The turnover rate of a company has a direct influence on many aspects of a business. A high staff turnover doesn’t only affect employee performance. Staff turnover also has an influence on the employer branding of your company.
What is Employment Turnover – Summary
When a single position or multiple positions frequently end up vacant, and the position(s) have to be filled regularly, it is said that there is high turnover.
- Voluntary rotation takes place when an employee leaves the company voluntarily.
- Involuntary rotation occurs when an employee leaves the company involuntarily.
In some cases, the main cause of turnover is due to an employee who chooses to leave their roll. However, a lot of times it may be a result of the way your company runs its business.
The more trouble you have with staff retention, the more likely you will notice a change of energy in the office. Low productivity in your employees is a direct cause of constant turnover. This is one of the most visible signs and one that affects the company at a core level. With constant turnover, it’s difficult to maintain an atmosphere of trust and confidence between employees. Additionally, failure to create a shared company culture is at risk when turnover is high.
The costs of employee turnover are substantial for a company. Every time an employee leaves, the HR department must enter the process of recruitment and selection once again. As employee rotation is quantifiable, if you look at your rate of turnover and cost of recruitment, you can see a direct correlation between the two.
The goal of many companies is to lower their average turnover. This can be done in many ways depending on what suits your company best.
We can say that each time an employee enters or exits a company there’s a rotation in staff. When a position continually is being filled and then abandoned, the result is a high turnover rate.
A high employee rotation has serious negative effects on a company. If you find yourself with a high rate of turnover, it’s important that you stop and analyze why this is occurring. Then, you can take action and make the required adjustments to lower it.
To create a prevention plan of action against high turnover you have to take into consideration the data extracted from all the employees who had left the company, at least in the last year. If you have more time and data, you can also look further back to analyze the turnover rates over a longer period of time. When you make your calculations you shouldn’t include those who have abandoned the company for reasons like retirement. The rate of turnover doesn’t take these cases into account. When analyzing turnover, we are only concerned with the rest of the cases, such as when people leave due to a lack of job satisfaction, their responsibilities or the company.
1- Voluntarily rotation
As the name states, this kind of job rotation takes place when an employee leaves the company voluntarily. The causes for this can vary, but more commonly, the reasons are: they’ve found a better job, disagreements between colleagues, they feel underappreciated or underpaid, are unable to adapt to the company’s culture, etc. Evidently, you can never satisfy everyone, nor the condition you offer will be to the liking of all. However, as an HR manager, it is your duty to create a comfortable atmosphere within the company. Also, it’s important to recognize the merits and achievements of your employees, and praise them so they feel validation.
The causes mentioned above, come after hiring an employee, but sometimes, voluntary rotation can occur as a result of a poorly planned and executed recruitment process. In this case, an employee may be hired quickly without putting in much thought about whether they match the position or company culture.
2- Involuntary job rotation
When a worker leaves the company because they are fired, they fall into the involuntary employee rotation category. It’s easy to place blame on the outgoing employee; however, as a company, you need to ask yourself whether this situation occurred due to something you have done wrong. This may include, not having provided the proper tools and training, which then resulted in the employee failing to correctly complete their tasks. These kinds of involuntary rotations can’t be avoided 100%, but it’s best to minimize them as best as possible.
Reasons for turnover in your company
In many cases, it is the employee who decides to voluntarily leave. However, a lot of times it has to do with the company. If the company is at fault, it’s necessary to ask the question, what can I do to lower the turnover rate in my company? This is the first place to start if you want to make improvements. Let us help you out too! Here are some of the most common causes of turnover and tips on how to reduce the likelihood of turnover occurring.
Lack of growth opportunities
No one likes to feel stuck in their personal or professional lives. Most people search for evolution in their job and inside the company. A discouraged employee ultimately leads to economic losses for a company. Discouragement means apathy and demotivation, and that’s the least you want happening to your business. You can avoid this by creating an environment with growth opportunities for your employees. Provide them training for their personal growth, along with tools that help them improve the abilities required for their job. Show your workers -with promotions and benefits- that those who work well, are rewarded.
The salary is unsatisfactory
Sometimes offering a competitive salary to keep up with other companies, isn’t always possible. In these cases, you should look into other forms of rewarding your employees, including their emotional salary. There are many ways to make your job offer more attractive; it’s not always the monetary salary that wins out.
Most companies still work with a hierarchical system and follow an organizational chart to better manage their human resources. This is a great way to know who reports to who in every situation. Having a system in place so all staff knows their responsibilities, and who they must communicate within the hierarchy system is essential. Without this, poor management is likely to result.
Toxic working environment
A company where everyone is bickering and quarreling is a direct path to employees leaving. No one likes to work in a toxic environment where they don’t feel at ease. The more constant the workplace conflict the greater the likelihood, employees will start to search for other work. You don’t need to be friends with everyone, but to gain your employee’s loyalty you have to make them feel integrated and nurture an atmosphere of camaraderie and understanding. Keep in mind, employees spend at least a third of their day working, and spending that time doing so in a bad mood ends up taking its toll.
An employee works for the salary they get, but not only that. Money isn’t everything, and there are other motivations that determine whether an employee stays or leaves. One motivation can be to share their work with their colleagues. If an employee’s goals are not aligned to those of the team or the company, a clash is likely to result.
Poor recruitment process
Choosing the proper candidate for a position is more than picking the best CV. The right candidate has the skills and abilities needed for the job but also matches with the company culture. It won’t be of any use to hire the best professional if they don’t share your values and visions. The cost of a bad hire can be very high.
By now, you should have a base understanding of the principal causes for a high employee rotation. Now, let’s explore the consequences of experiencing high staff turnover. If you still aren’t sure what is a high turnover rate or why it’s so important to track, continue reading.
Low productivity in the workplace is one of the first visible signs of high turnover. If there’s always a vacant position, everyone else needs to pick up the slack for the additional work, which ends up leaving some responsibilities unattended and uncomplete. And, even when you finally have someone for the position, they will need an adaptation period. This means that they won’t be productive from the start, and the internal workings of the team may be affected.
Given the amount of time they spend together, employees tend become like a family. That means that every change inside a company has the potential to make an emotional impact on the whole team. Constant changes affect the atmosphere and ability of the team to create a shared company culture. Furthermore, the employees that remain in the company may think they could be the next to leave, and that doesn’t help retaining talent or improving work relations.
Being the company with the best job conditions and one in which all employees are satisfied generates a good employer branding. The image of a satisfied worker is a good way to attract and retain talent. Don’t let employee rotation affect your employer branding.
The costs associated to employee rotation are quantifiable and have a significant economic impact on your company. For every employee that leaves, the investment the company needs to make is substantial. Also, the time required to hire and train new employees, along with other factors, results in a high cost.
To calculate a turnover rate you have to measure the numbers of incoming and outgoing employees in your company in a given period of time. As an example, if you look at a company with 200 employees who have hired 20 people and lost 10, the turnover rate will be 5%. The mathematical formula should be the following: ((20-10/200)*100).
Once you have the results, you can analyze them and see if you fall into the standard turnover rate range. Depending on the type of business, and it’s nature, the average turnover rate will differ. Keep in mind that a turnover rate of 0% is not good either. Yes, it reflects positively your skills to retain talent, but in the long run, it could mean an inability to change and evolve.
When was the last time you analyzed your turnover?
By offering benefits, you can lower the turnover in your company. Benefits and flexible payment plans, as we’ve said, are some of the best ways to retain your talent and optimize the ROI of your recruitment processes. Curious to know how you can retain staff? 👇