create more targeted and effective retention strategies. For example, if your surveys show that new hires feel their onboarding process doesn’t prepare them for their roles, you can improve the process. Focus less on administrative tasks and more on the skills and knowledge they need to succeed. When you tailor your approach based on employee feedback, you can tackle the root causes of turnover and keep more employees around.

5. Improving Employee Engagement

Sometimes, turnover is a symptom of deeper issues like poor management or lack of career development opportunities. If employees are leaving because they don’t feel valued or there’s no clear path for growth, it’s a red flag. By addressing these concerns, you can improve employee engagement and job satisfaction, which in turn leads to better retention and overall productivity.

6. Enhancing Your Employer Brand

When employees see that you care about their reasons for leaving and actively work to improve, it boosts your employer brand. A company that listens and takes action based on employee feedback becomes more attractive to both current and future talent. If your business is known for valuing employees and offering a great work environment, you’ll have an easier time attracting top talent and filling positions with qualified candidates.

III. Top 10 reasons lead to employee turnover

1. Burnout

A recent study found that 74% of its participants reported experiencing job burnout at some point. High-stress work environments tend to have higher employee turnover rates and more cases of burnout compared to low-stress environments. This happens when productivity and performance metrics are prioritized over the physical and mental health of employees, leading to unmanageable workloads and chronic stress. Without the right balance between company goals and empathy for employees, burnout becomes inevitable.

Stress at work is often caused by factors like role ambiguity, role conflict, lack of resources, or excessive workloads. When employees are not given enough support, whether in terms of time, autonomy, budget, or career growth opportunities, they can quickly become overwhelmed, leading to burnout and ultimately, resignation.

Key Causes of Stress in the Workplace

• Role Conflict: Role conflict occurs when employees are asked to fulfill contradictory demands. For instance, being asked to complete work quickly and with high quality at the same time can cause stress, as employees struggle to meet conflicting expectations.

• Role Overload: Employees need adequate resources—time, autonomy, budget, training, and career development opportunities—to do their jobs effectively. When these resources are lacking, employees face role overload, leading to stress and eventual burnout.

• Excessive Workload: One of the most common sources of stress is excessive workload. When employees are asked to do more than they can reasonably handle, or when tight deadlines are set that are outside their capabilities, it becomes a significant pressure point, often resulting in burnout.

• Work-Life Imbalance: Employees need a healthy balance between work and personal life to buffer against stress. When employees are unable to disconnect from work and lack time to recharge outside of their jobs, stress levels can escalate, affecting their health and performance.

How to Measure Stress in the Workplace

Stress is inherently subjective and difficult to quantify, but there are several ways organizations can assess the stress levels of their employees:

• Engagement Surveys: Engagement surveys help gauge employee satisfaction and emotional connection with the organization. While not a direct measure of stress, these surveys can reveal how stress affects engagement and morale.

• Pulse Surveys: Pulse surveys are shorter, more frequent surveys that provide real-time feedback on employee well-being. These surveys can help track stress levels over time and identify trends that need to be addressed.

• Stay Interviews: Stay interviews with current employees can provide insights into why they remain with the company. These interviews are a great opportunity to uncover any sources of stress that may not have been identified through other means.

• Exit Interviews: Exit interviews are a valuable tool for understanding why employees leave. If stress is a key reason for resignation, it can provide actionable insights into what needs to change in the workplace to reduce turnover.

• Absenteeism and Sick Days: High absenteeism or frequent sick days can indicate that employees are under excessive stress. Tracking these patterns can help organizations identify when stress is becoming a widespread issue.

2. Demographic Factors

Demographic variables are key indicators when predicting employee turnover, and they are generally easy to measure. Let's look at some of the most influential demographic factors:

• Age: Younger employees tend to have higher turnover rates, as they are more likely to seek new opportunities compared to older employees. Generally, as people age, they become more stable in their careers, making them less likely to leave their jobs.

• Children: Employees with children are typically less inclined to leave their jobs, possibly due to the additional responsibilities and the need for job security that comes with parenthood.

• Kinship Responsibilities: The level of responsibility one has toward family members can significantly influence their decision to switch jobs. Those with greater kinship responsibilities may avoid taking risks, such as leaving their job, to ensure their family's stability.

• Marital Status: Married employees are often more likely to stay in their current job compared to single employees. Marriage typically brings about additional responsibilities and a desire for financial and job security.

• Tenure: Tenure, or the length of time an employee has been with a company, is one of the strongest predictors of turnover. Generally, employees tend to leave after about four to five years in a position, although those with long tenure are less likely to leave altogether.

Measuring Demographic Variables

Demographic data is often available in an organization’s Human Resources Information System (HRIS), making it relatively easy to track and analyze.

3. Leadership

The old saying “people leave their managers, not their jobs” is still highly relevant today. Leadership is a key driver of employee retention, with several factors influencing turnover:

• Supervisory Satisfaction: Employees who are satisfied with their supervisors are less likely to leave the organization. A positive supervisor-employee relationship is critical for retention.

• Leader-Member Exchange (LMX): The LMX theory suggests that the quality of the relationship between a manager and an employee impacts retention. Employees who feel recognized and valued as individuals are more likely to stay, compared to those who feel like just another face in the crowd.

Measuring Leadership

Measuring leadership is challenging, but in large teams, variations in turnover rates between teams can provide insights. For instance, a high turnover rate in a particular team may indicate issues with the leadership style. Further investigation is required to determine the exact cause—whether it’s poor management, lack of communication, or toxic leadership.

4. Job Satisfaction

Job satisfaction is a well-established indicator of employee turnover. Several factors influence how satisfied employees are with their roles:

• Overall Job Satisfaction: This is the most direct measure of how content employees are with their job.

• Expectations vs. Reality: A mismatch between what employees expect from the job and what the job actually provides can lead to dissatisfaction and turnover. If employees expect more responsibilities or autonomy and do not receive them, they may decide to leave.

• Job Involvement: Employees who are deeply engaged in their roles, whose work aligns with their personal interests, are less likely to leave the organization.

5. Work Satisfaction

While similar to job satisfaction, work satisfaction specifically refers to an employee’s fulfillment and engagement with the tasks they perform:

• Job Satisfaction: This encompasses the overall contentment employees feel about their job, including pay, work conditions, and co-worker relationships.

• Work Satisfaction: More narrowly, this is about how satisfied employees are with the nature of their work, including how fulfilling or motivating the tasks are.

Measuring Satisfaction

Satisfaction, whether job or work-related, is subjective. It can be measured through surveys, including pulse surveys, engagement surveys, stay interviews, and exit interviews, to capture feedback and address concerns.

6. Job Content

How employees experience the actual work they do is another key factor in predicting turnover:

• Routinization: Employees may become disengaged or bored with highly repetitive tasks, even though routine work can improve productivity. High levels of routinization can increase turnover rates.

• Career Advancement Opportunities: Employees who know they have a chance for promotion or professional growth are more likely to stay. Conversely, a lack of these opportunities can push employees to look for other options.

• Instrumental Communication: The way goals are communicated within a company—specifically goal-oriented communication—affects turnover. Clear, actionable communication helps employees understand their objectives, which can foster a greater sense of satisfaction and engagement.

Measuring Job Content

Surveys are an excellent tool for evaluating the level of routine in employees' roles, their perception of career progression opportunities, and communication effectiveness. Additionally, job analysis can provide deeper insights into the nature of the work and how repetitive or varied the tasks are.

7. External Environment

Employees constantly compare their job situations to those of others. External factors, such as the job market and available opportunities, can influence turnover:

• Alternative Job Opportunities: Employees are more likely to leave if there are plentiful job opportunities available in the market.

• Comparison to Alternatives: Even when alternative opportunities exist, employees are less likely to leave if their current job offers more advantages. However, if alternatives are better, turnover becomes more likely.

Measuring External Environment

Organizations can use industry data or HR consultancy insights to assess job market conditions and employee demand in specific roles. If a role is in high demand, employees in that position may be more likely to leave for better opportunities.

8. Co-workers

The quality of relationships between employees and their colleagues also plays a significant role in turnover:

• Workgroup Cohesion: Employees who work in cohesive teams are less likely to leave. Strong team bonds can improve job satisfaction and engagement.

• Co-worker Satisfaction: Employees who enjoy working with their colleagues are less likely to consider leaving, as positive interpersonal relationships create a more supportive and fulfilling work environment.

Measuring Co-worker Influence

Co-worker satisfaction can be assessed through employee surveys, which measure the quality of relationships and team dynamics within the organization.

9. Compensation

Although compensation may not always directly influence turnover, employees’ satisfaction with their pay and the perceived fairness of pay can:

• Pay Satisfaction: Employees are more likely to leave if they feel they are underpaid relative to their colleagues or market standards.

• Distributive Justice: If employees perceive that compensation is unfair or inequitable (e.g., a manager earning significantly more despite similar responsibilities), it can lead to dissatisfaction and turnover.

Measuring Compensation

Benchmarking compensation against market rates and internal equity can help organizations determine if employees feel they are being fairly compensated. Discrepancies or inequities should be addressed to prevent dissatisfaction and turnover.

10. Turnover Indicators

Several behavioral signs can indicate whether an employee is likely to leave, including:

• Lateness: Chronic lateness can signal demotivation and may predict imminent departure.

• Absenteeism: High absenteeism is often a strong predictor of turnover intentions, as employees may take time off for job interviews or due to disengagement.

• Performance: Low performers may be more likely to leave, though exceptionally high performers may also leave if they feel underchallenged or unrecognized.

Measuring Turnover Indicators

Many organizations already track absenteeism and performance data, which can be used to predict turnover. Employees who exhibit signs of disengagement or declining performance should be monitored closely.

Interaction Among Turnover Predictors

It’s important to understand that predictors of turnover often interact with one another, which can amplify or reduce their effects. For example:

• Marital Status and Career Focus: A young person in their twenties may prioritize career advancement over family, while someone in their thirties with children may focus more on work-life balance, which could influence their decision to stay or leave.

• Workload and Gender Norms: Women may be more likely to seek flexible work arrangements after having children, whereas men may feel societal pressure to continue working despite heavy workloads. This interaction between gender roles and workload can lead to different turnover patterns.

These examples show how multiple predictors work together to influence turnover decisions. Understanding these interactions helps organizations better predict turnover and take proactive steps to address potential retention issues.

III. Strategies to Reduce Employee Turnover

Understanding the reasons behind employee turnover is the first crucial step in mitigating it within your organization. Once you recognize the root causes, you can implement strategies to address them. Here are several actionable steps to consider:

1. Identify the Key Drivers of Turnover

Start by identifying the specific reasons employees are leaving your organization. Are they dissatisfied with their compensation? Is there friction between them and their manager or colleagues? Do they feel disconnected from their job responsibilities? By understanding these factors, you can tailor a retention strategy that targets the underlying issues effectively.

2. Monitor Turnover Metrics in Detail

Tracking turnover in detail is essential to gaining a deeper understanding of its causes. Analyze turnover data across various categories, such as departments, job roles, geographic locations, age groups, gender, and employee tenure. This allows you to identify trends and areas where turnover may be disproportionately high, guiding your retention efforts.

3. Use Exit Interviews for Insight

Employees who are leaving often provide more candid feedback than those who stay. Exit interviews can be a valuable tool to uncover recurring issues and patterns that may not be apparent otherwise. Understanding why employees choose to leave helps you pinpoint areas in need of improvement, whether it’s leadership, compensation, work-life balance, or other factors.

4. Focus Retention Efforts Where They’re Most Needed

Once you’ve gathered data from exit interviews and turnover tracking, focus your retention efforts on the areas with the highest urgency. For instance, if new employees are leaving quickly, consider revising your onboarding process. If a specific department or team has high turnover, invest in improving team dynamics or leadership. Direct your resources where they can have the most impact.

5. Implement Stay Interviews

While not as common as exit interviews, stay interviews can be an invaluable tool to help you proactively address potential turnover. These interviews give you the chance to understand why employees choose to stay and identify any areas where improvements could be made. They also help you uncover ways to enhance the employee experience, increasing retention.

6. Build a Strong Foundation for Employee Engagement

Preventing turnover starts with establishing a solid foundation. Ensure that your workplace fosters an environment of engagement and satisfaction. Some key elements for a stable, engaged workforce include:

• Fair Compensation and Benefits: Ensure wages and benefits are competitive and equitable.

• Safe and Supportive Work Environment: Prioritize physical and psychological safety at work.

• Work-Life Balance: Maintain reasonable working hours and avoid overloading employees with excessive demands.

• Empowered Leadership: Equip managers with the resources and skills they need to provide consistent support.

• Purpose-Driven Work: Help employees understand the value of their contributions to the organization’s mission.

• Clear Growth Pathways: Provide employees with clear opportunities for career advancement and personal development.

7. Encourage Open Communication

Fostering an open and transparent communication culture is essential for reducing turnover. Regular, honest communication helps employees understand their roles, performance expectations, career growth opportunities, and company goals. This transparency fosters a sense of security and clarity, which can significantly boost employee engagement and reduce turnover risk.

IV. Conclusion

Reducing turnover begins with understanding the specific factors that cause employees to leave. By identifying these reasons through tools like exit interviews and stay interviews, you can implement more effective retention strategies. Moreover, when you create a work environment that is fair, engaging, and fosters transparent communication, employees will feel valued and motivated to stay longer.

With the challenges of retaining talent, Leamar Hiring can be a strategic partner in helping you find the right candidates. We understand that hiring the right person not only helps you fill positions but also reduces turnover by finding candidates who align with your company's culture and goals.

Need support in finding exceptional candidates? Let Leamar Hiring assist you in identifying the right talent that not only improves your hiring effectiveness but also contributes to building a stable and sustainable team. Contact us today to start building a strong workforce for your company!