What is employee turnover?
Employee turnover, or employee turnover rate, is the percentage of employees who leave an organization during a specific period, typically one year. It is the number of departing employees in relation to the total workforce, including early departure, illness, or retirement.
What is the difference between desirable and undesirable employee turnover?
Staff turnover can be divided into two categories: desirable and undesirable.
In case of internal promotion or the departure of someone with poor performance or little motivation, there is a desired staff turnover. In which the initiative usually rests with the employer.
While on the other hand, undesirable turnover occurs when the termination is by a skilled and high performing employee himself. Because, after all, you would have preferred to keep the employee on board.
How to calculate employee turnover
When calculating your employee turnover, it is helpful to consider different factors, such as employee satisfaction, leadership, and onboarding success in your organization.
You can calculate employee turnover by dividing the number of departing employees by the total workforce, including the departed employees.
For example: if 38 out of 480 employees have left in a year, the sum becomes 38/480*100 = 7.9%.
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What is a good employee turnover rate?
Post-pandemic, all industries have experienced turmoils in their turnover rates. In 2021 the overall average turnover fluctuated between 40 and 55% in most western countries. In the employee turnover benchmark, we see that turnover in retail and hospitality is higher than in other sectors. So what should you look for?
Quality over Quantity
Numbers, by all means, are very useful. But we would like you to realize that blind staring at averages is dangerous. Suppose your turnover figure is 35, but mainly consists of ‘desired turnover’. Then there is little to worry about. Does the majority consist of undesired attrition? Then there is work to be done.
Low vs. High
Another reflection is that, after all, an extremely low turnover rate means that you do not bring fresh eyes into your organization and that you barely rejuvenate. A high turnover rate means knowledge and experience are constantly being lost.
What causes undesired employee turnover?
Employee turnover can have various causes. Possible reasons for undesired turnover are:
- Work dissatisfaction, including duties, schedule, working atmosphere, or relationship with colleagues and supervisors;
- Poor working conditions, such as low salary or not enough vacation days;
- Insufficient promotion or development opportunities;
- Too much work pressure and few breaks;
- Poor internal communication and little feedback or appreciation.
💡 Tip: Have a look at our mini-guides or webinars on employee retention.
- Watch the Oneteam webinar on retaining retail employees;
- Read the mini-guide How the hospitality industry can attract, onboard, and retain employees;
- Read the mini-guide How retailers can attract, onboard, and retain employees.
What are the costs of employee turnover?
It is difficult to define the costs of employee turnover accurately. We can, however, state that there are various cost items associated with turnover, such as recruitment and selection of replacing employees.
In addition to the objective costs of the job advertisement and the hours that go into the job interviews, you also have to factor in things like onboarding, guidance, and training of new employees.
After all, getting a new employee to the level of the leaving employee takes time and money. Not to mention the productivity loss during the period when the new hire is still in the onboarding process.
How can you prevent employee turnover?
The good news is that you can limit undesired employee turnover. The more satisfied your employees are with their job and you as an employer, the lower your staff turnover and the longer your people stay in service. Here are six tips to reduce attrition:
Tip 1: Offer competitive employment conditions
Dissatisfaction with salary, overtime pay, or other working conditions can be a reason to switch jobs. And it would be a shame if someone switches to a competitor for one euro per hour more? So make sure you offer the same or more than other companies in retail and hospitality.
Tip 2: Talk & Listen to your employees
People want to be seen and heard. An interim evaluation meeting, a quick chat at the coffee machine, or an extensive employee satisfaction survey; it all has value – as long as you show genuine interest and keep an eye on how your employee is doing.
What’s going on in the workplace? How does someone feel about themselves, and do they have particular ambitions? The more you can respond to this, the better.
Tip 3: Give regular feedback and appreciation
Everyone likes to hear how they are doing. By giving feedback, you give employees the feeling that they matter and that they make a valuable contribution to the organization.
Show that you want to help employees improve in their jobs. Provide regular feedback on what is going well and what could be improved constructively and positively. You will both benefit.
Tip 4: Organize team building activities
Conviviality and working atmosphere are essential values, especially for non-desk employees. After all, you see your colleagues more often than your family and friends.
So put effort into a great team that is motivated and attuned to each other. For example, organize a staff party or other activity where people get to know each other better, and you can motivate your employees.
The more your employees will soon be willing to pay for each other, the less quickly they will terminate their employment.
Tip 5: Facilitate and encourage training and development
Most employees are eager to develop, and some dream of a promotion in the future. We, therefore, cited a lack of development opportunities as one of the reasons for staff turnover.
You can be ahead of turnover and ensure sufficient growth opportunities by organizing training or e-learning programs and supporting them if someone wants to follow specific training.
Is someone performing exceptionally well? Then propose an internal growth yourself, and do not wait for someone to ask for it. You might have the right talent just under your nose.
Tip 6: Invest in an internal communication tool or employee app
By investing in internal communication, you’re able to keep employees informed and engaged.
Did they achieve the monthly goal or get a positive review? Is there any news about the modified way of scheduling, a new cash register system, or have you made a certain decision that affects everyone? Share it centrally via your employee app, and you will reach all your employees at the touch of a button. Well-informed and engaged employees tend to be happier and more loyal.
The role of internal communication
Do you want to communicate better with your employees in a way that costs you little time and energy? Watch the video below about Oneteam’s all-in-one employee app and learn how other organizations use Oneteam to make their employees successful, engaged, and loyal.
