In employee-centric workplaces, turnover is inevitable as people pursue new opportunities or shift focus. Though losing key talent isn’t ideal, it’s essential to recognize turnover as a regular part of the organizational lifecycle.

However, that doesn’t mean you need to normalize turnover. Instead, it means you should understand why employees leave your organization and what makes them stay. This will help you design an employee retention strategy and shape a highly-skilled, more retentive workforce.

Let’s cover how you can exactly do that in this article.

What Is Employee Turnover?

Employee turnover measures how many employees leave a company voluntarily or involuntarily. Involuntary turnovers can occur when employees are laid off due to poor performance or downsizing.

However, voluntary turnovers arise when employees leave the organization in search of better opportunities or career shifts or due to personal reasons, including marriage, childbirth, death of a family member, etc.

Employee turnover is frequently measured as a percentage. It is calculated by dividing the number of employees who depart in a year by the average number of employees at the business during the same period.

For instance, if you had 100 employees in your organization in 2023 and 20 churned out, your employee turnover is 20/100 or 20%.

Why Is Employee Retention Important?

High turnover rates can be a significant financial burden on organizations, especially start-ups, as rehiring and backfilling positions can be costly, and retraining employees can be time-consuming.

Secondly, when experienced employees leave, they take valuable knowledge and industry connections with them, making them hard to replace.

For instance, employees in client-facing roles often develop strong customer relationships. High turnover can impact these relationships, potentially leading to customer dissatisfaction.

Aside from that, high turnover can make it challenging to attract new talent. Prospective employees may be hesitant to join a company with a history of high turnover, as it may indicate potential issues with the work environment or organizational culture.

Understanding Statistics Around Employee Turnover

Understanding employee turnover data can help identify problems and implement strategies to tackle excessive attrition.

1. The Average Employee Turnover Rate in the United States is less than 20%

According to the US Mercer 2023 Turnover survey, the average turnover rate among US enterprises between 2022 and 2023 was 17.3% — a decrease from the 24.7% reported in 2022.

The average voluntary turnover rate due to employee resignation (17.3%) was significantly greater than the involuntary turnover rate (4.8%), which occurred when the organization terminated the employee.

2. Over One-Third of Employees Will Look for New Employment Opportunities in The Next 12 Months

According to a 2023 survey by Bankrate, over one-third (37%) of workers believe they are “very likely” to hunt for a new job in the next 12 months, up from 32% in 2022.

This means organizations may face increased competition for recruiting and retaining competent workers when a significant portion of the workforce actively considers career shifts. It’s especially important in industries or positions where specific skills are required.

3. The Average Number of Years an Employee spends at a Company is Less than 5.

According to the United States Bureau of Labor Statistics, employees only stay at their jobs for 4.1 years — a figure that has remained relatively stable since 2018.

The comparatively short average duration reflects a dynamic work market in which individuals are more likely to shift jobs quickly. As a result, businesses may need to revise their strategy to handle staff turnover and discover more innovative ways to retain talent.

4. Employees Are Now Looking for Better Pay, Flexible Hours, and Remote Work Opportunities

According to Bankrate’s survey, the threat of a recession in 2023 prompted significant businesses such as Meta and Amazon to carry out cost-cutting layoffs, and it may also be encouraging individuals to change careers.

In 2023, workers say that higher pay, more flexible hours, and working remotely are most important.

5. Turnover Rates Can Cost a Company More Than A Million Dollars Annually

Even modest turnover rates cost the organization a lot of money. A 100-person company with an average pay of $50,000 might have turnover costs of more than $2 million each year.

Surprisingly, replacing C-level executive positions can cost up to 213% of their yearly salary, making employee turnover costs in C-level positions particularly untenable.

Strategies to Retain Employees in the Workplace

Organizations that understand and adopt these strategies can increase employee satisfaction and develop a workplace culture that values loyalty, dedication, and social responsibility:

1. Offer a Flexible Work Arrangement

Organizations should offer flexible work options, such as remote work or flexible schedules, to accommodate employees’ changing needs and preferences. This promotes work-life balance among employees and contributes to a higher retention rate.

2. Invest in Professional Development Opportunities

Companies need to invest in the professional development of their employees to empower them and help them advance in their careers.

They should also provide opportunities to develop their skills to boost morale and inculcate a sense of loyalty and commitment in the workforce.

3. Transparent Communication and Feedback

You should encourage open communication and offer regular feedback to employees. This promotes trust and makes employees feel valued.

Regular feedback sessions also allow people to gain insight into their achievements and areas for improvement, resulting in a more positive work environment.

4. Hire From Disfranchised Communities

Companies should consider hiring from disadvantaged populations, individuals from areas with higher unemployment, or other employment barriers. They should treat these employees with dignity and respect, creating a workplace culture that encourages loyalty.

This approach allows organizations to be more socially responsible and include more employees from diverse backgrounds.

Conclusion

Employee turnover has significant financial and operational implications for organizations, whether voluntary or involuntary. The statistics above highlight important trends and challenges organizations must consider when developing and refining employee retention strategies. The changing priorities of employees, particularly the emphasis on better pay, flexible hours, and remote work opportunities, align with the evolving expectations of the workforce.