The Most Comprehensive Guide to Strategically Lower Employee Turnover and Improve HR Practices for Retention
We spent time looking into the statistics of turnover in our prior post. We also spent a good deal of time on the fact that some types of turnover are good. Then we helped you to understand the best way to determine your true turnover rates. Finally, we provided you with a well cited and detailed turnover calculator to figure out exactly what turnover is costing you and your organization. Now, we are diving into the real brass tacks: How can I reduce and eliminate turnover? This will be done in a series of strategic posts that will help you to hone in on the real-word practical solutions to turnover that you have been looking for your whole career.
Put on your seatbelt, because our team of experts has been developing professional human resources competency for more than 100 years altogether. We are going to give you the ultimate guide with real strategies that will allow you to bring turnover to a halt.
What is Employee Turnover?
Turnover measures how many employees leave and must be replaced over time.
Employee turnover is the rate at which employees leave an organization and have to be replaced. Turnover is measured over a specific period of time (usually one year) and is usually expressed as a percentage.
Turnover can substantially impact organizational performance and bottom line.
Managing turnover requires understanding what causes it.
There are two main types of turnover:
Voluntary Turnover: This occurs when employees voluntarily choose to leave the organization. Common reasons for voluntary turnover include dissatisfaction, limited career opportunities, stressful work environment, or inadequate compensation. Employees may quit to pursue better opportunities elsewhere.
Involuntary Turnover: This occurs when employees have to leave the organization against their will. Common causes are layoffs, firings, retirements, or other dismissals initiated by the employer. Involuntary turnover stems from organizational restructuring, performance issues, or budget cuts.
Both types of turnover lead to vacancies that need to be filled by new hires. The costs of turnover include recruiting, interviewing, hiring, onboarding and training replacements. There are also indirect productivity costs as new hires learn their roles.
High turnover disrupts organizational stability and continuity. Loss of talented employees means loss of skills, experience and institutional knowledge. This drain on human capital can reduce innovation and growth.
What Is Attrition?
Attrition refers to the gradual loss of employees over time through voluntary resignations, retirements, firings, etc. It is the reduction in workforce due to natural causes rather than layoffs. Technically and historically, attrition is used to reference loss of personnel that is purposely NOT replaced by the company.
In other words, attrition is a reduction in headcount that the company lets happen and dos not work to counteract.
Is Attrition Different Than Turnover?
Yes. Although the terms attrition and turnover are sometimes used interchangeably, they refer to related but distinct concepts:
- Turnover considers the entire cycle of employees leaving and being replaced. It focuses on the equilibrium of arrivals vs. departures.
- Attrition solely focuses on employees that leave, rather than also incorporating replacement hires. It looks only at the outflow rather than the equilibrium.
- Turnover emphasizes the ratio of filled positions changing over time. Attrition emphasizes the absolute headcount reduction over time.
- Turnover conveys a sense of fluidity and motion, with employees constantly cycling in and out. Attrition conveys a sense of gradual shrinkage and erosion.
So in summary, turnover refers to the entire process of employees leaving and being replaced. Attrition narrowly focuses on those that leave without considering any new hires. Both measure workforce reductions, but attrition focuses exclusively on the outflows.
Is Churn the Same As Turnover?
No. "Churn" refers to customers while "turnover" refers to employees.
While churn and turnover are related concepts, they have some distinct differences.
Churn refers specifically to the rate at which customers stop doing business or end a subscription with a company. It measures the percentage of customers lost over a given period. High churn means a company must continuously acquire new customers just to maintain the same level of sales revenue.
In contrast, employee turnover refers to the rate at which employees leave an organization. It measures what percentage of staff leave during a set time period and must be replaced with new hires. High turnover signifies an unhealthy or unstable workplace.
While both concepts deal with loss rates, churn deals with the loss of customers while turnover deals with the loss of employees. They measure fundamentally different things.
There are some similarities though. Both high churn and high turnover can signal deeper issues that need to be addressed. For churn, it may reflect problems with product quality, customer service, pricing, or changing tastes. For turnover, it may indicate poor company culture, compensation, lack of growth opportunities, or ineffective management.
Additionally, both churn and turnover lead to costs for the company, such as marketing expenses to acquire new customers or HR expenses to recruit and onboard new employees. Minimizing churn and turnover helps optimize spending.
The key difference remains that churn solely measures customer losses while turnover measures employee losses. They are distinct metrics, although excessive levels of either one can hamper a company's performance and growth. Evaluating them requires looking at different data sets and implementing different mitigation strategies.
Why Worry About How to Reduce Employee Turnover?
Employee turnover is expensive. Various studies estimate the cost of replacing an employee to be anywhere from 50% to 200% of that employee's annual salary. This includes the costs of recruiting, interviewing, hiring, onboarding and training a new employee, as well as lost productivity while the role remains vacant. High turnover also causes the loss of organizational knowledge and experience, disrupts continuity, and can lower morale for remaining employees who have to pick up the slack. Reducing turnover has a direct positive impact on a company's bottom line.
In addition to the financial costs, employee turnover negatively impacts a company's culture and ability to build institutional knowledge. Relationships and rapport between team members are lost when someone leaves. Experienced employees take their knowledge with them, including information about customers, vendors, processes and why decisions were made. A revolving door of employees hinders a company's ability to learn from experiences over time. Stability in the workforce provides time to perfect processes, improve products and services based on feedback, and leverage what has worked well.
When employees leave, their institutional knowledge leaves with them.
Some examples of lost knowledge include:
- Knowledge of key contacts such as vendors, partners and clients
- Understanding of company systems, software, processes and infrastructure
- Awareness of why past decisions were made
- Familiarity with day-to-day responsibilities and tasks
- Historical interactions with various teams or departments
- Access to past communications, data or documents
Encouragement for Leaders
Now is the time for decisive action to engage your people for the long haul.
Losing top talent to "greener pastures" saps company knowledge, productivity and culture. Recruiting and onboarding replacements strains time and budgets. Yet quick fixes like across-the-board raises temporarily mask deeper issues driving turnover.
The hard truth? Retention starts from within. Analyze your culture honestly - do employees feel valued, trusted, heard? Do leaders model empathy, integrity and work-life balance? Or does overwork and favoritism spread?
Probe for root causes of resignations. Compensation often tops the list, but dig deeper. Do exit interviews reveal poor management, lack of recognition or unhealthy team dynamics? Preventable turnover indicates areas needing change.
Cultures thriving on collaboration and transparency retain innovation and experience. Employees give their all when they feel cared for holistically, not just regarded as “resources.”
As an organization’s heartbeat, you set the tone. Double down on onboarding new hires effectively and celebrating tenured employees. Keep listening and taking action on engagement survey feedback. Lead with the wisdom that businesses don’t succeed - people do.
The cost of inaction is continual talent bleed. But united in purpose, engaged teams transform companies. They propel competitive advantage that no competitor can replicate.
Take pride in the privilege you have to steward an environment where all employees reach their potential. The dividends to your culture and bottom line will astound you.
Explore Our Ultimate Guide To Employee Turnover
And find the right answers to your questions and then utilize the amazing strategies from our experts. We are confident you will find the solutions to all of your problems.
Table of Contents:
Main Causes of Turnover and Institutional Knowledge Loss
Reasons Employers THINK Employees Leave
The Real Reasons Employees Actually Leave
Stop Turnover Before it Starts - Recruit the Right Person for the Right Job
Get Onboarding Right and Turnover Will Reduce Itself
Offer Pay that Keeps Up with the Market to Avoid Bad Turnover
Craft Benefit Plans That Attract Good Employees and Work Against Turnover
Create a Company Culture On Purpose
Build Teams & Company Unity That Will Prevent Turnover
Transparency is Key to Superpower Employee Retention and Reduce Turnover
The Trust Gap Problem That Is Causing Your Turnover
Don’t Let a Toxic Workplace Spread Into Turnover
Be the Boss You Want to Have and Reduce Turnover
Empowering Employees Will Lower Turnover
Recognize Good Employees and Reward Good Behavior
Make Work-Life Balance a Real Thing In Order to Stave Off Turnover
Make Your Workplace Flexible
Employee Engagement Matters...A Lot
Performance Management Is an Everyday Thing That Can Reduce Turnover
Be Purposeful About Succession and Career Pathing to Lower Turnover Rates
Encourage Professional AND Personal Development To Raise Retention
Personal Development… At Work?
Provide Training On Interpersonal Skills To Stop Turnover From Pervading
Do Exit Interviews To Reverse Turnover
Do Stay Interviews and Stop Turnover In Its Tracks
Sources & References
The sources and end notes for this article and all of the sub-pages is listed below. All information is used under the Fair-Use.
"Reduce Employee Turnover," Oracle NetSuite, accessed January 18, 2024, https://www.netsuite.com/portal/resource/articles/human-resources/reduce-employee-turnover.shtml. "Reduce Employee Turnover Cost," BusyBusy, accessed January 18, 2024, https://busybusy.com/blog/reduce-employee-turnover-cost/. "Why People Leave Their Jobs," Monster, accessed January 18, 2024, https://hiring.monster.ca/resources/workforce-management/employee-retention-strategies/why-people-leave-their-jobs-ca/. "How Much Does Employee Turnover Really Cost Your Business?," G&A Partners, accessed January 18, 2024, https://www.gnapartners.com/resources/articles/how-much-does-employee-turnover-really-cost-your-business. "Cost of Employee Turnover Statistics," Gomada, accessed January 18, 2024, https://www.gomada.co/blog/cost-of-employee-turnover-statistics.
Wynhurst Group. (2014). Onboarding Benchmark Report: Technology. Retrieved from http://info.wynhurstgroup.com/Onboarding-Report-2014.html
ChangeManagementInsights.com. (2013). Survey shows how communications can make or break a change program. https://changementinsights.com/survey-shows-how-communications-can-make-or-break-a-change-program/
Peakon. (2019). The power of transparency: How honest engagement can transform your business. https://peakon.com/resources/ebooks/transparency/
PayScale. (2021). Compensation Best Practices Report. https://www.payscale.com/compensation-best-practices-report
Economic Research Institute. (2022). Geographic Assessor. https://www.erieri.com/blog/post/2022/01/20/how-to-use-eris-geographic-assessor-tool
SHRM. (2019). SHRM Compensation Survey Report. https://www.shrm.org/ResourcesAndTools/businesssolutions/Documents/SHRM%20Compensation%20Survey%20Report-2019.pdf
Joseph Campagna, SPHR, SHRM-SCP is president and owner of My Virtual HR Director, a human resources outsourcing company serving small and medium sized businesses nationwide. My Virtual HR Director provides an executive level HR advisor to companies that can’t afford or can’t justify hiring a fulltime HR professional on staff.
With twenty years of experience dedicated to the HR profession, Mr. Campagna has honed his skills as an expert in compliance, talent management and employee relations. Bringing human capital management experience from start-ups, IT and biotechnology companies, employee leasing, and fortune 100 behemoths Mr. Campagna has filled his tool belt through generalist work, executive positions, and consulting opportunities with companies such as ADP, Merrill Lynch, and Johnson & Johnson. As Vice President of HR for biotech company Hemo Concepts, as well as the head of HR for the global IT solutions company, the Galaxy Group, Mr. Campagna created rich and successful organizational development and employee engagement programs.
Having worked with a diverse group of companies and clients in a broad spectrum of industries and environments, he brings a unique HR philosophy to every organization he works with. “HR is not the picnic department,” he says “but instead bears the full responsibility and the unlimited potential for a highly productive and efficient workforce. If HR systems are successful, the organization’s revenue should be increased.” From mergers and acquisitions, to IPO’s, to new product development, to divestiture Mr. Campagna has a true business background to support his HR Architecture.
Mr. Campagna is certified as a senior professional through both the Human Resources Certification Institute (HRCI) and the Society for Human Resource Management (SHRM). The HRCI designation of Senior Professional in Human Resources (SPHR) is an experienced-based examination certification. The SHRM certification is a competency based examination certification. Each is a premier designation in the world of HR and recognized by the Society for Human Resource Management of which Joe is a national member and former chapter president.
Mr. Campagna brings decades of helping small and medium sized businesses create HR structures such as employee handbooks, performance systems, talent management, training programs, and employee engagement. He knows how to deliver business results through HR aligned objectives.
Nearly 30 years of expertise and HR executive authority combined with a group health insurance license and certifications from the Society for Human Resource management and the Human Resources Certification Institute have given Joseph Campagna the guru status that has earned him leadership roles, board of director roles, and speaking engagements related to human resources.