10 Common causes of high employee turnover & how to prevent/reduce them

Discover effective strategies to combat high employee turnover, retain top talent, and foster a positive work culture.

Matthew Emmons

Published on 

May 19, 2023

Updated on 

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Did you know that between 3 and 4.5 million people quit their jobs in the U.S. each month, according to the Job Openings and Labor Turnover Survey? These alarming statistics highlight the need for businesses worldwide to reduce high employee turnover rates and maintain and cultivate exceptional talent.

High employee turnover leads to huge waste of time and resources filling employment gaps after employees leave their company. On average, it costs an employer 33% of an employee’s salary each time they leave. It is also harder to create solid teams when each department is a revolving door of new faces.

Companies that invest in employee retention strategies, therefore, have a massive advantage. They retain talent more easily, find their employees to be more engaged, and develop a fantastic company culture of learning. One of the main ways to support employee retention is to develop a mentorship program. A workplace survey report found that 94% of employees expressed that they would stay with a company longer if they allowed for learning opportunities.

But before we can combat employee turnover, we must understand exactly what it entails.

What is employee turnover?

From the name, you may have suspected that employee turnover differs from the average use of the word “turnover.”

While turnover typically refers to how much product companies sell within a set time frame, employee turnover specifically looks at how many employees left a company over a specified period of time.

There are also two types of turnover: voluntary and involuntary. 

  • Voluntary turnover is the number of employees who choose to leave for their own reasons. This is the group we will be targeting the most with the strategies discussed in this article. 
  • Involuntary turnover refers to those who were forcibly terminated due to departmental reductions or poor performance.

How does employee turnover hurt your organization?

The cost of a high employee turnover rate is primarily a financial one. Research has suggested that at a 100 person company with an average salary of $50,000, turnover could cost as much as $2.6 million a year.

Typically, this is rooted in inefficient hiring practices as almost 75% of employers have admitted to hiring the wrong person for a role which costs an average of $14,900. The time and resources it takes to rehire for a role takes away from a team’s productivity focus on other work.

New hires are continually evaluating whether they are a good fit at their company which is why it is important to ensure they are supported and provided with opportunities that create deeper connections to their workplace and with their colleagues early on. They must feel committed to your company to develop a sense of loyalty, just like customers. 

What is a good employee turnover rate

Of course, you can never completely eliminate employee turnover. There is a general consensus that 18% is a good benchmark for average annual employee turnover. Of that, approximately 6% should be expected due to involuntary turnover. 

However, it is important to remember that, just like any other metric, what a successful turnover rate looks like will differ widely between different companies, industries, roles, and even locations. 

For instance, an acceptable turnover rate for a startup will in no way be the same as that of a Fortune 500 company. Some have even suggested that a 10% turnover rate is a healthy benchmark and anything over is concerning. The average turnover rate should simply be a guide to keep in mind what is realistic while setting goals that accurately reflect the state of your company.

10 Common causes of high employee turnover

There are several factors that can affect a company’s employee turnover rate. As you will see, many of these are common and can be addressed through the adoption of new strategies and/or programs. 

All of these common causes originate from a poor focus on the employee experience and the workers themselves. Creating a new environment that prioritizes their personal and professional growth, therefore, can combat high employee turnover. Understanding what pushes employees away and how is the first step to increasing employee retention and engagement overall!

1. Overwhelm/burnout

One survey found that 74% of its participants reported that they had experienced job burnout. Employee overwhelm is also highly correlative with toxic work environments and a lack of personal time. This primarily occurs when productivity and metrics are prioritized over the worker’s physical and mental health leading to unmanageable workloads. Finding the right balance between company goals and employee consideration and empathy is essential to eliminating burnout.

2. Lack of employee purpose

36% of employees were found to be actively engaged and enthusiastic about their workplaces. If workers feel no passion or connection to their workplace and job duties, they will not hesitate to look for other opportunities that may promise greener pastures. Getting your employees involved through mentorship or team building events can help to combat this.  

3. Bad work culture

The aforementioned bad work culture can lead to deteriorating employee mental health and burnout which will ultimately push workers towards other companies. Turnover due to toxic work cultures is estimated to have cost companies $223 billion over the past five years.

4. Absence of mentoring programs

Mentors are promoted five times as often as those who are not enrolled in mentorship programs. Their retention rates are also much higher than those without formal programs. One of the top reasons employees leave jobs is lack of career advancement. 

Mentoring programs are a fantastic way to attract talent and accelerate the growth of existing employes. We at Together know it’s no easy task to start and launch a mentoring program. We’ve outlined the step-by-step process to start a mentorship program, but we also have a mentoring platform that manages everything from registration, to pairing, and reporting. You can get started for free or get a personalized demo to see if it’s right for your orgarnization.

Starting a mentoring program may not be a silver bullet for employee retention, but it’s close. 

5. Poor compensation and low pay raises

According to this SHRM survey, three-fourths (74 percent) of HR professionals (respondents) said inadequate compensation—pay, bonuses, profit sharing and the like—was the top reason for employees leaving their organization. Only 14 percent said their current budget for compensation was adequate. If your employees do not feel they are being fairly compensated for the value they bring to your organization, they will not hesitate to look for a position where their worth will be recognized.

6. Absence of true diversity, inclusion and belonging

78% of the workforce says that diversity, equity, and inclusion is important to them in the workplace. A study from Momentive also found that organizations who prioritize diversity, inclusion, and belonging are more likely to have advancement opportunities available to their staff. This is obviously an area of great concern for a majority of the workforce and, therefore, should be prioritized to continue to reflect employee desires.

7. Inconsistent management styles

This can go hand-in-hand with bad management, however, inconsistency is its own issue. A manager can still be supportive and kind while being inconsistent. Employees can sense disorganization or when someone does not fit their role. 36% of workers say that their manager does not know how to lead their team. Ensuring that managers have a distinct, consistent, and developed leadership style is key to keeping top talent around.

8. Little to no career development

A lack of career development opportunities is the number one reason why employees leave companies. 22% of workers leave as a result of this, a figure which has increased 170% in the last ten years. In order for an employee to feel connected to their workplace, they need to know that they have a future and to feel connected to the company’s long-term strategy and goals.

9. Bad managers

Managers have the most sway when it comes to company culture, employee engagement, growth opportunities, and diversity practices. In fact, over 50% of employees who voluntarily leave their job state that their manager or organization could have kept them from leaving. Good management that prioritizes employee health, work-life balance, and growth can ultimately be the deciding factor between high or low retention rates. 

10. Little to no feedback/recognition

It is important for organizations to foster an environment of feedback and recognition. Not only does it allow employees to track their progress but it also affirms their skills in their roles. Interestingly enough, one study found that retention rates decreased by 16% when employees did not feel comfortable enough to give feedback. Workers actually want to be involved in the feedback chain and have their opinion valued when it comes to suggestions for improvement.

The most effective way to prevent high employee turnover

Although there are several common ways that companies contribute to high employee turnover, it is never too late to make changes. As previously mentioned, the most effective way to combat high employee turnover is to introduce a mentorship program.

Mentorship programs pair colleagues together to increase learning opportunities, hone leadership skills, and create deeper connections within your workplace. Statistics have shown that mentorship increases employee engagement and retention, with mentors and mentees having 20% higher retention rates than those not participating in a mentorship program. 

However, we know that launching a mentorship program from scratch is a difficult venture. That is why Together has developed our own mentorship software which has been successfully utilized by over 150 companies. Our work with the company Randstad actually helped them to save $3K per participant per year. They also found that employees were 49% less likely to leave Randstad during the study period.

Learn more by scheduling a demo with our team to find out how you can launch your own mentorship program to combat high employee turnover.

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