August 16, 2021

What Causes Employee Turnover? Why It Matters

Sam Caucci

Every business, no matter the size, should be concerned about their employee turnover rate. In fact, up to 50% of employees are actively searching for a new job at any given moment. And when these employees eventually leave, the costs to a business can be high. Gaining knowledge about how to calculate your employee turnover rates will help you build a better business which can help you anticipate these losses. Understanding the causes of employee turnover can help you keep your retention rates and profit more consistent. 

What is employee turnover?

The most common definition of employee turnover is the loss of talent in the workforce over a period of time. This can include any type of employee departure, such as resignations, layoffs, terminations, retirements, location transfers or death.

Businesses typically calculate their rate of employee turnover as a way to help them predict its impact on productivity, customer service or morale. 

How can you calculate employee turnover?

Every organization, locale and industry has an employee turnover rate specific to it. The U.S. Bureau of Labor Statistics (BLS) also calculates the employee turnover rate nationally. The BLS calculates turnover for the whole country, every region of the country and for different market sectors. 

The annual total separations rate is the number of total separations for the entire year as a percent of annual average employment. 

In order to calculate your organization’s turnover rate, divide the number of employees who have left your organization during a specific time period by the average number of employees during the same time. Then multiply that number by 100 to figure out your turnover percentage. 

Since average turnover rates vary widely between industries, it can be difficult to know whether or not your turnover rate is good or not. For example, the average turnover rate is 18% but the average turnover rate for the hospitality industry is over 70%.

Top Causes of Employee Turnover

If you find that your organization has higher than average employee turnover rates, then you should be figuring out why. Taking the necessary steps to rectify the top issues and keep your company from reducing your employee turnover can make a significant difference. Here are the top causes that could be increasing your turnover rate:

Lack of Purpose

Having meaning in what we do for work is incredibly important. If you think about it, we spend a lot of time at work, so many employees want to work for a company and role that gives them purpose. 

Companies that have a purposeful objective are great at motivating their employees, and each individual is pretty much an extension of the brand itself. These organizations have strong values, cultures and are good at connecting the dots between their product or service and what difference it makes in the world.

Even businesses that have low employee engagement are able to retain their talent if it can get its people to believe in its mission and purpose. Employees will draw motivation from the importance of the work that they do.

Inadequate Compensation

Typically when individuals leave a company it’s because compensation and benefits are part of the reason, especially for younger generations. Giving out a higher base pay plays a big role in employee retention for a couple of reasons. First, paying people well is a sign that you truly value their contributions. It also makes it less likely your competitors are able to lure them away with financial incentives. 

So what are ways in which you can ensure that compensation is in line or above for the market and role? First, make sure that you continue to provide base pay increases each year. Keep an eye on what other companies are paying annually, and paying more for in-demand skills is a continual trend. 

Employee Burnout

Being overworked is caused by performing tasks without being given the resources to succeed, when there is a feeling of a lack of control, or when employees face more daily stress than is manageable. Burnout combines both emotional and physical exhaustion paired with a sense of hopelessness and self-blame. This can manifest into physical and behavioral issues. Feeling burned out can lead an employee to leave. It’s important we pay attention to our employees physical and mental health.

Think about whether or not you regularly ask employees to work overtime or on weekends and evenings. Would a normal workweek be higher than 40 hours? Or if you provide your employees with the resources they need to continually succeed.

Lower Turnover with 1Huddle

Creating a healthy work environment where employees can thrive can be as simple as making your employee training and onboarding programs more engaging with a gamified training platform like 1Huddle.

1Huddle can help you and your team stay ahead of the learning curve. We offer cloud-based employee gamification software that can easily adapt to any employee training or gamification strategy you want to implement at your workplace. You can customize your content for a seamless experience and all of your employees will be able to access their training anywhere, anytime and at the push of a button. You can use our game platform to measure their performance and make key decisions on where you should take your gamification strategy next. 

To learn more about employee turnover, read our blog on “10 Facts You Should Know About Employee Turnover”.

Do you want to learn more about how 1Huddle can help you level up your own workforce? Talk to us today.

Sam Caucci, Founder & CEO at 1Huddle

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