How to Reduce the Employee Turnover Rate at Your Company

Employee turnover can be divided into two main types: voluntary and involuntary.

Voluntary Turnover
This occurs when employees choose to leave on their own. Common reasons include seeking better opportunities, career growth, dissatisfaction, relocation, retirement, or personal factors.

Involuntary Turnover
This happens when employees are separated from the company not by choice, often due to poor performance, policy violations, downsizing, restructuring, or disciplinary issues.

Employee Turnover vs. Attrition
Turnover should not be confused with attrition. Attrition specifically refers to a gradual workforce reduction where departing employees aren’t replaced, often due to retirements, resignations, or non-renewed contracts. Attrition is a more passive process, where the organization does not directly initiate the departures.

What Is Employee Turnover Rate?

Employee turnover rate measures the number of employees who leave a company over a specific period.

This metric is valuable for organizations to gauge the success of their talent management, employee engagement, and overall work environment.

A high turnover rate can signal issues like poor management, insufficient compensation, limited growth opportunities, or a negative workplace culture. Conversely, a low turnover rate often points to positive factors such as high employee satisfaction, strong leadership, and effective retention strategies.

By tracking and analyzing turnover rates, companies can detect trends, address problem areas, and implement strategies to boost retention and engagement, contributing to a more stable and productive workforce.

How To Calculate Employee Turnover Rate

To determine your employee turnover rate, divide the total number of employees who leave in a given month by the average number of employees in your company. Then, multiply this result by 100 to get the turnover rate percentage.

Try our interactive employee turnover calculator to explore retention improvements and potential cost savings.

Causes of High Employee Turnover Rate

Once you've calculated your turnover rate, it’s essential to understand why employees may be leaving. Here are some of the most common reasons:

Financial Stressors

Financial stress can heavily influence turnover, with the 2022 PWC Employee Financial Wellness Survey showing that financially stressed employees are twice as likely to be job hunting.

Poor Work-Life Balance

A lack of work-life balance can harm employee morale and well-being, making it a leading cause of high turnover. Inflexibility in work arrangements is particularly challenging for younger employees.

Limited Career Advancement Opportunities

When employees see limited opportunities for growth, turnover rates often increase. Investing in upskilling and training programs for high-potential employees can help reduce turnover by supporting career development.

The Negative Impact of High Employee Turnover

A high employee turnover rate can significantly hinder a company's success. It can damage workplace culture, limit the company’s capacity to deliver excellent customer service, and lead to various expenses, including:

• Departure Costs
• Lost Productivity
• Recruiting Expenses
• Onboarding and Training Costs

How To Reduce Employee Turnover at Your Company

A high turnover rate can lead to productivity loss, reduced morale, and increased hiring and training costs. To avoid these challenges, companies should focus on strategies to boost employee satisfaction and retention. Here are some effective methods:

Offer Competitive Compensation and Benefits

Providing a comprehensive benefits package and competitive pay, including flexible access to earned wages, can enhance employee appreciation and retention. Compensation isn’t just about pay; it’s also about how often employees can access their earnings, which can help reduce financial stress and improve productivity.

Empower Employee Financial Wellness

Supporting financial wellness helps employees manage their earnings, pay bills on time, budget effectively, and plan for the future, reducing financial stress and enhancing overall engagement.

Deliver Meaningful Rewards and Recognition

Recognizing employees for their contributions with meaningful rewards can motivate and retain talent. Tangible incentives for exceptional performance show appreciation and encourage employees to continue excelling in their roles.

“My Day Pay Day(MDPD) helps reduce employee turnover by promoting financial wellness, allowing employees early access to wages for unexpected expenses. This support reduces financial stress, boosts job satisfaction, and strengthens loyalty, making employees more likely to stay engaged and committed, ultimately decreasing turnover rates.

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