employee turnover rate | 8 mins read

Employee Turnover Rate- The Silent Killer of Your Business

employee turnover rate the silent killer of your business 1651041361 9119
Kanika Jain

By Kanika Jain

What is Employee Turnover?

Employee turnover is described as the number of employees who resign or are asked to leave the organization within a certain time frame and are replaced by new staff.

Typically, employee turnover is calculated on a yearly basis. It makes no difference whether the employees resigned or were fired; their absence has a detrimental effect on an organization's overall productivity.

According to the United States Bureau of Statistics, the annual turnover rate in the United States is approximately 12 to 15%. It is much higher in the hospitality industry where the restaurant employees' turnover rate is around 25%.

This phenomenon may have a negative impact, but it is not always detrimental, as new employees replace departing ones. However, the rate at which work is completed is affected to some extent.

Reasons for Employee Turnover

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1. Being understaffed- Burnout occurs when employees are required to perform duties without adequate resources, when they lack control, or when they face stressful situations beyond their capacity. Burnout is characterized by emotional exhaustion and hopelessness that starts affecting employees' personal lives negatively.
Employers expect employees to work on weekends or till late evenings due to a shortage of skilled manpower. Insufficient reward, socially toxic places of work, lack of equality, and ethical conflicts were identified as factors that lead good employees to leave an organization. Alteration in any of those areas increases the risk of burnout. Workload feedback from employees should be solicited and acted upon by HR and team leads.

2. Toxic managers- People who take credit for others' ideas, play favorites, and even ill-treat their statistics every now and then must be weeded out from their respective workplaces. Managers who are simply bad at their jobs are less obvious and must be identified for their incapability of managing people which adds to their company's high turnover rates.
The Main factors for turnover include inadequate compensation or work-life balance, insufficient training, and limited career advancement opportunities. All these factors are directly related to the manager, which means that HR teams must identify supervisors who are fundamentally incapable of managing people and either transition them to new roles or provide support and training.

Good managers view themselves as career developer. They know their employees well enough to ascertain their abilities and aspirations. Great managers recognize and value their employees' unique skills and quirks, and they learn how to best incorporate them into a task within a given timeline.

3. No scope for personal growth- Another attribute that consistently ranks among the top reasons why people leave their jobs is a lack of opportunity within the organization. It has been highlighted in the PWC report about the future of recruiting report that today's job applicants are willing to give up 12% of their salary for a good and talent-driven job opportunity. They want to enhance their skill set rather than get stuck in a redundant job.

Employee development is a critical component of talent management. Provide services beyond skills-based training, such as education and training, tuition reimbursement, mentoring, and leadership training. Consider unconventional approaches to training as well.
Before an employee agrees to join a company they must ask a few questions to the HRs-

- Is there a viable strategy for employees' career growth?
- Do they run formal programs of learning and development every now and then? Will they allow employees access to new learning opportunities outside the office to develop new skills?
- Are there any pre-defined mentoring programs for employees, employees are given the freedom to explore different departments and responsibilities?
- Are the company's business objectives coherent with employee career objectives?

4. Ineffective hiring practices- When retention rates are falling within the short term, look for issues with your recruitment and onboarding processes.

When employees leave within the first six months, they have a short-term retention problem. A high rate of termination also indicates that there are issues with the hiring process. LinkedIn highly suggests companies to be candid and realistic when explaining their company culture to new hires.

5. Low employee engagement- To keep employees interested and motivated, companies need to involve employees in the company's value systems. Regular feedback, incentives, excursions, and healthy interpersonal relations improve the company culture and environment.

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Why is Employee Turnover Rate Important?

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It is the responsibility of HR heads to calculate turnover and retention and communicate it to the management. Determine what the rate is, why it may be so high, and correct it if necessary are key metrics that tell a lot about a company and its employees. Maintaining an eye on this rate can assist you in detecting the onset of problems in your business.

Here are a few reasons why this is critical-

1. Expense-

The reason we constantly hear bad feedback about employee turnover is that it is costly. Retaining existing employees is significantly less expensive than recruiting and training new employees. If your retention rate is low, this can be extremely costly to your business. Typically, the rate is expressed as an annual turnover rate. This explains the natural attrition of staff.

2. Indicates the presence of added issues in the workplace-

Additionally, a high turnover rate indicates low employee engagement and performance. These issues have additional consequences, such as decreased productivity, which can make it more difficult for your business to achieve its objectives. A high turnover rate can serve as a warning to HR that they may need to investigate further.

3. A good turnover Rate-

A business must experience some level of turnover. This is not only normal, but newcomers also bring new ideas and enthusiasm. Additionally, they can increase the business's distinctiveness and technical skills. Thus, while excessive turnover is costly, it is not entirely negative.

  • Statistics have suggested that a company owner spends around 33% of their average employees' salary to substitute just one employee.
  • Around 65% working population believes they can find a better job opportunity than with an existing one.
  • It is believed that by 2030 US will lose more than $400 billion dollars annually due to low retention rate and desired talent.

How to calculate Employee Turnover Rate?

As of 2021, the average turnover rate in the US touched 15%. An organization needs three pieces of data to Calculate Employee turnover rate.
1. Number of employees at the beginning of a period
2. Number of employees at the end of a period
3. Number of employees that left the company during that period

The formula is-

Employee turnover rate = Employees left the company in a given period/ Average number of employees * 100

Due diligence of a company's health and employee satisfaction can be gauged by calculating the
employee turnover rate.

What is voluntary and involuntary employee turnover


Voluntary turnover occurs in every organization. Individuals will decide that it is time for them to switch jobs and will most likely leave at some point. However, voluntary turnover can be reduced.
Your organization conducts or must already be doing exit surveys where employees are asked to fill in answers to some questions pertaining to the organization they are currently working for. This helps them to predict which employees may leave in the future and might resign.
Conducting exit interviews with departing employees will provide invaluable insight into how to proceed. Utilize this data to comprehend-

Why did an employee leave?
What could you have done in response?
How their exit impacts your organization?

You'll want to keep a close eye on your high turnover rate. This occurs when top performers leave for avoidable reasons.

  • Involuntary turnover-
An involuntary turnover is an act where an employer requests employee to resign or terminate. This could be a result of-

- Inadequate performance
-Behavioral difficulties
- Requirement of different skill sets in business
- Budget reductions

Utilize your turnover data to ensure that the organization made a reasonable decision and that the employee will not suffer a loss as a result of the decision. On the other hand, the employer gets rid of poor performers and can make a fresh start with a new hire equipped with skills that can help their company to grow better.

Online employee scheduling software that makes shift planning effortless.
Try it free for 14 days.

What is a healthy Employee Turnover Rate?

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Different industries have different standards to adhere to when it comes to maintaining a healthy employee turnover rate.

According to the bureau of labor statistics, for the hospitality and food service industry, the employee turnover is higher than in others and a good turnover rate can be between 17%-25%. whereas, sales and manufacturing industries have lower employee turnover rates at 12%-15%.

Steps to Reducing Employee Turnover

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  • Know your requirement- If you are hunting for a good resource then first know what your requirements and expectations are for the vacancy you want to fill.
  • Hire better talent- HRs tend to rush the hiring process because of the pressure coming from top management. But it is important to convey to them that good things take time to happen and the same can be applied to hiring great talent. Do not make hasty decisions that might cost you more than intended.
  • Improve Employee Engagement- communicate and allocate work to your employees in a way that they feel important and valued. Disengagement leads to low morale which eventually results in low productivity. The employee starts to look for a better opportunity elsewhere.
  • Offer benefits and incentive schemes- a good incentive makes employees work hard and challenge themselves to perform better. Just a hefty paycheck is not enough! Give employees goals and motivate them to outperform. Incentive schemes are a great way of improving retention rates in a company.

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People also ask

What is employee turnover?

In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.In business, turnover is the rate of staff changes over time. It is a general term that describes the number of employees that leave a company each unit of time, or the number of employees that leave a company each period of time. It is the rate at which employees resign from their jobs and leave an organization, as opposed to resigning for a reason other than to leave a company. An employee who is willing to stay with a company for the long term is called a committed and loyal employee. These employees help a company retain its best employees, drive employee engagement, and help keep turnover to a minimum.

How do I calculate employee turnover rate?

The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability. The turnover rate is an indicator of employee engagement. When an employee leaves the company, it is natural for them to feel bad about it. However, it isn't something to be ashamed of. In fact, research has shown that companies with higher employee turnover tend to have lower employee engagement. The average employee turnover rate for the software industry is about 61%. That is why when it comes to finding good employees, it is essential to have a low employee turnover rate. A high employee turnover rate can have devastating consequences for a company's culture, morale, productivity, and profitability.

What is a good employee turnover rate?

The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.The turnover rate for employees is often cited as a key indicator of the effectiveness of a company's employee retention strategy. High employee turnover rates are often linked to a company's low-quality employee staffing strategy, and low turnover rates are often regarded as an indication of a company's superior employee retention strategy. Both of these interpretations are likely to be accurate, but they also tend to overlook the many other factors that can play a role in employee turnover rates. One of the most important aspects of a company's employee retention strategy is the employee turnover rate. If a company's employee turnover rate is high, this could be an indication of a poor employee staffing strategy. However, if the company's employee turnover rate is low, this could be an indication of a superior employee retention strategy.
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