The Truth About Employee Turnover and What HR Can Do About It

May 31, 2018

 

Every office experiences some level of employee turnover and depending on your office culture and employee job description, your office can benefit from a high or low turnover rate. For the purpose of this article, Fit Pros seeks to encourage your office to sustain a low employee turnover rate, although we will explore how a high employee turnover still benefits a certain type of workplace.   

 

Turnover can refer to the rate at which inventory is used and replaced in a company, or the rate at which employees are replaced within a company. Both inventory and employee turnover directly impacts profit and the future success of a company. Employee turnover, however, is not handled as seriously as inventory because it is a harder component to assess. And frankly, a lot of companies fail to analyze and assess the tangible costs of losing a single employee.

 

I'd like to illustrate my point by using a brick and mortar retail store as an example. Retail stores are typically more fixated on inventory turnover, and less so on the need to engage and retain employees. The reason is that the nature of the job relies on high turnover rate to get the job done. Unless you'd like to climb the career ladder, retail gets tedious and may feel like a dead-end job – leading employees to burnout and leave. Since employees are treated more as numbers and not people, the workplace culture suffers and results in high employee turnover. 

 

Most retail stores incentivize employees with commission percentages to persuade them to stay employed at their store and to challenge them to sell, sell, sell. But if a store's incentive program becomes ignored or too challenging to attain, employees will likely disengage and want to leave. Then the only reason to stay is a steady paycheck of minimum wage and that is not enough incentive to sustain employee engagement and retention. As long as employee wellness is treated as inconsequential to a company's success, the company will experience a consistent flux of high employee turnover, and a consistent loss of profits due to time lost training new employees. 

 

What's worse, the reputation of a workplace culture can be so ingrained in their lack of employee engagement that it can become a word-of-mouth deterrent for future hires. People may still apply for the money when desperate but they may catch early on that the workplace culture is flawed. Poor management, favoritism, and a cliquey atmosphere, for instance, can ultimately become the culture. No matter what the job is, a company that believes in creating some sort of work/life balance through a strong incentive program, workplace camaraderie, and a genuine interest in the wellbeing of their employees, will experience a low employee turnover rate that ultimately engenders more day to day successes.

 

On the other hand, a high employee turnover may benefit a retail business if employees have a clear prediction of when they will be leaving and a clear objective of what they want to accomplish for the duration of their stay. That way they will likely perform at their best if their career and work goals are time-sensitive and in motion. If employees choose to work with no clear direction in mind, they will likely perform well at first, and then tire of it easily. And since retail store often see employees as expendable, employees will see themselves the same way too and leave early or simply not show up to work. A great way for your office to reap the benefits of high and low employee turnover is to have honest conversations with new hires about their future plans and that will give you an idea of how long they will likely stay – especially if the reason for wanting to work at your company is more of a bridge or gateway to get somewhere else. A lot of times, employees will say anything to land the job, just so they can first pass the task of getting hired, without really thinking longitudinally about their future in that role. 

 

 

It's a good rule of thumb for HR to consistently touch base with employees about what they are gaining in their current position and if there are questions and concerns about what they'd rather be doing instead. Fit Pros understands that these questions may be tough to ask for HR or uncomfortable for employees to respond sincerely without feeling penalized, but prompting these conversations will help your company better gauge employee engagement and employee turnover.

 

An ideal employee turnover rate worldwide is 10%. This shows that some turnover is expected and good for your company. It helps to slough off the employees who are performing at their lowest potential and ability, and hire on those you know will perform optimally. Losing 10% of the lowest performing employees will free your company to focus on strengthening and training your best employees and new hires. Your company will save money while reducing the need to quickly hire more employees to fill the gaps, regardless of their level of proficiency.

 

A few takeaways by