Understanding Employee Turnover

//Understanding Employee Turnover

Employee turnover is an unavoidable issue every company or organization must deal with at some point or another. Turnover is unavoidable, but a high attrition rate could indicate internal problems in a business.

Types of Turnover

There are two types of turnover, voluntary and involuntary turnover. Voluntary turnover occurs typically when the economy is struggling and companies are forced to downsize to save money. This issue is usually resolved once the economy strengthens again and businesses can hire the number of employees they need. Involuntary turnover is when employees choose to resign and seek greener pastures elsewhere. A high turnover rate can become especially disruptive when a constant pattern develops of hiring new employees and training them, only to have them leave shortly after.

Surprisingly, many employers do not see an issue with a high turnover rate. But whether they realize it or not, it is costing them time and money. These sometimes poorly run companies see a high employee attrition rate as an inevitable business process and fail to see the value of retaining trained and experienced workers.

The Costs of Turnover

A chain reaction of unnecessary costs and effort are continuously created when employees are regularly coming and going. When an employee leaves a company to work for a competitor, the business they left essentially served as a paid training ground for the employee to use their newly acquired skills elsewhere. It could be months before a business sees a return on their investment on training new hires. If workers are leaving a company shortly after being hired the business may not even see a profitable return at all.

Finding and hiring new workers is an expensive and time-consuming task. The company must pay for advertising and then pay an employee to conduct interviews. In addtion, a pre-employment background check is generally required. That itself can become expensive since it is typically done by an employee of the hiring company, or outsourced to a third party company. It can become costlier when potential workers are required to take a drug test. When there is a shortage of trained workers who can properly cover shifts, employees may be required to work overtime or come in on their days off. And finally once hired the newly employees do come on board, they have to be trained. All this diverts time and resources from the business.

Common Causes of Turnover

Voluntary and involuntary turnover is never good for morale either. When a business becomes understaffed current employees must pick up the slack.. With loss of moral comes a loss of productivity and motivation. Workers start to gossip and then begin to wonder if all of the leaving employees are on to something.

Therefore, a high attrition rate is generally caused and perpetuated by a poor work environment. If a business cannot keep its employees happy they look for work elsewhere. Here are some common underlying issues:

Poor Management

Employees usually quit their boss, not their company. Dealing with someone that is disrespectful or incompetent and has power over them can become exhausting to deal with on a daily basis.

Not Enough Pay

When a business is stingy with paying their workers most will quickly seek work elsewhere.

Poor Work Environment and Lack of Job Satisfaction

A boring or difficult job is tough to stick out for long if they are not compensated properly or receiving job satisfaction.

Businesses with a high attrition rate would be wise to take steps to solve these problems. If they could remedy the employees’ satisfaction issues they could retain solid workers and prevent cutting into their profit margin caused by turnover.

By | 2018-04-12T07:59:35+00:00 November 11th, 2017|Human Resources|