High employee turnover rates can negatively impact a business from top to bottom, costing the company money, slowing daily work procedures, and increasing staff burnout.
By focusing on employee experience and retention rates, employers can decrease the risks of high turnover and increase company growth and staff satisfaction, which is better for everyone!
We've provided some easy ways to tell if your company's turnover rate is healthy and where to look to increase retention rates and employee experience.
Average Employee Turnover Rates
The average employee turnover rate in America in 2020 was 57.3% according to the 2021 Bureau of Labor Statistics Report. However, this average varies depending on the industry. Retail and restaurant businesses have a much higher turnover while education and health sectors generally have a lower turnover average.
The average turnover rate for a company can also change significantly depending on the period of time you are accounting for and whether or not you are factoring the nature of the employee departure in all of the possibilities of inside promotions, involuntary turnover, and voluntary turnover.
These different factors can all heighten or lower a company's turnover average and while including the voluntary turnovers in a turnover calculation makes sense, inside promotions may need to be left out because it doesn't accurately reflect the potential negative impacts of a high turnover percentage.
All companies go through rough patches and peaks so adjusting the measurement period in which you're calculating a turnover rate can be very impactful in representing accurate averages, as well.
Is Your Company's Employee Turnover Rate Healthy?
One way to calculate if your company has a healthy turnover rate is to divide the number of people hired by the number of people who left the company during the same time period and then multiply that number by 100. This will give you an average turnover rate percentage that you can compare to the industry average provided by the Bureau of Labor Statistics.
As an employee, you may not have access to these numbers, so you can gauge your employer's turnover rate by merely observing the company culture. If you've noticed that the best workers at your company often leave quickly or move on to better opportunities, then that could be a sign that the turnover average isn't healthy.
The effects of strong workers leaving the company in large numbers can cost a business money, increase stressful working conditions, and lead to the burnout of other staff members. These consequences will likely be felt throughout the company and make your job harder, so if you see these factors manifesting in your own workplace then the turnover rate is unhealthy.
On the other hand, if you see all of the lowest-performing members of the staff get terminated or quit because they can't keep up, but the best people stay, then you are likely working at a competitive company with a good turnover rate and even stronger retention rates which are ideal.
Employee Retention Rates Matter
A company's high employee retention rate is beneficial to the company's growth and is linked to employee satisfaction. Retention rates are the inverse of turnover rates so it is generally better for an employer to have high retention rates where staff members stick with the company for significant periods of time.
To lower turnover rates in a company, employers may implement employee retention strategies that mitigate employee attrition.
Focusing on Retention in the Hiring Process
Some proactive employee retention strategies can include hiring the right workers who intend to stick around.
Hiring managers may ask questions like "Where do you see yourself in five years?" and "What are your professional goals?" to try and gauge if a candidate has intentions to stay with the company for a while.
In the hiring process, employers may also pay more attention to applicants' resumes to see if they remained in their former roles for respectable periods of time or if they are at higher risk of turnover.
For more information on the hiring process check out our articles on Using Pre-Employment Assessments in the Hiring Process and Tips for Finding the Right Employees.
Positive Employee Experiences Increase Retention
According to LinkedIn's Global Talent Trends report, 96% of talent professionals say employee experience is becoming more important and is directly linked to higher retention rates. Employers who put a focus on increasing employee morale reaped the benefits of business success and growth while maintaining high worker satisfaction rates and employee loyalty.
Companies with high ratings on open and effective management saw a 143% headcount growth and companies with high ratings on employee training saw 53% lower attrition. It appears that staff responds positively when an employer implements smooth and understandable training procedures while utilizing communication effectively.
This trickle-down effect is also visible in high ratings of a company's purposeful mission, directly linked to 49% lower attrition. This suggests that when a business is passionate about its role and goals, the staff will also feel this dedication and remain in a committed role in the company for a longer time.
Competitive Salaries and Benefits Packages Lower Attrition
LinkedIn's Global Talent Trends report also indicates that companies rated highly on their compensation and benefits packages saw 56% percent lower attrition rates. This shows that staff members stay with a company that rewards their hard work with a competitive salary, discouraging them from shopping for an employer with better compensation benefits.
Flexible schedules and work arrangements are also employee benefits linked to a 137% headcount growth. With the impacts of Covid-19, many workers have seen their work-life balance improve with flexible work-from-home arrangements and may search for jobs that maintain that kind of freedom apart from the in-office nine to five schedule.
With all of this considered, 48% of talent professionals still believe that compensation and benefits packages need improving. The companies that put a priority on strengthening their compensation offers soon will likely see positive results in lasting retention rates and employee satisfaction while the companies who fail to put any focus on improving these aspects of employee experience will likely fall victim to high turnover rates as their highest performing workers leave for better offers.
If you want to increase your company's retention average and decrease turnover, we can help. Check out our Recruitment Services for more information or Contact Us with any questions or inquiries