The average UK turnover rate is approximately 15%1 a year, with the highest levels found in retail, media and other private sector organisations.
There are two types of turnover: voluntary turnover, which refers to employees choosing to leave a company, and involuntary turnover, which happens when an employer lays workers off.
High voluntary turnover levels are problematic for businesses due to the costs involved in finding replacement workers, plus once one employee leaves, a chain reaction often occurs and several other staff members will follow suit. Involuntary turnover can also have this effect, as staff morale inevitably suffers once an employer starts letting colleagues go.
You’ve probably heard the saying ‘People quit their boss, not their job’ – this is significant because voluntary turnover rates are a reflection of bad management. And when it comes to letting people go? The last thing you want are high involuntary turnover rates, as not only are layoffs short-term fixes that are detrimental to a company, but they also suggest inefficient business planning has been implemented to cover fluctuating economic factors.
How to calculate your staff turnover rate
Divide the number of employees that left by the total number of employees at the beginning of the period.
For example, let’s say you had 100 employees at the beginning of 2014 and over the course of the year nine people left voluntarily and six employees were let go. This would mean your annual voluntary turnover rate was 9% and your involuntary turnover rate was 6%, totalling 15% altogether.
It’s in your best interest to keep turnover rates low because it’ll save the company time and money spent on replacement costs for those who quit, plus you’ll receive a better evaluation from your supervisor if you’re able to retain your staff.
Below are six staff retention strategies to help you succeed.
1. Track retention
Use the formula above to calculate your staff turnover rate and aim to ensure the percentages are dropping every year. You can compare these figures with those recorded by other internal teams to determine which line managers are performing the best, and you can hold the total up to the average turnover rate within your industry to measure your company’s overall performance.
All too often, managers are taken by surprise when an employee hands in their resignation. By having a constant target in place, this puts the importance of retaining staff at the forefront of your management teams’ minds and will encourage them to adopt a proactive approach to preventing this from happening, rather than simply reacting to it when it does.
2. Set out a clear career path for your employees
If an employee doesn’t feel that working for your company will lead to better pay, greater recognition or more responsibility, they’re going to look elsewhere for an employer who will offer them these things.
This is why it’s vital to schedule performance reviews every six months for each member of staff, enabling you both to discuss your expectations and monitor if they are being achieved.
3. Train your management team
As previously stated, employees don’t leave companies, they leave their managers, which is why it is so important to provide your management team with adequate training. You can do this by partnering them with a mentor from higher up within your organisation or by sending them on an external training course.
Be open with your management team about what is going on throughout the business too and if any potential stressors could be about to occur, as this will allow them to prepare their teams for any potential fallout.
4. Increase the flexibility of your working conditions
Three in four2 managers have a flexible working policy solely to hold on to their staff.
Whether it’s instructing flexible working hours to help your workforce beat the rush hour, or if it means permitting workers to work from home once a week to help them reduce their childcare costs, employees appreciate this humanistic approach and are significantly more loyal as a result.
5. Review your benefits package
Commonly, benefit packages are compiled by senior managers thus the list of compensations focuses around life insurance and PMI, completely overlooking what the average 30-something who is thinking about leaving their job would actually like to receive.
Sit down with your HR team and tailor your company’s benefits package to meet the needs of your core team, which could mean including paid-for gym memberships or giving employees the option to swap their medical insurance for additional annual leave days.
6. Implement a succession plan
If the worst does happen and a key member of your team quits, you can reduce the impact this has on your business by kicking your succession plan into action, which may entail referring to your internal talent bench review or 9-box grid, or it may require the assistance of an external recruitment company.
You can read more about effective succession planning methods here.
1 Monster, 2015. What is the ideal employee turnover rate?. [Online] Available at: http://hiring.monster.co.uk/hr/hr-best-practices/workforce-management/employee-retention-strategies/what-is-the-ideal-employee-turnover-rate.aspx.
2 London loves Business, 2013. 10 killer statistics that prove how transformative flexible working is. [Online] Available at: http://www.londonlovesbusiness.com/business-news/tech/10-killer-statistics-that-prove-how-transformative-flexible-working-is/5476.article.
[All information sources accessed 30th April 2015].