Employee turnover rate measures the number of employees leaving an organization during a given time period.
The turnover rate can be calculated by dividing the number of employees who left the organization by the average total number of employees in the organization during a given time period. Multiplying this number by 100 gives the turnover rate in percentage.
The lower the turnover rate, the better. A high voluntary turnover in the workplace is expensive, hurts employee morale. Moreover, it is indicative of a deeper underlying organizational problem.
Although the turnover rates vary by industry, there is a substantial commonality in the reasons that prompt employees to exit their organizations.
What Causes Employee Turnover Rate?
Read on to know the six top reasons for employee turnover rate and what you can do to fix them.
Toxic Work Culture
A toxic work culture — marked by infighting, fear, low morale, lack of communication, low productivity, and employee unhappiness — is a prime cause of employee turnover. A toxic workplace scares away fresh talent. It also drives away its best employees. Such a workplace makes employees miserable and unmotivated.
Toxic work culture is one of the more difficult to address causes of employee turnover. Such a work culture is most often the result of poor leadership and the refusal to acknowledge the visible signs.
An effective way to fix this problem is to conduct comprehensive culture audits periodically. A culture audit helps the organization identify the causes of toxicity and the underlying reasons. This will help the leadership institute corrective actions and bring about improvements.
Lack of Purpose or Meaning
Employees look for purpose and meaning in their work to stay motivated and productive. However, employees begin to sense a lack of purpose when they do not have a shared vision or a common goal to strive towards.
Such a feeling can develop in the employees because of the nature of the work itself. Or it can also be because the organization fails to create a culture of meaningful work. This can be overcome through transparent communication to create a shared vision and a sense of purpose around the firm’s long-term goals.
Convey to the employees a reason to believe in the organization. However, take care to see that this reason is authentic and not contrived.
Excess work and the related stress is a common cause of employee turnover. Employees, when overworked, are susceptible to illnesses, stress-related health problems, burnout, and depression. This prompts them to look for and accept opportunities that provide a better work-life balance.
The organization’s leaders can address this cause of employee turnover by looking out for the common signs of overworked employees.
Some common signs include staff regularly inordinately working later than they ought to, the need to come on weekends to complete assigned work, etc.
These signs of excess work are indications of inefficient resource allocation, unrealistic deadlines, and inadequate training to enable employee efficiency.
The organization’s leaders should talk to the employees to ascertain the reasons, identify the underlying root cause, and institute changes to eliminate the cause(s).
Unfair Work Practices
Any display of favoritism among the employees creates anger and resentment in the workforce. In addition to favoritism, sometimes, conscious and unconscious biases come into play.
These cause differences in the manner in which the employees. An example is a bias based on the employee’s background or gender.
Such unequal, unfair, and discriminatory practices result in an inefficient and unproductive workplace. To obviate this occurrence, the leaders in the organization must be careful about treating all employees equally.
The work-related policies should engender equal treatment of employees. They should also ensure that the words and actions of the leaders are perceived to be uniformly fair and equitable.
A Bad Boss/Manager
It is almost a cliche when it is said, “People do not leave their organizations. They leave their bosses.” A bad boss or a bad manager is often cited as the prime reason for a high turnover rate.
Employees quit the firm if they perceive their manager to be incompetent, inefficient, or unfair. The remedy to this problem lies in sensitive and careful handling of the situation. Especially, if the manager’s handling of his subordinates is causing even the high performers to leave.
The firm needs to carefully collect feedback from the concerned manager’s team members and exit interviews. The data should be assessed to identify the true cause of the problem.
Based on the finding(s), the manager or the team members could be deputed for specific training on working in teams/leading teams.
If training does not resolve the problem, as an extreme measure, the concerned manager may be asked to leave in the larger interest of the organization.
Lack of Career Development Opportunities
It is only natural for employees to look for avenues for professional advancement. Workplace policies and practices must enable employees to work to advance professionally. If the employees collectively face professional stagnation, it may cause an exodus from the firm.
This issue can be overcome by investing in the employees to improve retention. In addition, the organization should offer growth opportunities, encourage people to hone their skills, and institute transparent and fair policies for career advancement.
Recognition of good work is also crucial. Individual and team performance needs to be publicly recognized. This encourages employees to be the best versions of themselves.
The surest way to stop high turnover and improve retention is to: (a) talk to employees, (b) carefully listen to what they have to say, (c) identify the underlying reasons for dissatisfaction.
Then, start working towards addressing them. Constant two-way communication between the leadership and the employees is the only proven and effective way to check turnover from running amok.
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