What are the top reasons for most employee turnover?
Employee turnover is a fact of life for all companies. Whether you’re operating a fast food restaurant or an executive corporation, employees come and go as time passes. Employee turnover occurs when employees voluntarily leave their jobs and must be replaced. The severity of turnover varies widely by type of business and the economic health of the region where companies are located.
High turnover can be a serious obstacle to productivity, quality and profitability for organizations of all sizes. For the smallest of companies, a high turnover rate can mean that simply having enough staff to fulfill daily functions is a challenge, even beyond the issue of how well the work is done when staff is available. Turnover is also a problem for major companies, which often spend millions of dollars a year on turnover-related costs. Customers are also likely to experience dips in the quality of service each time their representative changes.
The U.S, Department of Labor estimates that it costs about 33% of a new recruit’s salary to replace a lost employee. That’s obviously a significant amount of money. And when you consider the time that the selection process and training takes, turnover can eat up precious company resources.
To reduce turnover, you must be aware of what causes turnover.
1. Receiving higher pay elsewhere. This can be regularly observed at all levels of the economic ladder, from executives to entry-level workers. However, there is considerable evidence that money is often not the root cause of turnover, even when it is a factor in an employee’s decision to quit. Yet it is something to consider. Being competitive with pay-rates and benefits packages is indeed important.
2. Work environment: Turnover tends to be higher in environments where employees feel they are taken advantage of, where they feel undervalued or ignored, and where they feel helpless or unimportant.
3. Management handling of major corporate events such as mergers or layoffs. If employees are fearful or have a negative image of a company, more employees tend to leave the organization.
4. Work stress experienced at particular types of jobs: ex: childcare workers, waiters dealing with demanding dinnertime customers, police officers in high-crime areas, and truck drivers facing long hours.
5. Other factors such as seasonal changes (i.e. beginning of school semesters)
6. Retirement (even though this type of turnover is expected more-so, if many employees are aging out of the workforce it can have detrimental effects.
7. Work-Life balance can’t be achieved. When women or men are trying to juggle heavy home responsibilities with work responsibilities, they may find it overwhelming and therefore leave their positions.
Source: Reference for Business, Encyclopedia of Business, 2nd Ed.