Everything You’ve Wanted To Know About Employee Turnover

Employee Turnover Statistics

Employee turnover is incredibly costly and something that every leader needs to pay attention to.

Turnover isn’t something that you can ignore.

Here are some startling statistics that show how big of an issue this really is.

  1. More than 70% of high-retention-risk employees say they have to leave their organization in order to advance their careers.
  2. More than one-quarter of employees are in a high-retention-risk category, and many are top performers or high potentials and possess critical skills.
  3. 44% of employees say they would consider taking a job with a different company for a raise of 20% or less (for actively disengaged employees, that number is 54%).
  4. Employees who are ‘engaged and thriving’ are 59% less likely to look for a job with a different organization in the next 12 months.

Focusing on employee engagement and personal growth for your employees will pay huge dividends for your team.

The things that you need to do to fix these things are surprisingly simple.

More than anything, it’s about actively listening to employees and even encouraging them to submit feedback about what could be improved in their role.

You can even ask them during regular one-on-ones what would get them to leave and what you would need to do to make sure they stay with you.

It’s important that you develop a relationship with your employees where those conversations can take place.

Employee Turnover Costs

Generally speaking, turnover costs about 20% of an employee’s annual salary.

The problem with calculating the costs of turnover is that it’s so all over the place.

For higher, more specialized positions that take longer to fill, the cost of turnover is way higher. For jobs with lots of turnover (retail, call centers, etc.) turnover costs will be lower.

Another problem with calculating the costs of turnover are all of the items that are untracked or just hard to put a dollar amount on.

Things like:

  • Costs associated with hiring (job posts, interviews, technical tests, etc.)
  • Onboarding costs (employees aren’t “valuable” for at least 3 months)
  • Training costs
  • Lost time from other employees helping out with questions

Causes Of Employee Turnover

There are many causes of employee turnover, mostly having to do with a negative work environment. The two biggest factors though, are hiring problems and issues with managers.


According to the RainMaker Group, hiring problems account for 80% of employee turnover.

This is why it’s so important to make sure you have an amazing hiring process, and you’re always looking for ways to improve it.

The first step, is to make sure that you write a good job description, so that candidates know exactly what to expect.

Then, I would recommend using video technology to help you with the interview process. You can use something simple, like Skype or Google Hangouts, or a more sophisticated tool like HireVue.

Finally, I would do something called hire by auditions, where you give candidates a test project to see how well they’ll perform.

Bad Managers

Another significant cause to employee turnover is a bad manager. Not all managers are bad, but there are so many managers out there who are stressed out, and don’t treat their employees properly.

PricewaterhouseCoopers says that 9 out of 10 barriers to the success of employee engagement programs are people related.

Remember, most people don’t quit their jobs, they quit their bosses.

This means that it’s actually quite easy to fix, all managers need to do is appreciate their employees.

They need to learn how to be nice to them, respect them, and treat them like they would want to be treated.

How To Calculate Employee Turnover Rate

Let me show you the formula for calculating turnover:

employee turnover calculation

For example, suppose you have a company with 200 employees, and 30 of them leave throughout the year. At the beginning of the year, they had 200 employees, and now they have 195 (you need to include the new hires).

employee turnover example

The Center for American Progress put together an amazing report on the costs of employee turnover, that I definitely recommend everyone checking out.

There are many ways that you can lower employee turnover, let’s discuss a few.

Ways To Lower Employee Turnover

Most of the ways to improve your turnover are very simple, they just require focus on a long-term commitment.

Here are a few ideas you can use to improve your employee turnover.

  1. Improve The Hiring Process

    Like I mentioned above, by far the most important thing to work on is the hiring process. If you get that right, and you start hiring people that are the right fit for the job and the company culture, your employee turnover will go down.

  2. Train Your Managers

    I also mentioned bad managers, so an easy way to lower employee turnover is to train your managers.

    I really believe that psychology plays an important role in leadership, and I really wish that more managers would take training in emotional intelligence and positive psychology.

    I would highly recommend every manager reading this to take a free course from Coursera called Inspiring Leadership Through Emotional Intelligence.

    It’s taught by Richard Boyatzis, who is a distinguished university professor, and a professor in the departments of organizational behavior, psychology, and cognitive science.

    Alternatively, Officevibe has an 11-day email course that you can sign up for right now.

  3. Give Opportunity To Grow

    What employees really want, as made famous by Dan Pink, is autonomy, mastery, and purpose. You can easily fulfill their need for mastery by letting them improve whatever skills they have for their job.

    It’s actually a win-win, because if they’re better at what they do, they’ll be more productive.

  4. Recognize Employees

    Companies that scored in the top 20% for building a “recognition-rich culture” actually had 31% lower voluntary turnover rates according to research by Bersin.

    What’s important to note about the research is that it’s more important to receive recognition from peers than it is from top managers, so set up a way for employees to praise and recognize each other.

  5. Be Flexible

    Work-life balance is one of the most important parts of keeping your employees happy, healthy, and productive.

    Offering your employees flexible options to make sure they’re able to have a life is one of the easiest (but often forgotten about) ways to lower turnover.

    More companies are starting to realize this, meaning that you’ll need to get on board or employees will leave for companies that understand its importance.

  6. Collect Frequent Feedback

    Some companies still survey their employees only once a year. How sad!

    Employees want to feel listened to and like their opinion matters.

    A great way to lower turnover is to collect feedback frequently from your employees and act on that feedback.

    Don’t collect feedback if you’re not ready to act, that will have the opposite effect of what you want.

    But actively listening and genuinely caring about the well-being of your employees will guarantee your turnover to decrease.

What Do You Do To Calculate Employee Turnover?