Navigating High Turnover Rates: Strategies for Employee Retention

High employee turnover rates, especially unexpected turnover, present several business challenges. When employees leave, their absence can disrupt daily workflows and divert resources to recruit new employees to fill vacated roles. This comes at a financial cost, so establishing strategies to retain employees is a worthwhile and achievable effort with the right plan in place.

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Understanding high turnover rates

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 employees quit or were fired last year, your turnover rate is 7 percent.

Turnover rates tend to vary by industry, but according to the Gitnux 2024 Market Data Report, the average employee turnover rate across all industries is between 12 and 15 percent, with industries such as healthcare, hospitality, and manufacturing all reporting turnover rates higher than the national average [1].

Spotting the signs of high turnover is a good place to start addressing the issue. Some common warning signs that potentially indicate problems with 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 reduction in the quality of work or failure to meet deadlines.

The consequences of high turnover

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 cause higher rates of turnover. 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 negativity as those who stay wonder if they made the right decision on top of now likely having 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 find opportunities to grow internal advancement, making employees aware 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.

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 unsustainably high expectations can lead to burnout, which can cause poor productivity, lack of job satisfaction, and an increase in 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 to gain perspective on the state of your workplace. 

Involuntary vs. voluntary turnover

Involuntary turnover includes those laid off or fired, while voluntary turnover refers to the employees who decide 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. A high voluntary turnover may imply issues such as 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 employee satisfaction by conducting interviews, surveys, and open conversations. It’s especially important to monitor the satisfaction levels of new hires since the turnover rate is generally higher here than with 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 entails taking the combined number of years worked for all employees and dividing that number 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.

Getting started with Coursera

Employees are critical to any successful business, and the ability to recruit and retain skilled employees can help you reach your business goals. Focusing on areas such as communication between managers and employees, professional development opportunities, and offering flexible work policies can go a long way.

Attract frontline talent, support internal mobility, and prepare workers for in-demand, digital jobs with Career Academy from Coursera. Featuring a curated catalog of guided tutorials and projects focused on high-value digital skills and tools, Career Academy offers competitive career development opportunities with training programs from industry leaders like Google, Salesforce, Intuit, Meta, and Ashok Leyland, among many others. Explore Coursera for Business to learn how to provide the technology training your business needs to be competitive.