Recruiting top talent and high-performing employees is the lifeblood of any company. At TravelPerk, we understand how important it is to hire and retain the right staff. The COVID-19 pandemic has forced many employees to look for new jobs. This means industries are experiencing a shake-up in their workforce which is affecting their employee turnover and employee retention rates. Here, we take a closer look at what exactly employee turnover and retention is, and what it means for a company’s workplace, employee satisfaction, and the bottom line.
What is employee retention and turnover?
Basically, employee retention rate is the rate at which companies and organizations measure their employees. It is usually recorded as the percentage of full-time employees with a specified period of time in the same company. This is then taken as a percentage of the overall workforce. If a company has an employee retention rate of 75% it means that 75% of their employees have been in post for more than a year.
Employee turnover is the other side of the coin. It refers to the number of employees Those who leave a company within a certain period of time – Usually one year. It covers all employee exits from voluntary turnover – including retirement and resignation to involuntary turnover such as redundancy.
Looking at specific metrics and turnover figures can be particularly helpful to companies as indicators of their management effectiveness. It can also help improve the employee experience.
What is a good employee turnover rate and why is it so important?
For jobs with in-demand skills, or positions where training and recruitment are long and expensive, high turnover can become a problem. High-performing employees with special skills or strong customer relationships can also be special Hard to replaceMaking recruitment process Long and laborious. In a fast-paced business environment, the old adage ‘time is money’ holds true. That’s why understanding the drivers behind employee turnover can help you retain your employees, increase employee performance, and ultimately save your business time and money.
Generally, a Better employee turnover rates to consider about 10%. This means a good employee retention rate should be around 90%. Some industries have higher employee turnover rates than others. For example, the turnover rate of workers in the hospitality industry is higher than average – in the UK the figure is 30% – double the national average.
Despite this, there is always room for improvement in terms of employee retention and turnover.
So, we’ve put together some amazing statistics for managers and HR professionals to give you insight into employee retention and turnover and how to improve these rates.
The cost of losing employees is higher than you might think
- The average cost of losing an employee is 33% of their annual salaryA figure that may be much higher than managers expect (Employee Benefits News).
- The sticker price of average employee turnover per vacancy in the UK is approximately £30,614 – a pretty big bill for companies to absorb (6Q).
- New hires mean more training. In the UK alone, employers invest around £42 billion in employee training each year (Department for Education UK).
- According to 2020 UK government statistics, it costs an average of £1,530 per year on training (Department for Education UK).
In addition to the financial cost of a high employee turnover rate, there are other factors that are difficult to quantify that can occur when team members leave their current employer. If a company has a persistently high turnover rate, it can damage employee morale and, as a result, produce less good work and lead to lower productivity.
Not all industries have the same employee turnover rate
- The average turnover rate in the UK is around 15% – although this varies widely from industry to industry (Monster).
- For manufacturing industries, the employee turnover rate was 20% for 2022 (Prize Gateway).
- The global average employee turnover rate for technology workers is relatively high, sitting at 18.3% (net of benefits).
- According to the 2021 survey (EY Global Survey), caregiver, manager/leader and finance or technology roles are the most likely to change job roles.
- For US workers in 2021, the turnover rate in the retail industry was higher than in the previous 5 years at 69% (GPIA).
Top causes of employee turnover
A high turnover rate is a big problem for companies. That’s why 87% of HR leaders say their employee retention rate is their top priority for the next few years.
There are many factors that lead employees to decide to leave their current employer and increase the rate of voluntary turnover. Naturally, employees will always have reasons to move on. However, these key drivers of voluntary turnover show that there are things employers can do to ensure they don’t need to look for new employees unnecessarily.
- Overwork is one of the leading causes of employee turnover. 77% of workers experienced burnout from overtime work at their current job and 42% quit their jobs For this reason (Deloitte)
- In 2019, 12% of US employees cited work-life balance as a reason for leaving their job (Work Institute).
- Lack of flexible working is one of the main reasons employees leave their roles. In the US, 16% of employees said they would be willing to quit their current job if remote work wasn’t an option. 8% said they would quit if required to work partially on-site (Gartner).
How to reduce employee turnover and increase employee retention
Research from the Harvard Business Review shows that there are several key factors that motivate employees to stay with a company longer. These range from development opportunities to job satisfaction and company culture. Understanding these factors gives managers an idea of how to improve the employee experience.
Below are employee retention statistics, and tips on initiatives HR leaders can take to keep your best employees, enhance their professional development, and increase your employee retention rate.
- Employees who have higher job satisfaction and feel they are progressing in their careers 20% more likely Still have to work in their company within a year (TINYpulse).
- A company culture driven by a purposeful mission is also important. Employees who believe their company has one A higher purpose than just profit 27% are more likely to stay at their company (TINYpulse).
- employees who Engaged and Prosperous Respondents to the Gallup survey were 59% less likely to seek employment at a different organization in the next 12 months. (Gallup Research).
- Remote work is an important part of company culture to enhance well-being. 52% employees said Flexible work policy It will affect whether they stay in their organization. (Gartner).
- A positive onboarding program for new hires can also help. 69% of employees who go through a Well managed onboarding process They have a more positive view of the work environment and stay with their company for at least three years (SHRM).
- Career growth is a key metric that indicates job security and retention. Regular feedback sessions With staff can dramatically reduce employee turnover. In fact, organizations that implement regular employee feedback 15% lower turnover rate Compared to companies that do not provide consistent feedback to employees (Firstup).
In short, for companies to be competitive, HR leaders need to attract, hire and retain the highest-performing employees with strong employee retention strategies.
Providing flexibility, career development, a purposeful mission, and a work environment that encourages employee engagement can help you retain your employees and ensure that your top talent doesn’t become job seekers!