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Guide

An introduction to reducing staff turnover

Losing talented employees can have a knock-on effect on staff morale, performance and productivity across your organisation. And once your workforce is in a slump, it will take valuable time and resources to get it back on track.

Everyone knows that staff turnover is expensive. Gallup estimates that replacing an individual employee can cost between half and two times their annual salary.

There are the recruitment costs of hiring a new employee, but staff turnover also creates problems that you might only see three or six months down the line. Failing to take action to reduce turnover can leave you with a disengaged workforce that’s sleepwalking through the week.

According to Perkbox, disengaged employees cost the UK economy around £340bn every year in recruitment costs, sick days, lost training costs and lower productivity. Here’s how that could impact your bottom line:

  • In the financial industry, it costs around £18,000 to recruit and train a new employee – around 41 per cent of the average salary
  • In the care industry, disengaged workers take five times more sick days per year than the UK average
  • In the recruitment industry, a disengaged employee costs the industry £3,103 more than an engaged employee – the equivalent of 18 sick days

It’s easy to dismiss high staff turnover rates as the natural result of a fast-paced and competitive job market, but many of the reasons employees leave are simple. Taking the time to understand these reasons can prevent leaders from losing talent and resources unnecessarily.

This guide will outline some of the main contributing factors to staff turnover, common mistakes businesses make and quick wins that will improve your retention rate right now.

What contributes to staff turnover?

There are a number of reasons why employees choose to leave a business. Some depend on economic or environmental circumstances you don’t have control over, but the following three factors are the biggest drivers.

Poor company culture

Workplace culture and work-life balance are increasingly important when employees are deciding where to work.

A toxic or negative culture damages morale and can be hard to shift once it’s ingrained. Over time, poor culture can harm your company’s reputation and make it hard to retain staff or attract new talent.

No opportunities for career development

People want to know their career is going somewhere. Your employees need to see a clear career path with your business or believe that their current role is a stepping stone to a better position.

If they can’t picture either, it will be hard for them to plan a long-term future with you.

Letting employees become bored and stagnate in their roles is one of the main reasons people leave. If you aren’t challenging staff, they will start to believe that your company doesn’t have anything else to offer them.

This type of stagnation and listlessness won’t just cost you when your employee leaves either. A workforce that lacks drive can suffer from low productivity levels and damage your ability to keep up with competitors.

Lack of competitive pay

Competitive pay is essential to retaining talent. A good culture and the opportunity for career progression can help with retention, but new titles alone won’t reduce staff turnover.

Additional responsibilities have to feel meaningful. If your employees aren’t properly compensated for a new role then they will eventually seek opportunities elsewhere.

Joanna Swash – Moneypenny

Joanna Swash leads a team of more than 1,000 people, so knows a thing or two about keeping staff empowered

"Loyalty is first and foremost created by people. It can be killed off in a multitude of ways and to lose it is the death knell in any business. You have to know how to scale your relationships – to empower employees with freedom and opportunities, then reward them."

Joanna Swash, CEO of Moneypenny

The cold hard facts

For nine years in a row, the Employee Retention Report from the Work Institute has found that career development is the number one reason why employees leave their jobs.

Common mistakes that affect turnover

Even with the best intentions, there are some common mistakes that can hamper efforts to reduce staff turnover.

Not giving employees enough recognition

How often does your company celebrate those employees who bring their all to work every day? Not having a structured system for recognition can result in great work slipping under the radar and employees feeling undervalued.

The truth is, your staff need more reasons to stick with you and work at the best of their abilities than just a pay cheque. Recognition shows that their efforts are appreciated and encourages others to adopt a similar attitude.

Relying too heavily on exit interviews

Exit interviews can provide useful information, but there are plenty of reasons why departing staff won’t be completely honest with you. Some will worry about leaving a poor impression or coming across as bitter; others might believe that the company won’t take feedback seriously so it’s pointless to provide it.

In short, it’s important not to wait until an exit interview to find out what an employee thinks of your business.

Finding out why people leave – not why they stay

Companies spend a lot of time looking at why people leave, but tend to forget to look at the reasons why people stay. Do you know what people love about their jobs and why they work for you over a competitor? If not, it’s hard to know which positive areas to reinforce.

Forgetting entry-level workers

Entry-level staff often have the most direct contact with customers, particularly in retail, hospitality and customer service. Yet there’s rarely the opportunity or structure in place for them to share the information they learn.

In some workplaces, the frequent loss of entry-level workers means that little to no effort is invested in recruitment, onboarding and retention. These businesses miss out on the customer insights these employees gain – and face the expensive cost of replacing them.

"Turnover in our customer service department is really low. They’re not just taking orders – they get really involved and give us a lot of feedback on what buyers are thinking. It makes their jobs more varied and shows that everyone can have a significant impact, whatever role you’re in."

Chris Legard, managing director of Joseph Turner

Quick wins for improving staff turnover

Making structural changes to your business or looking at ways to improve a culture that’s existed for a long time can be daunting. While these changes will pay dividends in future and these opportunities shouldn’t be ignored, there are also some quick wins that can make a difference right now.

Schedule regular one-to-ones with employees

One-to-ones with managers are a great way to find out how employees are feeling and prevent potential issues building into bigger problems. Too often these one-to-one meetings end up being sidelined in favour of client projects or scheduled ad-hoc by managers.

Make sure managers understand that these meetings are a priority and avoid rescheduling them.

Show that you care about staff wellbeing

Showing staff that you care about creating a healthy, supportive work environment can make all the difference. Don’t just discuss work projects – find out what they enjoy or dislike about their role and if there’s anything you could do to make it more enjoyable.

Ask staff about the skills they want to learn

Providing training opportunities keeps your company competitive and people engaged. Training tackles two of the biggest drivers of turnover: it prevents employees from stagnating in a role and provides them with the skills they need to get promoted.

Talk to staff about any skills they think would be useful to learn. Discuss their short and long-term career goals and show that you’re genuinely interested in helping them map out a career path.

Abdul Muhaimen

Investment in training and onboarding has paid off for Abdul Muhaimen

"Waiting is a casual job, so turnover is a big issue for restaurants. The front-of-house staff would come and go quickly. I started spending more time onboarding people and training them in all aspects of the restaurant: front-of-house, setting up, waiting tables and running the bar. We’ve seen turnover improve by 50 per cent, so the effort has paid off."

Abdul Muhaimen, manager of City Spice

Find daily opportunities for progress

Providing individual training workshops or courses might not be feasible, but finding daily opportunities for staff to learn something new or step outside of their comfort zone is a fast, easy way to move the needle.

This type of everyday training is most effective when it’s catered to employees’ challenges and experience.

Employees who have some experience with a task can be pushed to take a bigger risk, while an employee who’s new to a subject can be eased in by collaborating with more experienced colleagues.