Navigating High Turnover Rates: Strategies for Employee Retention

Key takeaway

High turnover affects costs, quality, and morale, highlighting the importance of supporting employees and strengthening workplace stability.

• The average voluntary turnover rate in the US is about 13 percent, according to Mercer’s Workforce Turnover Trends analysis [1].

• Employers calculate turnover by dividing departures by average employee headcount and multiplying the result by 100.

• You can improve work-life balance by encouraging healthy habits, reducing emails and messaging after work hours, and offering more flexible hours.

Learn more about what constitutes a high turnover rate and what you can do to mitigate it. Afterward, explore Coursera for Business to discover learning opportunities from more than 350 world-class universities and institutions, and more than 10,000 programs that can support your employee development and training initiatives.

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What is a high employee turnover rate?

You can calculate the employee turnover rate by dividing the number of employees who left your organization over a given time (typically annually or quarterly) by the average number of employees. Then, multiply that number by 100 to get the turnover rate. For example, if you have 75 employees and five either quit or you fired them last year, your turnover rate is 7 percent.

Turnover rates tend to vary by industry, but according to Mercer’s Workforce Turnover Trends analysis, the average voluntary turnover rate in the US is about 13 percent, with industries such as healthcare, retail, and wholesale reporting higher turnover rates[1].

Spotting the signs of high turnover is a good place to start addressing the issue. Some common warning signs of potential employee turnover include employees who previously showed up on time but are now arriving late or leaving early, negative attitudes, lack of engagement between coworkers, and a declinein work quality or failure to meet deadlines.

The consequences of a high employee turnover rate

A high turnover can negatively impact businesses in several ways. Financially, recruiting and hiring new employees is costly, rather than retaining the ones you already have. Additionally, high turnover can potentially lower the quality of products and services as inexperienced employees who require training replace experienced employees. This can create significant losses, sometimes totaling hundreds of millions of dollars.

High employee turnover itself can even lead to higher turnover rates. As employees leave, morale may shift as the remaining employees work through the loss of coworkers with whom they developed relationships. You may notice increased friction among those who stay, as they wonder whether they made the right decision, on top of likely facing a larger workload.

Common causes of high turnover and strategies to mitigate them

Employees have varying reasons for leaving their jobs. While some causes may be easier to control than others, learning about the various causes can help you find ways to improve retention.

Career development

A lack of career development opportunities to learn new skills and advance can contribute to high turnover rates. Solutions include assessing promotion policies to identify opportunities for internal advancement, informing employees of these openings, and providing learning opportunities such as access to online courses.

Management styles

Employees typically want to feel supported by management and prefer consistent feedback, direction, and evaluation. Improving this factor largely starts at the top, where leaders must effectively communicate standards and establish management processes.

Read more: Why Your Company Needs Management Development and How to Start

Job flexibility

A lack of job flexibility can cause high turnover rates, as hybrid work models are attractive to workers and motivate them to pursue other opportunities. While remote work isn’t always feasible, it may be possible in some situations. Even if remote work isn’t an option, offering slight flexibility regarding occasional working hours can have a positive impact.

Compensation

Below-average compensation, including salary, opportunities for raises, and benefits, can contribute to high turnover as employees seek more competitive pay. One way to combat what employees view as poor compensation is to take a more personalized approach to benefits packages so that they’re better suited to the needs of each individual. You should also perform research regularly to confirm you’re keeping up with industry-standard compensation to stay competitive.

Work-life balance and burnout

Overworking employees due to unsustainable expectations can lead to burnout, which in turn can cause poor productivity, job dissatisfaction, and increased turnover. You can implement several strategies to avoid burnout, but it’s also important to have a workplace where employees feel comfortable communicating these concerns. Additionally, you can improve work-life balance by encouraging healthy habits, reducing emails and messaging after work hours, and offering more flexible work hours.

Measuring and monitoring employee turnover

Beyond measuring employee turnover rates, you can observe other metrics that will help indicate when a problem exists. You can also proactively identify key performance indicators (KPIs) to gain perspective on the state of your workplace. 

Involuntary vs. voluntary turnover

Involuntary turnover includes employees who are laid off or fired, while voluntary turnover refers to employees who choose to leave. These two metrics can highlight different issues. For example, a high involuntary turnover rate can mean recruiters are bringing in candidates who aren’t qualified for the job. High voluntary turnover may indicate issues with advancement opportunities or compensation compared to other organizations.

Employee satisfaction

By paying attention to employee satisfaction, you can address concerns before they become so severe that employees feel it's in their best interest to leave. You can develop a sense of workplace satisfaction by conducting interviews, surveys, and open conversations. It’s especially important to monitor new hires' satisfaction levels, as turnover is generally higher among new hires than among long-term employees.

Length of employment

Calculating the average length of employment of employees within your organization can help you see how you compare to others in the same industry. The formula for the average length of employment is the total number of years worked divided by the number of employees. For example, if you have 75 employees who have worked a combined total of 1,000 years, the average length of employment is 13 years.

Can increasing employee engagement help? Benefits of prioritizing engagement

Yes. Engaged employees are more connected to their colleagues and their employers, and they’re more likely to stay where they are. Benefits of employee engagement include improved retention, higher productivity rates, and lower absenteeism.  Engagement can be a powerful measure of the overall employee experience. When people work in an environment where they feel valued, recognized, and supported, with access to opportunities and work that they feel is meaningful, engagement often follows.

Employee engagement is a metric that assesses your employees' overall enthusiasm for their jobs and workplaces. Elements like growth, purpose, equality, recognition, psychological safety, autonomy, trust in management, and clarity all help foster a more engaged workforce. to engagement. 

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