Employee turnover has become perhaps the hot button topic this year. With businesses emerging from the COVID-19 pandemic and thrust into a new panic over the ‘Great Resignation’, morale and employee engagement have become the new dominant metrics concerning the workforce, eclipsing even productivity as a means of determining success.

Remote and hybrid working have become more prevalent. Employees are placing greater emphasis on work-life balance. Burnout has finally become a topic openly discussed and seriously treated. Workers en masse are slowly realising their power; realising what they want, and what they don’t want. And they are leaving their jobs in record numbers.

With companies struggling to catch their breath and struggling to catch a break, it would appear the reckoning is here: for the first time on record, there are more job vacancies than unemployed people. Employers need to come to terms with this, and quickly – they can ill-afford to play the role of Principal Skinner, trying to convince themselves that they’re not out of touch; that it must be the others who are wrong. Because the facts are simple: employee turnover is costly – estimated to be at least a third of an employee’s annual salary. And that’s not even factoring in the loss of productivity, or the effect of the burdens placed on understaffed teams.

While concerns over turnover and retention are nothing new, the ongoing candidate shortage has cast these issues in a new light. With the cost of recruitment also increasing, and time-to-hire escalating, employee retention has never been more critical.

Luckily, with the right tactics and the right technology, there is a clear path towards better retention. But before we can discuss what a company can do to retain their employees, we must first understand what employee turnover is, and just what the biggest causes are.

What is Employee Turnover?

Ok, let’s get the simple stuff out of the way first: employee turnover describes the process of employees leaving – or being asked to leave – and then being replaced by new employees.

Typically, its HR who calculate employee turnover, and they do so on an annual basis. The average turnover rate in the UK has typically hovered around 15%. This number is going to be dependent on several organisational factors, such as historical turnover rate, internal promotion rate, and the sector your company operates in.

Industry is especially significant, although that number has been climbing in the last year across all sectors– rising to over 18% among office workers in tech and financial sectors looking for more flexibility and hitting a staggering 94% for nursing home workers facing risky working environments and burnout.

While some level of employee turnover is normal, and all businesses will factor this into their calculations, as this number rises, the impact on organisations also grows. High employee turnover affects the workplace, damaging productivity and hurting the morale of those left behind, left to carry the additional burden while a company finds a replacement. With the average time to hire a new employee standing at 41 days, those left picking up the pieces will face increased strain, and that increased workload can also lead directly to a higher turnover rate. It can be a vicious cycle.

A high employee turnover rate effects employee experience, it hurts revenue, and impacts profits. For hiring companies dealing with higher rates of turnover, it can also impact their employer brand, making their company appear less desirable for potential applicants.

The Different Types of Employee Turnover

There are primarily four different types of employee turnover:

  • Voluntary Turnover: when an employee chooses voluntarily to leave a company, without any pressure from external or internal forces.
  • Involuntary Turnover: when an employee is fired or otherwise asked to leave for whatever reason, be it behaviour, productivity, or other reasons relating to their fit in the role.
  • Desirable Turnover: this is when an underperforming employee is replaced by a new hire. This process is not always good for employee morale but is often necessary for businesses to hit targets and perform successfully.
  • Undesirable Turnover: this is the opposite – when a business loses a top-performing employee who would be difficult and costly to replace.

What Causes a Higher Employee Turnover Rate?

Poor Workplace Culture

Your culture is indelibly tied to the way that your employees feel. Research from Glassdoor shows that over half of employees place a greater value on workplace culture than even salary. Culture is much more than social activities or a ping pong table; it is a combination of many factors that include making your employees feel valued and respected. Companies with weak culture are forced to pay higher salaries and generally have a higher turnover rate.

Lack of Career Development Opportunities

Without a clear growth plan, many employees can feel frustrated and stagnant. Career development opportunities provide workers with clear goals to work towards, promising growth. Without any potential for growth, they will feel as though their achievements receive no recognition and are unrewarded. As such, they will also feel undervalued. And undervalued employees are easily prompted to find work where they will be valued.

Lack of Work-Life Balance

A healthy work-life balance is essential for the wellbeing of your employees. After the pandemic, there has been a total change in how many approach their jobs – the rise of remote and hybrid working has offered people flexibility and convenience that was previously largely denied to them by their employers. The subsequent rising turnover rate demonstrates that many value this newfound flexibility – they don’t want to be forced back into offices and into situations that offer a poorer work-life balance.

Poor Employee Engagement

Employee engagement is becoming more and more essential as businesses wake up to the fact that it is not a cliché – employees do need to feel engaged – with meaningful, challenging work, with support and training, and with appreciation for their ideas and contributions. There are many ways to encourage employee engagement and provide a strong employee experience for your workers – the approach that you take will depend on your culture and leadership, but low levels of engagement will harm employee retention.

 How to Reduce Employee Turnover

As outlined above, there are obvious solutions to reduce employee turnover – allow for more flexibility among your workforce, provide career progression opportunities, meaningful work, and give your employees respect to prove they are valued. And if all else fails, pay them higher salaries. There we go. Simple.

Although if it were truly that easy, I might expect that you wouldn’t need to be reading this article. Things like culture and even career progression opportunities do not come from nowhere – they must be nurtured and built from the ground up by getting the right people in at the right time.

The key to employee retention then – the root issue to be addressed – is in recruitment: hiring the right people, attracting the best talent, and building the necessary blocks around them.

With an Applicant Tracking System, you can improve your hiring processes and build towards higher rates of employee retention. Let’s look at how.

Utilise Recruitment Analytics to Hire the Right People

Using data analysis enables businesses to hire more efficiently and at a lower cost, and more crucially in terms of retention, allows businesses to more easily identify the top candidates who provide the best fit for the organisation. With the Hireserve ATS, businesses can build out criteria based on skills, experience, and location, allowing them to develop a more consistent talent pipeline with candidates who are better matched to the open roles available.

This also allows businesses to identify candidates who fit the culture they have or are trying to build. Sourcing outstanding candidates that fit with your business means filling positions with employees who are more likely to stick around.

Improve Employee Onboarding

Getting onboarding right is essential – unnecessarily long onboarding periods lead to uncertainty, doubt, and severely impact talent retention.

The slow process of administrative tasks can cause bottlenecks that hamper onboarding, lengthening the time it takes to bring aboard new hires, causing confusion, frustration, and a lack of communication. Providing a strong employee experience starts from day one.

With an ATS, companies can improve much of the processes that can delay onboarding, from speeding up pre-employment checks to ensuring documentation is signed quickly, there are numerous ways that onboarding can be streamlined with the right technology.

The impact this has on employee turnover cannot be underestimated, with research from Glassdoor finding that a strong onboarding process can improve retention of new hires by as much as 82%.

Improve Culture by Boosting D&I

Research shows that improving diversity in your workplace not only improves productivity but also positively impacts company culture, gaining deeper trust and greater levels of commitment from employees.

With the CV Anonymisation Tool in Hireserve ATS, businesses can remove personal information from applicant’s CV’s, customising the level of information you want hiring managers to see. This helps remove any unconscious bias from the recruitment process, allowing businesses to engage in blind recruitment and improve the diversity of their workforce.

Demonstrating a commitment to diversity and inclusivity helps employees feel more engaged and prouder to work for your organisation. This reduces turnover, as happy and engaged employees are less likely to want to leave.

To learn more about how Hireserve ATS can improve employee retention and reduce turnover rates, book a demo today.




About the author

Tristan Potter

Tristan has a decade's worth of experience writing content and copy for organisations across Bristol and the Southwest of England. He has written on a diverse range of topics, including technology, philosophy, politics, and recruitment. His writing has appeared in The Drum, HR Grapevine, and The Guardian, among other publications. He joined Hireserve in March 2022.