Employee Engagement

How high employee turnover hurts your company

It’s not a secret that high employee turnover hurts your bottom line. It’s estimated that the average cost of a lost team member is 38 percent of their annual salary. Considering the average income in the U.S. is $50,000 a year, that’s $19,000 per person!

Turnover is typically calculated by dividing the amount of people who left the organisation by the number of people currently working for it over a given period. For example: If 7 people leave and there are currently 100 people in the organisation

(7÷100) x 100= 7%

7% turnover rate per year

When people leave, the ripple effect can be felt throughout the company. Lost knowledge, training, interviewing, and recruitment costs all add up, and companies cannot afford to ignore the long term implications high employee turnover has on the success of the business.

Companies cannot prevent people from leaving for the ubiquitous greener pastures, after all it’s natural for people to seek change after a certain amount of time. However there are ways to foster greater loyalty within your workforce, thereby developing ambassadors.

Whilst factors such as lack of training, ineffective leadership, and a lack of purpose can all pave the way to the exit door, if companies shift their focus to investing more in their people, they can more successfully grow their business in the long run.

Below are a few common symptoms pointing to a risk of high turnover, and what you can do about it.


1. Lack of training

Employee retention strategies start when a new hire steps through the door. Part of that experience is their on-boarding, which also counts as training. On-boarding is an important process as it ensures people have the necessary knowledge, skills and behaviours needed to become successful in the long term.

By introducing them to the mission and the values of the company, new arrivals can adopt company-wide practices faster. Did you know that when a company implements a successful on-boarding program, they experience 54 percent greater productivity and 50 percent greater retention?

But it should not end there. Once people are familiarized with the company and their role, if they suffer from a lack of training opportunities there is a strong risk that they will become disengaged. In fact, 40 percent of employees who receive poor job training leave their position within the first year.

People want to be challenged, learn and grow, which is only natural. After all, they are looking for opportunities to develop, follow a career path, and become better at their jobs. No one is interested in executing the same task year after year. If people feel that their role is not evolving and they stop learning, chances are their motivation will start to decrease.

Providing opportunities for mobility within the organization

In order to ensure people feel satisfied and accomplished in their jobs, its not only important to provide training, but also opportunities for mobility within the organization. For example, many people while assigned to a certain role within the organization (such as digital marketing) also have other traits (such as creativity) that aren’t necessarily exploited within their roles. Often, people believe that in order to explore these traits or to start using them at work they need to change jobs, but this is not necessarily true.

By encouraging regular communication between managers and their direct reports, more frequent conversations should take place where people are able to express the direction in which they want to take their careers and areas for growth they would like to explore. This enables managers to look out for opportunities within the organisation that suit people’s needs and ambitions, sometimes balancing them with current priorities or sometimes enabling a complete change.

When companies are able to support and encourage good relationships between managers and their team members, as well as provide opportunities for career growth and mobility, it helps them to retain the best. In return, they get dedicated team members who are willing and happy to go the extra mile at work.

2. Ineffective leadership

There is a long standing belief that people don’t leave their jobs, but leave managers. In fact, managers account for up to 70% in variance of employee engagement scores. Leaders who are not able to create the right opportunities for their team, don't communicate regularly with them, and don't show appreciation experience high turnover rates.

On the other hand, people who have regular meetings with their managers and feel their managers are invested in them, are three times as likely to be engaged. Let’s be clear, these discussions shouldn’t just be a run through the tasks and output of the week in order to be impactful.

It’s important to cultivate trust between members of a team and also between managers and their direct reports. If a culture of trust is established, people are more likely to openly speak to their managers when they’re feeling demotivated or lost at work, giving them the opportunity to improve the situation.

The right leader is someone who is able to inspire, motivate and coach their workforce. They regularly seek new opportunities to help their reports reach their professional development goals. When a company has effective leaders, communication is daily and open. Everyone clearly understands the vision and goals of the organisation, and has input into how they can improve.

In order to foster open communication and develop a culture of trust, managers can implement weekly or bi-weekly check-ins with their direct reports, enabling them to better understand their team members’ needs, whilst focusing on regularly improving their coaching and leadership style.

For more insights on how to develop and engage your managers check out our free white paper

3. Lack of purpose

Turnover can be infectious. When one person leaves, it’s inevitable that their colleagues will consider their reasons for staying. Even if they are enjoying the work, why should they stay with their current company rather than doing the same job at another one?

While compensation is important, people aren’t just working for a salary. Along with wanting to develop and learn on the job, people also want to feel that what they’re doing is having an impact and contributing to something bigger than themselves. They need to feel connected to the company purpose and vision. Otherwise, why would they put in an extra 110%?

Ensuring the companies are clear and well understood by everyone is a clear starting point, fostering a strong culture of recognition and community then reinforces that. There are three ways to do this.

The first is making sure to recognize people’s work on an individual level. People aren’t required to go that extra mile, so when they do it’s important to show appreciation. One study found that out of the 2,700 people surveyed, 45% hadn’t been recognized at work in over six months. Recognizing the work done in a timely manner helps people to feel their work contributed to something bigger than them, and ultimately feel more engaged.

Regularly reminding people how their work contributes to the wider company objectives is also a good way of creating a sense of purpose. For example, how does staying late to help a client fix their access problems contribute to the company’s brand image or customer satisfaction? And how is the company’s work, and in effect each individual’s work, contributing to society? This should be clearly articulated and tied back to projects and accomplishments.

Finally, people naturally want to feel part of a larger community. What are the common values and traditions that tie everyone in your organization together? Spending time on creating an engaging company culture is one of the strongest ways to keep people wanting to work for you, even when others leave.

Unsure where to start?

One of the first things you can do to understand your turnover rates or get a pulse on the health of your organization is to hold regular engagement surveys. They enable you to identify and address factors like lack of development, ineffective leadership and lack of purpose before they lead to high employee turnover.

Impraise allows you to quickly and easily set up engagement surveys and the aggregated reports allow you to draw immediate insights into the current health of the organisation. Available both on web and mobile, our customers average a 93% participation rate.

Once you get the results and want to dive deeper, check out our free white paper for more insights on how to develop an engaging company culture. It’s time to tackle employee turnover head on!


Photo Credit: Alexander Lam