High Employee Turnover Rate at Your Business
Understanding a high employee turnover rate will be critical for a business to survive in today’s competitive marketplace.
On average, a high turnover rate occurs when 28% or more employees leave a business within one year. High turnover can also be measured by employees’ leaving within their first 90 days of employment at the company. Today, many employees will not stay with an organization past this 90-day period if they do not feel connected to their work and the company vision or feel a lack of value or appreciation in their role or from their leadership. When employees leave a business at rapid and exceeding rates, leaders must determine what is contributing to this turnover issue and what they can do about it.
Calculating the employee turnover rate is a great step to learning more about what your business’s turnover rate means. If a turnover percentage is 28% or more or higher than the leadership desires based on the company and industry it will be time to make wise decisions surrounding current strategies and re-shaping of the employee experience and overall cultural health of the business.
What Does a High Employee Turnover Rate Mean for Your Business?
Each industry and business roles face unique circumstances impacting employee turnover, but a high turnover rate is not ideal for any business, job role, or setting. High turnover can create setbacks for all people involved relating to efficiency in duties and progress, as well as profitability and in achieving goals for the business. High turnover can be expensive, as employees are costly to replace in terms of salary, hiring, and onboarding new staff, and extra training needs.
An average employee leaving their company will cost a business over thousands of dollars, and others much more depending on the role and nature of the job. A Hubspot report showed that a loss of technical positions can cost 100% to 150% of the salary and a loss of C-suite positions can cost up to 213% of the salary of the individual who leaves a business. A risk also presents with burning out your current employees by assigning them additional responsibilities from other unfilled roles. This can affect business sales and productivity by thousands in revenue. Overall, these impacts can lead to both short-term and long-term issues for a business.
According to LinkedIn Data report, certain industries and business roles can suffer from higher turnover rate potential than others. This can be due to the culture of this industry, the position, and the nature of the job role. Some of the highest turnover rates identified were in the areas of human resources, research, product management, marketing, and consulting. With this information, these leaders must gain a high-level awareness, problem-solve, and act to make changes to benefit all their employees, future talent, and the company’s cultural health. Industries with lower turnover rates should not just stop there. It will always be valuable to gain insight and feedback into the employee experience to cultivate growth and change and to continue maintaining a lower turnover rate.
Most turnover rates at a business are impacted by its employees’ degree of happiness and overall job satisfaction. This engagement and satisfaction are critical for business objectives, goals, and productivity. Other factors relating to training and development, fair compensation, incentives, and providing a healthy and supportive workplace culture also impact employee engagement and satisfaction. When employees lack a sense of purpose, happiness, and fulfillment in their workplace and roles, this can lead to bigger obstacles for a business. Leaders need to become aware of and act on these initiatives to combat high turnover rates or risk the health and future success of the business. Leaders greatly impact a business, its cultural health, and its people, so they must focus on what they can do to reduce employee turnover and a high turnover rate.
A high turnover rate not only impacts the employees but also the potential for incoming top talent for a business. Employee retention is now more important than ever when hiring and retaining top talent. People are no longer interested in working for poor culture or ineffective leadership regardless of how much you pay them, challenging leaders to set their company apart from the rest. In today’s marketplace, businesses need to impress and invest in their talent by providing opportunity, growth, and development, as well as cohesiveness, value, and positivity in the company culture and employee experience. With high turnover, a business may struggle to attract the best possible people and talent, which can impact profitability and future employee retention. If a company cannot keep its people and gain new evolving talent, it risks the reputation of its brand and business culture and accomplishing its business goals.
A high turnover rate will identify a need for action within any business. A change will be needed for leaders to hire and retain top talent and for the business’s future success.
Ideally, leaders will move to gain insight into their high turnover rates through exit interviews, and by incorporating employee satisfaction and feedback surveys into their workplace. Exit interviews can help to determine trends or common problems a business is facing surrounding a high turnover rate and why employees leave. This information can benefit an organization in how to progress forward to reduce turnover and increase retention rates. Ongoing feedback surveys can also help a business gain insight into employee satisfaction, engagement, motivation, and overall employee workplace experience. These approaches also help leaders gain insight into their personal workplace impact and enhance their critical thinking skills toward positive and effective change. Leaders should consider and incorporate all feedback into their changes moving forward, to focus on improving the workplace to lower their high turnover rate.
Businesses cannot hire and retain top talent in the same ways they have in the past. With the ever-changing workforce, businesses must evolve their strategies and culture to withstand the increase in employee turnover and to best avoid a high turnover rate. The higher the turnover, the more complex issues a business can face.
At EDA, our priority is to help your organization grow and thrive in today’s marketplace by helping you build a compelling culture that lasts. To learn more about how to enhance your executive and leadership development and business’s cultural health to gain insight into your employee turnover and rate, check out our technology and services offerings and contact our EDA team today.
CEO, EDA, Inc.
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