Top 10 Reasons for High Turnover Rates
10 high employee turnover problems and how to fix them
1. You hire a lot of entry-level employees who don’t plan to stay in the position for very long
If you own or manage a call center, fast food restaurant, or other business that’s popular for having many entry-level employees, not even the best employee retention techniques will work. A few of your employees may stay with your company long term, and maybe even some of them will move into management positions. Others may enjoy the work as a long-term source of extra income or as a low-stress job in retirement.
Taking the nature of your business into account and how you’re hiring a lot of entry-level employees, you’re providing a fantastic opportunity to these employees. Yet, it all comes at a cost. Instead of focusing solely on employee retention ideas, a better move is to invest more in your employee training programs.
This will help you get newcomers up to speed faster in the work environment—and with fewer bumps along the way. Provide more value to your entry-level employees so they can also succeed in their next steps. In doing so, it sets them up for moving up the ladder to a management role and sticking with your company longer because they can use their knowledge to its full potential.
2. You hire a lot of minimum wage employees
Some college graduates are frustrated at jobs paying minimum wage (or close to it) while they still require degrees and exceptional work experience. While recent graduates expect to earn an average of $60,000, they actually get around $48,400. Even when it’s an “employer’s market,” taking advantage of experienced, highly educated employees who are desperate for work (even at a low rate) comes at a cost.
These workers are likely to be looking for better jobs immediately because they don’t think they’re appreciated and that their efforts are valued. They also expect other benefits in addition to higher pay—like strong professional development opportunities that will help them improve and grow their careers. New employees tend to be happier when they’re valued at work and this, in return, lowers your turnover rates.
Even if your budget is limited, aim to at least offer strong professional growth paths so your less experienced workers will get a chance to advance and not look for that opportunity elsewhere.
Expressing gratitude will also go a long way with people who are just entering the workforce. A Cheers for Peers program enables everyone within a company to recognize their colleagues. This way, they’ll feel more valued at work and motivated to keep delivering great results even if they’re still getting a lower salary.
3. Your competitors are offering more
“More” doesn’t necessarily have to mean overtly financial through salaries, although it can. It can also refer to more flexible schedules, more benefits, and more of just about everything else.
When researching your competitors, keep an eye out for what they’re offering beyond hourly rates and salaries. These extra perks and benefits—such as gym memberships or telecommuting—are going to lure your employees away and decrease your employee retention rate.
Believe it or not, some of these perks hold a top value for certain workers—like remote work. One study found that 36% of people would prefer to work from home over a pay raise. As such, it’s safe to say they would choose to stay with a company that can offer them this perk no matter how much the money another employer can provide.
Employee needs are constantly changing. On the correlation between salary and retention, we also found out that a 10% salary increase doesn’t affect retention as it used to five years ago.
4. Poor management
Full-time employees spend the majority of their day at work. Overall, people give just over 13 years of their life to the office—13 years!
“Poor management” can mean a lot of things, from illegal activities (such as sexual harassment) to maddening issues—like lack of recognition, constant conflicts, or micromanagement—that have people leaving within the first months of stepping foot in the office.
If an employee feels like they aren’t appreciated or they dread coming to work, they’re going to start looking for another position as soon as something feels off—especially if they are experienced professionals who’d have no problems finding another opportunity. Managing your managers becomes increasingly challenging the larger your company is, which is why it’s important to bring in third-party consultants from time to time to ensure your managerial techniques are up to par.
Still not convinced? In our Employee Retention Report we discovered that 40% of employees who don’t rate the performance of their managers highly have gone out to seek new companies over a timespan of three months. That’s compared to a mere 10% of people who are appreciative of their managers but seek other benefits too.
5. Social media and the internet in general
Twenty years ago, a person had to put in some serious effort to find a new job. They had to pore over the newspaper and even “pound the pavement.” Since they also worked 40 hours and often had other responsibilities, like a family, there wasn’t much time to look for a new job.
The internet changed all of that. And so did social media. It’s now entirely possible for an employee to spend all day at work looking for another job and their boss will be none the wiser. Making matters worse, job offers can proverbially fall out of the sky via LinkedIn and other similar networks. Access to information, including available jobs, has naturally helped increase the employee turnover rate.
Despite all of its distractions, the internet has also brought in multiple possibilities for managers to increase employee productivity at work and keep track of employee performance with continuous feedback. Tools like TINYpulse now allow you to manage performance and hold online 1-on-1 meetings and help employees better manage their time while removing any fears of talking to a superior.
6. Younger generations have different priorities
A couple of generations ago, the dream was to get a suitable job and stay with it until retirement (complete with a gold watch). The idea of “work” and “career” has changed over the years—and priorities have, too. It’s increasingly common for a person to only stay in a position for a few years before moving on. Maybe it’s part of the trend toward instant gratification.
After all, our brain prioritizes instant gratification. Inc.com cites Princeton University researches as proving this is largely because the “emotional part of the brain responds well to instant gratification.”
Maybe our idea of what a career means has changed for good. Regardless, younger employees tend to job hop more often than ever. Gallup dubs Millennials the “job-hopping generation,” with 60% open to a new job. That’s naturally detrimental to staff retention techniques.
The stats do change in time according to the economic situation. People are more likely to stay with a company during a recession, for example. In regular times, though, job-hopping is normal, with 51.7% of people admitting to leaving a position voluntarily in the last five years.
What can you do to retain younger generations? Understand them and speak their language. If you’re going to invest in their development, make sure you’ll also help them put their knowledge into practice and continually grow. Beyond all, they value these professional opportunities and engagement at work.
7. Remote working opportunities have increased
Unless you operate a brick-and-mortar establishment, it’s unlikely that every single employee needs to work in an office. However, many business owners and companies cling to the idea that in order to work, an employee needs to be physically present. Do they?
Virtual work isn’t for everyone or every position. Regardless, it’s a hugely appealing perk to many. In fact, along with childcare, it’s one of the most desirable non-monetary benefits.
Take a look at your current business position and see how many competing companies allow workers to do the same job remotely. If a lot of the competition is hiring remote workers, it’s probably safe to say that a number of your employers are eyeing the exit.
Not only will embracing remote work help you retain more employees, it’s also a fantastic way to lower overhead and expenses.
There are thousands of companies that are currently fully distributed, like WordPress, Zapier, and Help Scout to name a few. These companies have been working remotely for a while and have kept using this style of work because they’ve experienced all of its benefits—from reaching a wider talent pool to reducing costs and answering customer inquiries in real-time across time zones.
To start a remote working policy at your company, you’ll first need to consider the different working styles your employees might have. The companies I’ve given as an example have hired most of their employees as remote team members from the start. This being said, their workers were prepared for this lifestyle. If you’re switching from an onsite team to a remote one, you’ll need to put in extra effort to train your employees.
Here’s where setting clear guidelines on remote working options come in. You’ll need to establish everything including:
- How communication is conducted
- What methods you’ll use to organize and manage tasks
- How will your managers supervise the team
- What tools and equipment are needed for employees to complete tasks remotely
- How you’ll hold 1-on-1 meetings to check with them
- What can be done to keep your team bonded
8. Entrepreneurship, side gigs, and small business ownership have increased
There are currently around 400 million entrepreneurs worldwide and the numbers are growing each year. Some only rely on their own company for income; others work a full-time or part-time job, too.
The reasons for starting their own gig are various. Some want to work on something they love, prove themselves, or make extra income. Others just want to provide a product or service the world really needs in hopes of making a change.
With entrepreneurship on the rise, having your own business or bringing in solid income just from a side hustle is becoming more desirable than long-term employment for some workers. You might already have a number of employees who are also getting their own small business started or working on side gigs for extra cash. You never know when the draw of working for oneself may have your employees turning in their notice.
With 25% of people who start a business being unhappy with corporate life, we can safely say that a lack of happiness and engagement at work will cause these folks to leave as soon as their business becomes profitable. Top performers, though, are able to maintain a regular job and juggle their side gig, too.
While employees don’t have the legal duty to tell you about their side professional activities, as an employer, you’ll need to show support for their business if you want to retain them. All in all, you’ll need their expertise. And any new skills and knowhow they gain from their side gig can also benefit your business.
You succeed when they succeed. This is why so many VPs and top-rank managers handle multiple projects simultaneously.
9. Employees want their work to make a difference
Increasingly, younger workers want more than “just a job.” According to The Atlantic, they’re now looking for a career that they’re proud of, that helps them make a difference in the world, or where they view their workmates as their second family.
Many workers are frustrated with a corporate culture filled with non-stop meetings that leave them feeling drained or like they’re not doing anything meaningful. Some may call it idealism, but if an employer doesn’t offer a more holistic job opportunity that clearly shows workers how their daily activities are making an impact, they may look elsewhere. Fortunately, this is a relatively easy fix that is completely in the employer’s control.
Ensuring employees feel heard, that they’re part of decision-making processes, and that you create a work culture that encourages positive relationships is key. Offer ways for employees to connect, both within the business and the community, to satisfy their need to give back and feel like they’re an active part of the world.
10. Recent years have taught us how to hustle
Starting in 2009, people began to understand that if they lost their job, it probably wasn’t the end of the world. Those who were laid off or who couldn’t find a job after high school or college learned to make it work however they could. Maybe they moved back in with family or they figured out that driving for a rideshare company actually earned them more than many full-time jobs.
Now, we have a country of skilled hustlers who understand that having multiple sources of income (via side gigs, cryptocurrency trading, and bartering) is a lot safer than depending on a single job. It’s a hard lesson learned by recessions, and now we’re facing the consequences of it.
Those who struggled through the Great Recession understand that there are plenty of options for income if they’re not happy with a single job. Part of “keeping” an employee used to be largely depending on the fact that the employee needed that job. However, with side gigs and multiple streams of income, total dependency isn’t always a given.
The importance of employee retention
Unless the positions you’re concerned about have built-in high turnover rates, such as entry-level positions, it’s critical to consider the importance of employee retention methods. Hiring the best employee for the position is just half of the process. You also need to keep them.
One reason is because it’s incredibly expensive to hire and train any new employee. On average, companies spend $1,252 for each employee they onboard. When there are unnecessarily high turnover rates, you are just increasing costs with nothing to show for it over the long term.
Not only does employee retention reduce your costs, it also makes your team happier. Why? Because they’re getting more benefits as they’re making their voice heard during the employee retention process. We found out that once people are happy at work and feel like they’re in control of their career paths, the chances of them keeping a job increase by 20%. This is why career growth opportunities are often noted as a must-have by job seekers.
Retaining employees requires a thorough understanding of what employees want. The best way to find out what they want is by asking them directly. Anonymous, regular polls provide fantastic analytics that you can quickly put to use.
You may be surprised by what it takes to retain employees in your unique company. They may not want what you think they do. For example, 4 in 5 employees would rather choose extra benefits than a raise. You can only find this out if you talk to your employees. Communication is key to any relationship.
Keeping your employees helps them stay happy and become proficient in their role since they’re likely working on similar projects for longer periods of time. This gives them enough room to improve their skills and develop themselves professionally without worrying about job instability or a lack of work-life balance.
Of course, this all assumes that you’re able to understand their needs and cater to them.
The benefits of employee retention
The benefits of focusing on employee retention also highlight some direct ways you can improve the results of your business and keep your team happier.
1. Reduce exit and training costs
Besides not having to spend extra money on training a new worker from scratch, you’re also saving roughly 33% of your past employee’s salary. This is how much you’d otherwise spend on the recruitment and testing needed to find your next hire.
What’s more, there’s also the productivity loss that costs both time and money to cover. All of these efforts and monetary resources can instead be redirected towards growing and promoting your business—or even delighting your current workers.
2. Improve team performance
Happy employees perform better. They’re more likely to work with a purpose and give their all to a project. More than this, they put in more hours on projects, gain more knowledge, and gradually learn to better handle issues and structure their work.
Performance is closely tied to how engaged employees are. Build a work culture around keeping employees satisfied and communicating any complaints freely. Doing so will turn your team into your most valuable brand advocates.
3. Keep the best professionals in a field
In an increasingly competitive market, working with top experts is crucial to keeping your organization at the top. In fact, 47% of people would look for a new job within the first year if they weren’t happy with the offered benefits.
As an example, one of the reasons many companies are turning to remote workers is because this way they can work with the people who are the best fit for their organization—regardless of where they are in the world.
Once these professionals leave, you’re also losing their expertise and institutional knowledge. And you certainly don’t want them to use the skills you’ve helped them earn to build a competitor’s business instead. Loss of experienced team members who’ve been with you for years hits both the value of your work and your image as an employer.
4. Raise morale
In their free time or at work, people seek to make real human connections.
An office where team members change every couple of months isn’t going to keep workers happy. Your staff doesn’t get enough time to bond, make long-lasting relations, and, above all, they don’t get to trust one another. Nothing takes a blow from the lack of trust more than team morale. Just as you’re getting to know someone better, they leave.
All of these are aspects of a healthy work culture. Sadly, only 38% of employees can certainly say their company’s work culture is strong enough to keep team members loyal.
People leave all kinds of jobs and industries when they’re unhappy and don’t feel like they’re getting enough recognition for their work. This is why your top priority should be listening to your team’s needs and finding appropriate solutions to fulfill those requirements.
Keep pulsing your employees frequently to uncover new insights and constantly get their feedback. You can download our guide to employee pulsing to help you get started.
Additionally, schedule regular one-on-ones to keep tabs on your team feelings as they change over time. Both of these activities will help you have more meaningful “stay conversations” instead of “exit interviews” nobody wants to participate in anyway.
Go over the above list of 10 mistakes you might be making that are causing your high turnover rates. How many of them are you guilty of—and what can you do to resolve the problems? Take each one at a time and find actionable plans you can follow to switch things around and delight your employees.
If you don’t know where to start, take a look at the TINYpulse surveys which can help you spot any problems your employees might have before they become too serious.