Whether you’re in charge of a micro-business, an SME, or a FTSE 100 giant, it’s important to know how to combat high staff turnover and keep numbers where you want them. While accepting the natural ebb and flow of employees arriving and leaving is critical to good management, too many staff leaving in a short time can be damaging.
Defining what “high staff turnover” means exactly is also extremely difficult to quantify. Chris Goulding, MD of specialist HR recruitment firm Wade Macdonald, believes the UK average of around 15% a year might provide “a happy medium of keeping things fresh without compromising the running of a business”.
Goulding does though acknowledge the average “fluctuates drastically between industries” and amid today’s tough battle for talent, everyone will have their own reason for looking elsewhere from financial to personal to career development.
Nearly six in 10 (58%) employed professionals worldwide are already searching, or are likely to search, for a new job within six months according to recent research from G-P (Globalization-Partners). The study took in responses from 5,500 employees worldwide.
Certain roles in the tech sector are under particular scrutiny for turnover right now. Gartner research from 2023 found nearly half of cyber leaders will quit by 2025 due to work-related stress, while a 2024 report on CISO job satisfaction found 75% of CISOs are mulling a career change.
Goulding says: “Naturally, whether the turnover consists of voluntary or involuntary leave, it can’t be ignored. A high turnover of talented and valued staff can cause irreversible reputational damage and might be indicative of workplace culture overdue a change. It should be treated like the red flag it is.”
How a company handles its departing employees is an opportunity and an obligation “to show maturity and respect”, Goulding argues. “Treating leavers well will leave a positive feeling behind with the remaining staff and doesn’t burn any bridges,” he adds. “This same employee may return armed with better skills and performance or even become a competitor later down the line.”
Staff leaving could be put down to any, or all, of the three Cs: Culture, Compensation, and Communication. To combat high staff turnover, leaders must address all three. Amid the cost-of-living crisis salary demands will certainly be a key factor but flexibility, wellness, and feeling heard are all growing in their importance.
Combat staff turnover: Employees are holding all the cards
According to industrial and organizational (I/O) psychologist Tom Cornell of Hirevue, employees are currently “empowered by job shortages and can demand more from employers”. In the tech sector, the AI skills shortage and cyber security skills shortage are forcing employers to carefully assess their workforce numbers and focus on upskilling. Those not willing to invest in employees may find workers leaving to pursue new, high-pay AI jobs or similar opportunities.
Cornell believes this dynamic of high demand and low supply means workers “more comfortable leaving a role if they are unhappy”. However, retention is a complex task, Cornell admits. “Ensuring expectations of the role are clearly communicated, but then actually delivered upon, is key,” he adds. “If the role or experience is not what was promised, employees are likely to quickly become dissatisfied.
“Businesses need to listen to their employees and what they want. General trends serve as a good foundation but can’t replace good internal processes to give employees a voice in shaping their employee experience.”
And when it comes to employee wants and needs, Cornell warns: “You’ll pay the consequences of cutting corners”.
Ask a range of HR experts and most will agree managers can stem the tide of churn with regular check-ins and anonymized company surveys. This is particularly critical during times of change and especially important given research by Ricoh Europe puts the average cost of replacing an employee at €10,600 across the EU.
“People need to be at the center of any workplace transformation, with their needs and pain points listened to and actively addressed,” writes Nicola Downing, CEO at Ricoh Europe. “This is vital to talent attraction and retention, boosting collaboration and productivity and ensuring a sense of fulfillment through work.”
Pointing to those associated financial costs of staff turnover Alex Alvarez, lead people scientist at employee engagement platform Culture Amp, explains how more than one in five, employees leaving within a single year would create a noticeable cost. The budget for recruiting can vary between 30% and 200% of an employee’s salary, he suggests.
The cost of replacing staff is not only monetary. Alvarez cites a loss of productivity, an impact on company goals due to knowledge drain, and a strain on the mental health of colleagues forced to pick up the slack. Loss of security workers could be particularly harmful, as it will place additional pressure on already exhausted cyber security professionals and put organizations at increased risk of attack.
Combat staff turnover: Keep employees in the fold
Offering exit interviews might be one way to combat high staff turnover in the future with the knowledge gained from them helping to reduce similar issues happening again – especially during the age of so-called “quiet quitting”.
However, when Culture Amp reviewed exit survey responses of 100,000 employees from a cross-section of businesses, it showed that ‘career opportunities’ was the most cited reason at the time of leaving. This was “more common than compensation, work/life balance, and manager-related reasons combined”, Alvarez adds. Mentorship schemes could help employees feel they have vertical mobility in their workplace while also showing workers they are valued in their current positions.
Yoko Spirig, co-founder of equity software Ledgy, suggests offering employees a piece of the action can be useful to preventing turnover because it enables them to “see their work as an investment”.
“When you give people the opportunity to own a piece of the company they work for, people stop treating the work they do every day as a means to an end,” Spirig argues. “Equity gives people an extra reason to choose you over another company; to do their best work, innovate, and focus on long-term rewards, even in a tough economic cycle. Equity schemes also demonstrate to employees that their value and hard work is recognized.”
Discover how AI helps with managing hiring, career mobility, retention
Aside from financial concerns, wellness is another area for companies to get right to reduce staff turnover, but this doesn’t always have to mean allocating budget for gym memberships, meditation, or healthy food. Stan Massueras, EMEA general manager for people management platform Lattice, believes “wellness isn’t bought but nurtured through shared vision”.
“Businesses embracing purpose as a motivator understand that employees, like athletes, need that inner fire to achieve the impossible,” he explains. “The wellness and mental health challenges associated with the Great Resignation created meaningful change and now purposeful collaboration will propel us toward a brighter future.”
As the trend of big tech layoffs continues into 2024, employees may feel insecure in their current roles and begin the search for alternatives. Leaders who don’t effectively communicate their intentions for hiring and firing could be forced to reckon with workers leaving pre-emptively.
One brighter note to boost staff morale would be recognizing and celebrating their achievements, according to Cicely Ward, head of HR at digital marketing company Embryo. She believes this current “climate of uncertainty” means employees need "more assurance they are performing and valued”.
With a nod to today’s cost-of-living crisis, Ward highlights a key challenge for business leaders to consider. “The connection between employee satisfaction, productivity, and positive work environments becomes even more relevant amid economic turbulence,” she warns.
