Causes of Employee Turnover

Turnover is influenced by many factors that generally come from two directions: external forces and internal forces. We have a bigger impact focusing on internal forces within the company’s control.

We’ll start with external forces, though, because it helps to be aware of how much they contribute to fluctuations so that you can make effective decisions about retention. It also helps assess how important turnover is to your company when you see how you stack up against your competitors.

watching-the-clock

Average turnover rate

The U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey is based on a monthly survey of approximately 16,000 U.S. businesses. They report the average total turnover rate around 3.5% with voluntary turnover around 2% monthly.

As unemployment rates have declined over the past decade, the U.S. has gone from over six unemployed people per job opening in 2009 to less than one in 2019. That means employees have more options.

When there is more confidence in the economy and lower unemployment, voluntary turnover tends to rise and involuntary turnover tends to fall.

Mercer’s annual survey of 150 organizations in the US reported voluntary turnover at 16% in 2018 – lower than the 26.9% that the federal government reported, which may be a reflection on the types of organizations that participate in Mercer’s more in-depth study.

Overall, turnover does not vary greatly based on organizational size, although larger organizations can have slightly lower rates. And smaller organizations tend to feel more of an impact when someone quits.

Geographically speaking, the South tends to have the highest quit rates while the Northeast has the lowest in the US.

The biggest variances by far, though, are seen between industries. Hospitality and retail have the highest turnover rates while manufacturing and finance have among the lowest in the private sector.

Industry5-Year Average 
Voluntary Turnover
Hospitality51%
Retail35%
Professional Services34%
Leisure34%
Construction24%
Transportation21%
Real Estate21%
Healthcare21%
Information18%
Manufacturing15%
Education15%
Finance14%
Government9%

Source: U.S. Bureau of Labor Statistics, 2014-2018 

When LinkedIn analyzed their half-a-billion users, they found 11% indicated they left a company in 2017. This turnover rate is likely lower than the government and Mercer reports because of the types of professionals that use the platform and the dependence on an individual updating their profile.

Still, LinkedIn showed how turnover reflects current industry trends. Retail is a high turnover industry and now software is too. However, tech employees usually move to another tech company while retail employees often move to a new industry, likely due to the rise of online shopping.

When LinkedIn ranked job functions, those with the highest turnover (17%) were marketing and research, followed by media and communication, HR, and support functions (15%). Sales, engineering, and operations also have above average turnover (13%), likely a reflection of high demand for their skills. Meanwhile business development has the highest retention (6%).

While turnover trends are valuable, insights into your industry and overall economy are likely enough to anticipate when you need to invest more in recruitment and retention. Besides, long-term investment in retention is the most effective approach regardless of fluctuations in the market.

And while it can be helpful to benchmark externally based on industry, function, and region, the most important benchmark is internally based on department, job level, location, and other segments of your organization over time. So let’s now look inward.

Key drivers

Certain aspects of employee experience tend to be the biggest drivers of turnover (why employees leave) and retention (why employees stay).

Work Institute reports that 77% of voluntary turnover is avoidable. They found the top reason for leaving is career development, followed by work-life balance and manager behavior. Compensation, job, and workplace were also common reasons.

Based on industry research, the key drivers are consistent:

  • Total rewards
  • Onboarding
  • Leadership
  • Learning and development
  • Growth and advancement
  • Wellness and work-life balance

Total rewards

Total rewards goes beyond base pay, bonuses, and compensation overall. It includes health benefits like insurance and financial benefits like retirement savings. For many companies, it also includes any gifts or bonuses received due to a recognition program.

In sum, total rewards encompasses all that an employer offers an employee in exchange for joining, contributing, and staying with the company.

Recognition

When we talk about total rewards, we should also keep in mind the power of recognition. At its core, employee recognition is the open acknowledgment and expressed appreciation for employees’ contributions to their organization.

When organizations decentralize employee recognition and empower their workers to engage in peer-to-peer and 360-degree recognition (that is, not solely top-down recognition), they increase the frequency with which employees can receive recognition and get a more nuanced understanding of what individuals, teams, and departments consider valuable.

Onboarding

Employees tend to be the most positive about their employer before their first day on the job. Onboarding is a way to build on that momentum, but it’s often a place where companies fall short.

A BambooHR survey found that 31% of employees have quit a job within the first six months and the top reason was a poor onboarding experience, which is generally defined as the first 90 days on the job.

Onboarding includes orientation to the workplace and the job, yet it’s so much more than that. This is the time to integrate the new employee into the team and culture: the core values underlying everyday behavior.

Leadership

We know how critical managers are to the employee experience. The immediate supervisor directly influences many key drivers of engagement and retention like development and recognition. If your manager doesn’t recognize your work, how can you trust them to support your career growth and success? 🤔

Senior leadership also plays an important role. Executivesmustclearly articulate the company’s vision and values. They’re responsible for the that makes people feel secure and that the work they do is meaningful.

Learning and development

When people think about job learning, they think training, and that’s certainly a key part, whether in-class workshops or bite-sized videos on-demand.

However, the majority of career development comes from on-the-job learning. It’s an organic way we share knowledge. Plus it’s often the most effective way to learn: in a real environment with a real task.

Employees want to strengthen their skill sets to do better in their job, career, and sometimes just for the challenge and stimulation that keeps coming to work every day interesting.

Growth and advancement

While learning and growth are highly related, we separated them because they can satisfy different needs and can be accomplished in different ways.

Nobody wants to feel stuck. No matter how much education you provide, many people are not satisfied unless they can move to progressively more challenging jobs. And simply changing someone’s title from junior to senior hardly makes them feel more confident and capable.

Wellness and work-life balance

We define wellness as a holistic way to look at employee health, that includes both physical and mental health.

Work-life balance is a way to support employee wellness, and an increasingly more common method is flexible work arrangements. Research from Owl Labs and TINYpulse showed companies that support remote work have 25% less turnover.

burnout

Now that you know the factors that cause turnover, what can you do to fix it? 

When Is It Time to Fire an Employee?

No one likes firing employees. It’s a difficult decision, but any HR manager or business owner will eventually have to make the choice to do what’s best for the company. While it’s important to give problem employees a chance to improve, there may eventually reach a point at which the only option is to let an employee go.

But how do you know when it’s time to fire an employee?

They Don’t Improve

If an employee isn’t meeting your expectations, it’s important to let them know. Provide feedback and training as needed and give the employee opportunities to correct their mistakes, whether they’re producing poor-quality work or behaving badly in the workplace. It’s when no improvement is made or when the employee has no interest in improving that you may consider firing as the next step.

They Bring Down Other Employees

When an employee’s behavior or lack of work ethic affects other employees, it’s a sign that it’s time to fire that employee. If one employee can bring down the morale of the entire office, department, or even company, and the behavior hasn’t improved, then it’s time for that employee to go. The other employees will thank you for it and will be happier, less stressed, and more productive for it.

They Affect Productivity

If a poorly-performing employee isn’t improving, despite corrections and opportunities to do so, that can affect the productivity of your other employees as well. If one employee fails to complete his or her part of a project or doesn’t provide needed information to coworkers in a timely fashion, the productivity of the entire office can fall. Ridding the company of the unproductive employee will give you the opportunity to replace him or her with someone who will do the job right.

They’re Often Late or Absent

If an employee is regularly late to or absent from work or takes extended breaks, that’s something that can’t be left unaddressed. Employees that are frequently absent are equally unreliable. Perhaps they call in sick too frequently or use up their allotted vacation time too early in the year. These are signs that the employee may have problems with attendance.

Your other employees will notice the behavior and at best, believe their coworker is unreliable. At worst, they may believe the company is tacitly encouraging such behavior by failing to correct it. This could cause productive and timely employees to lose productivity and morale and even consider moving to a company that didn’t allow such bad behavior.

How to Fire a Problem Employee

Once you’ve decided to fire an employee, it’s important to do it right. If your company has a policy on the number of opportunities to improve each employee gets before they’re let go, make sure you’ve followed that policy exactly. Once the employee has reached the requisite number of “strikes” and you don’t see any hope of improvement, make sure that you have thoroughly documented the problem behavior.

You may want to engage your HR person to assist in the process to help you avoid a wrongful termination lawsuit.

How to Prevent Employees from Faking Sick Days

Flu season is right around the corner, and with it, employees calling in sick. Not all of these call-ins will be real, however. Up to 40% of employees actually call in and pretend to be sick in order to get the day off. For some companies, this can affect productivity and the ability of the other employees to do their jobs properly.

While companies can make do for when employees are genuinely sick, it can feel like a slap in the face to discover later on social media that an employee was actually at a concert and not at home sick after all. Many employees who have faked a sick day have actually ended up fired as a result of the dishonesty.

But what can companies do to prevent their employees from faking sick days?

Require a Doctor’s Note

Some companies require sick employees to provide a doctor’s note before they allow the absence to be counted as a sick day. This does require employees to prove that they are really ill, but it has the opportunity to backfire, especially if the employee is sick with something run-of-the-mill that doesn’t actually require a trip to the doctor.

Getting a doctor’s note for something like a cold or the flu would require employees to make unnecessary trips to the doctor, increasing health care costs. On the other hand, if the employee chooses not to get the doctor’s note and instead comes into work sick, they could infect the rest of the office. Even mild illnesses like a cold can affect employee productivity and morale.

Check up on Employees

Some managers take the time to actually check in on employees who have called in sick, especially when they have noticed a pattern of supposed illness around holidays or weekends. Some employees who have faked sick will post about it on social media, making this job a lot easier. Others are smarter about faking sick, but a drive-by of their home or a call to their residence could prove they’re not actually sick.

The downside of this is that it wastes the manager’s time. Your company’s managers should have better things to do than driving past an employee’s house to make sure they are actually sick. Plus, this sort of policy could make employees who really are sick feel like they aren’t trusted and encourage employees to come into work when they are sick.

Examine Company Culture

It’s also worth the time to look at how your company culture views taking time off. Employees may feel pressured to make up an excuse to take a day off so that they’re not looked at as unproductive. Employees have earned their PTO days and have every right to take them, but in a company that frowns upon actually taking time off, they may feel that they have to lie about it.

8 Tips for Handling Tough Employee Conversations

We all get cold feet when it comes to addressing difficult issues with colleagues in the workplace. It’s stressful, and you just can’t help but think of all of the ways that a well-meaning conversation could go sideways. You worry about the longer-lasting effects of a damaged work relationship but know that you must correct problematic work performance or behaviors before they get out of control.

Uncomfortable conversations about personal behaviors and poor performance are tough, and putting them off just allows the problems to worsen. Use your knowledge of the situation and put together the right combination of management skills to tackle the talk now.

Imagine these all-too-familiar employee situations that you know you need to address but don’t think you have the wisdom (or can’t muster up the courage) to handle:

  • The “No Good Deed Goes Unpunished” situation. For the past several months, one of your team members has been underperforming, and it has dragged down your business unit’s productivity. The underperforming employee has shared that she has a number of family and financial issues and is trying her hardest to stay focused on work because she needs this job and loves the company. She lives your company values and is well-liked by her co-workers. Everyone feels bad for her situation and has been picking up the slack, but they are growing resentful of the extra work with no end in sight. You’ve been trying to be kind by avoiding the issues as her performance has slid from bad to worse. It is now impacting your company’s overall performance and degrading the employee relations climate.
  • The “Bad Behavior, Great Performer” situation. One of your employees consistently exceeds his production goals at the expense of the company culture. He is highly critical of others, issues demands from other work teams without regard for their other priorities, and employees grudgingly drop everything to deliver on impossible deadlines because they believe that they cannot push back. It’s all about him and his performance. He is regularly recognized by the company leadership for being the top producer, and employee complaints to management about his behavior have not been addressed. While production goals are good, your company culture is sinking and you’re starting to see increased absenteeism and turnover among your staff.

Don’t Overlook the Signals

In addition to employee resentment and lost productivity, there’s a bottom-line impact for not tackling these tough talks at the right time and in the right manner. The key is to pay attention to the signals and not feed the problem with neglect.

In the first scenario, trying to be a kind and sensitive boss worked in the beginning but is now backfiring. At first the team worked together to help their struggling colleague, but without a plan to fix the problem in the longer term, it created three serious issues for you to fix: employee morale, lack of confidence in your leadership for missing the signals of “team fatigue,” and not having a plan to keep the team on track — all resulting in lost productivity.

The best thing you can do in situations like these is to work with the struggling employee to develop a plan that puts her back on track or helps her consider alternatives if necessary. This type of conversation requires sensitivity along with some firmness because you need to steer the conversation from the personal issues back to actionable work deliverables.

In my experience dealing with circumstances like the second scenario, typically management allows the top performer’s behavior to go unchecked for fear that if the employee is corrected his performance will suffer or he will quit the company. While there may be an element of truth to those concerns if the individual is unwilling to accept constructive feedback, the bigger fear should be for the company’s culture, employee erosion of trust and confidence in the leadership team, and the motivation, performance, and retention of the other company employees if the behavior is not changed.

Often the top performer continues to use the same work patterns that have been successful and isn’t even aware of the impact on others. Addressing the issues sensitively so that he can make personal changes has the potential to create even higher levels of team unity and performance.

What Signals are You Looking For?

For starters, watch your team’s interactions with each other, be sure that each team member understands their key performance objectives, and take the time to “check in” regularly and solicit feedback about the job, work team, and overall company with each employee.

Having direct conversations on a regular basis helps you nip problems in the bud and shows your employees that you care about their concerns. You also learn each other’s communication patterns so that when it comes time to have that awkward or difficult conversation, you both are less uncomfortable.

Groups where team members work remotely increase the chances that signals can be missed. When telecommuting is coupled with the use of instant messaging and other forms of communications in place of direct face-to-face or voice communications, the sender’s well-intentioned messages may get lost in translation. Be sure to follow up any electronic communications with a direct phone call or meeting.

Eight Tips for Tackling These Conversations

Strategies to manage conflicts with subordinates are not fully taught in business classes. More common are courses addressing project conflicts, where the focus is on fixing the “what” of the problem, such as resetting priorities, changing business plans, or repairing broken systems or processes. There are fewer tools focusing on how teams communicate and repairing broken business relationships. Preparation and planning are critical to get what you need from these hard conversations while keeping your relationship with the employee intact.

  1. Focus your own viewpoint first. If you start out thinking the conversation will be really hard, you’re going to be more anxious. Chances are the conversation will be harder. Instead, position this discussion as a means to enhance your relationship while helping your employee develop better skills, understand company priorities better, or work more positively on the team. Think about how you can deliver the difficult talking points with honesty, courage and fairness.
  2. Recognize the emotions you will be feeling. Are you disappointed in this employee? Angry about the problems they’ve caused? Scared that your conversation will damage your work relationship? Put your negative feelings aside and consider how you will frame the problem you need to discuss and how your employee may feel. Try to come at the discussion with consideration and compassion for their feelings and frame the conversation with a desire for the employee’s success. “John, we need to have a hard conversation today, and I’m feeling anxious because I want you to win. Please know that I am invested in your success and will work with you to make that happen.”
  3. Be intentional in planning the conversation, but don’t script it out so that your delivery sounds mechanical. Some consultants suggest drafting a script and considering alternatives based on the employee’s reactions. In my experience, these conversations never go completely according to plan, and scripted conversations feel artificial. Instead, write down key points and plan as if you are just having a simple conversation with a colleague. Be prepared to provide specifics and pace your conversation so that you take time to gauge your employee’s reactions to your comments. Your employee may react defensively if you provide vague statements. Instead of saying, “Sue, people in the company are telling me that you are difficult to work with and have a bad attitude,” frame the issue with examples, such as, “Sue, I am concerned because I’ve noticed in the last four team meetings you arrived late and weren’t prepared with project updates. As a result, both Joe and Sam missed their deliverables, and you didn’t let any of us know in advance that the timeline was slipping.”
  4. Recognize that you own part of the problem, too. Your goal is to have a conversation between adults where each owns some responsibility for the issue and solving the problem. This takes the conversation from finding fault to finding solutions. “Rob, I realize now that you have too many priorities and I didn’t provide you with the resources to deliver on the project. I also realize that I avoided addressing the problem at the beginning of the project and let it go too long without discussing it with you.”
  5. Outline what you want changed. Don’t just discuss the problem; describe the end result you envision. Discuss realistic and achievable outcomes and be willing to offer resources and assistance as appropriate.
  6. Ask the employee for his or her viewpoints. The last thing you want is a one-sided conversation. Slow the pace of the conversation, observe the employee’s reactions to your comments, and ask for feedback and suggestions for solving the problem. You may learn new information about what may have caused the problem, and the employee could offer even better solutions than you thought possible. Throughout the conversation, look for areas of consensus and acknowledge the employee’s feelings and concerns. That shows respect.
  7. End the conversation on a positive note with an action plan. Thank the employee for working with you through the difficult discussion. Acknowledge that it was a tough conversation and express appreciation for the employee’s professionalism as you both work towards a better outcome. Develop a going-forward action plan to solve the problem. “Tom, this was a hard talk, and I know it wasn’t easy for you. You provided some good ideas for fixing the issue, and I appreciate your professionalism. You can do this, and I am here to help you win.”
  8. Close the loop and follow up. Give the employee a little time to reflect on the discussion, but no more than a day or two. Follow up and ask the employee if they would like to have another discussion to cover any additional information or clarification. Put the agreed-upon action plan in writing, schedule regular status meetings, and recognize progress and improved performance. Taking these steps demonstrates your respect for the employee and desire for them to succeed.

Keep the Conversation Going

Great managers keep the conversation going to ensure team members are aligned and supporting each other to create a healthy corporate culture and successful company. When problems arise, they have the tough conversations to get things back on track. Handling these discussions well takes courage as well as empathetic listening and communications skills. Pay attention to the signals, develop your communications plan, and you’ll be more confident in tackling your next tough employee communications challenge.

How To Handle Difficult Employees

Every employer will have to deal with a difficult employee eventually. Sometimes, a serious conversation is all that’s needed to solve the problem. At other times, you might need to bring in HR. Here are seven types of troublesome employees and what you can do to handle the issues they bring.

The LOAFER: Known for goofing off, the loafer does just enough work to get by, while other employees have to pick up the slack. Unsurprisingly, this can cause resentment. Have a candid conversation, telling the loafer to focus on doing their job, not on wasting time. And reward those who pick up the slack.

The MALCONTENT: The grump in the group, the malcontent can squelch other’s ideas and lower morale with just a few words. Talk with them to discover the cause of their discontent and encourage them to offer potential solutions alongside any complaints they raise.

The MEDDLER: Extremely nosy, the meddler is known to ask personal or rude questions. Worse yet, they’re quick to share what they’ve learned. If your goal is a harmonious workplace, have the difficult conversation. Tell the meddler to focus on their work, not other people’s business.

The NARCISSIST: Desperate to be the center of attention, the narcissist puts their ego above the needs of the company. Assign them to projects where their strengths and skills will shine, while encouraging them to give credit to their hardworking coworkers.

The THIEF: Shady and manipulative, the thief lies and maybe even steals from your company. This makes other employees uneasy and scared. Don’t let your guard down when dealing with the thief. Instead, investigate discreetly. If you have hard evidence they’ve stolen from you, seek legal advice before confronting them.

The VICTIM: Excuses, excuses. With the victim, it’s always someone else’s fault. Counter this behavior by explaining it’s not about assigning blame. You don’t expect perfection, but you do expect people to help solve problems when they arise, not point a finger.

The YELLER: From shrieking laughter to loud chatter, the yeller can distract and annoy others. Sure, they may not realize how disruptive they are, but people need to get work done. Be direct and tactful when you tell them to lower their volume. After all, what you’re asking is reasonable.

You Can’t Wear That! Dealing With An Employee Who Dresses Inappropriately

If you’re a small business owner with staff, at some point you’re going to have to deal with a sticky, employee-related situation. Whether it’s an employee who’s always out sick, staff who look for sneaky ways to abuse benefit privileges or team members being careless on social media, your people may make choices that don’t suit your business—including what they wear to work.

It’s a situation no business owner wants to face, but you and your employees may not be on the same page when it comes to appropriate work attire. As workplace dress codes continue to get more casual across the country, business owners and their staff may struggle to determine what’s acceptable to wear at work and why.

Use these tips to determine how to communicate with staff when an employee dresses inappropriately.

1. Have an answer for ‘Why Can’t I Wear This?’

It’s important that all members of your staff understand why certain clothing items or styles aren’t acceptable in your workplace, and that sometimes it’s about more than just making a good impression. For instance, if you work in an environment with machinery, tools, heavy equipment or other potential dangers, inappropriate clothing may not adequately protect  your workers. Even worse, some clothing, such as wide, loose sleeves, may interfere with equipment and pose a safety hazard.

2. Send out reminders when necessary.

Sometimes, the best way to deal with a minor “wardrobe infraction” is to post a reminder list on the wall in the break room or send out a simple company-wide email reminding your staff of the expected dress code. This subtle reminder may be all that’s required to get the attention of the specific offender, plus any others who may be tempted to stray toward inappropriate clothing choices for work. If this doesn’t work, though, prepare to talk to the staff member in question.

3. Be really specific about acceptable work clothing.

When communicating to your employee about what is and isn’t acceptable attire, be as specific as possible. Explain that what they’re wearing isn’t safe while working at a lathe, for example. Also prepare to clearly explain what’s included in any terminology you use. Instead of saying that your employee should avoid “casual wear,” specify that they should avoid “weekend casual wear” and list the clothing items that are included in this category.

For example, your non-acceptable “weekend” casual wear list could include:

  • Athletic shoes
  • Flip-flops
  • Sweatpants or yoga pants
  • Hats
  • Hoodies and sweatshirts
  • Halter tops
  • Crop-tops (belly-baring shirts)
  • Jeans

And your acceptable “business casual” list could include:

  • Khakis
  • Cotton trousers
  • Skirts
  • Blouses
  • Polo shirts
  • Pullover sweaters
  • Cardigans

The key is to clearly communicate to all your staff what is and isn’t acceptable work attire.

4. Understand the do’s and don’ts for talking about inappropriate clothing.

Before you talk to your employee about his or her clothing choices, review this list of what to do and what to avoid.

Do

  • Make the conversation easier by preparing. Make sure you are well-versed on your company dress code, and more importantly, that your dress code is legally compliant.
  • Choose a private setting to talk to the staff member, so you can address the issue without embarrassing them in front of others.
  • Choose your words carefully. For example, “I’ve noticed your clothing choices, which, though they may be appropriate outside of our office/shop/business, are not in keeping with our dress code. I’d appreciate your cooperation in making some minor changes.”
  • Introduce your meeting as a time clarify your dress code and make sure your employee understands it.
  • Be specific about the problem. For example, “The shoes you’re wearing expose your toes, so they don’t meet the safety requirement of closed-toe shoes in our dress code.”

Don’t

  • Attend alone, especially when speaking with an opposite-sex employee. Bring in another staff member.
  • Make it a personal attack on the  person’s character. This is about the clothing they wear at work, not an attack on their lifestyle, religion or political choices.
  • Use the word “improve.” If you do, it may sound like you’re dealing with a performance issue.

5. Have “The Talk” with your employee.

If an employee wears something inappropriate after you’ve sent out a group email, it’s time to talk specifically to them. Keep in mind the information from tips three and four, and act quickly.

“Don’t delay taking action—even if just verbally and even if you learn of the infraction long after it occurs,” says human resources consultant Linda Michaels. Clearly point out any dress code violations plus how to remedy them.

Discussions about acceptable workplace clothing can be uncomfortable. They require a sensitive and delicate approach. To keep inappropriate clothing at work from becoming an extended issue, the best strategies are to head it off before it even starts and address any wardrobe infractions immediately.

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