It is very normal that business experiences employee/staff turnover, but to what extent does it become a problem? Here’s why understanding staff turnover and being able to measure it is crucial for any company that aims to succeed in the long run.
Beyond being a simple number, employee turnover is a powerful metric of a company’s health. With that metric, the decision makers within the company can determine what actions to take—whether you need to improve a safe and healthy workplace, or address other internal issues.
This article will guide you through understanding what staff turnover is and how to measure it, its real impact on your business, and, most importantly, the actionable steps you can take to manage and reduce it effectively.
What is Staff Turnover and How is it Measured?
Staff turnover is the rate at which employees leave a company and are replaced by new employees within a certain period of time. When the number of employees leaving represents a high percentage of the total workforce, the turnover is considered high.
To accurately measure this, it’s essential to define a specific timeframe, as a rate is meaningless without a consistent period for comparison. While it can be calculated monthly or quarterly, it is most often measured annually.
The Formula for Calculating Staff Turnover
To calculate your turnover rate, you simply divide the number of employees who left the company (either voluntarily or involuntarily) during a specific period by the average number of employees during that same period.
For example, if 10 employees left a company with an average of 100 employees in a year, the staff turnover rate would be 10%. This metric, often also referred to as employee turnover, gives you a clear measure of your company’s retention efforts.
Understanding Turnover: Is it Always Bad for Business?
There is no single “healthy” turnover percentage because what’s considered ideal depends on several factors. A turnover rate of around 10% or less is generally considered healthy, as it allows for fresh talent and ideas without losing too much institutional knowledge. However, to truly understand your rate, you should:
Compare to Industry Benchmarks: A healthy rate in retail (often 60-80%) is vastly different from one in finance (often 10-15%). Comparing your rate to your specific industry’s average shows where you stand.
Analyze the Type of Turnover: Distinguish between voluntary (employees choose to leave) and involuntary (employees are terminated). A high rate of voluntary turnover is a strong indicator of underlying issues, while a certain level of involuntary turnover can be a sign of performance management.
Staff turnover is a KPI for many businesses and HR departments. A high turnover rate can signal underlying issues within the company, while a low rate generally indicates a healthy and stable work environment.
The High Costs of High Turnover
A high turnover rate—the high staff turnover meaning—is a major red flag. It comes with significant costs beyond just recruitment and training, including lost productivity, reduced team morale, and the erosion of institutional knowledge.
The constant churn can make it difficult for teams to build cohesion, innovate, and meet long-term goals, ultimately harming the company’s bottom line.
The Main Causes of High Staff Turnover
Understanding the root causes is the first step toward effective management. So, what is the main cause of staff turnover? It’s rarely a single issue but rather a combination of factors.
Common Causes in the Modern Workplace
High staff turnover is often linked to:
- Poor Leadership: Ineffective managers, a lack of clear direction, or a toxic leadership style.
- Lack of Career Development: Employees leave when they feel there are no opportunities for growth or advancement.
- Poor Work-Life Balance: Burnout and excessive stress can lead employees to seek more sustainable roles.
- Low Compensation and Benefits: A lack of competitive pay or benefits is a primary driver of departure.
- Negative Culture: A workplace with little recognition, poor communication, or a lack of psychological safety.
Sudden and traumatic events, such as a workplace accident or the loss of a colleague, can also profoundly impact a team’s sense of safety and well-being.
A company’s response to these events is crucial, as mishandling them can lead to a significant spike in turnover.
Having a clear and compassionate plan in place, such as professional Critical Incident & Trauma Response, can help mitigate the psychological distress and protect employee morale during a crisis.
How to Reduce Staff Turnover
The good news is that most causes of staff turnover are within a company’s control. Answering “reduce staff turnover” effectively requires a strategic and proactive approach.
Actionable Strategies for Retention
- Invest in Career Development: Provide clear pathways for growth, offer training, and support mentorship programs.
- Provide Competitive Compensation and Benefits: Regularly review salaries and benefits to ensure they are competitive with industry standards.
- Improve Leadership and Management: Invest in manager training to develop strong, supportive, and communicative leaders.
- Enhance Onboarding and Recognition: A strong onboarding process sets new employees up for success, and consistent recognition keeps them motivated and engaged.
The Role of an Employee-First Culture
Ultimately, the most effective strategy for retention is to build a culture where employees feel valued and supported. One of the most effective ways to show this commitment is by providing a strong support system.
Offering a robust EAP (Employee Assistance Program) gives employees and their families confidential access to professional help for a wide range of personal and work-related issues, directly addressing common stressors that often lead to burnout and departure. This is a clear signal that the company prioritizes the well-being of its people.
Final Thoughts: The Path to a Stable Workforce
Effective staff turnover management is a continuous effort that involves understanding the key metrics, addressing the root causes, and implementing proactive solutions.
By investing in your people, you not only improve your retention rates but also build a more resilient, productive, and thriving organization.
Ready to address the root causes of staff turnover and build a more stable team? Explore D’Accord OAS’s customized solutions in EAP, Training, and Critical Incident & Trauma Response. Contact us today to discuss your retention strategy.
