OneSource Business Solutions Blog

4 Causes of Employee Turnover and How to Fix Them

Employee turnover is a problem that faces every company. While some turnover is normal and unavoidable, high turnover comes with significant costs. The average turnover rate is 3.5 percent, with some industries having higher turnover rate than others. If your rate is high for your industry, it can indicate that you have a problem. There are numerous challenges in retaining employees, and high turnover is not uncommon for smaller companies. 

The Problem with High Employee Turnover 

There are several problems which are caused by high turnover. They include: 

  1. Hiring costs. Even replacing a retail clerk can cost as much as $25,000 in hiring costs and lost revenue. 
  2. Reduced employee morale, which then results in other problems. This can easily spiral into a full-blown toxic work environment. 
  3. Low service quality as experienced employees leave and inexperienced new hires are left dealing with issues. 
  4. Low productivity as new employees get up to speed. It can take weeks if not months for a new hire to reach the productivity level of an experienced one. 
  5. Loss of institutional memory and, often, of valuable knowledge. 


High turnover, overall, has a negative impact on almost every aspect of your company. 


4 Causes of High Turnover and Their Solutions 

While all kinds of things can impact turnover, and not all are under your control, there are four main causes of high turnover that HR can solve. 

Being Overworked 

When employees are overworked, they are stressed and often feel undervalued. Excessive mandatory overtime (or staying late in the case of salaried workers) will often drive employees to quit. So will not being able to take breaks or the feeling that the to-do list is growing faster than items are being ticked off. All of this can lead to burnout among employees and a very high rate of turnover. 

Hiring more staff is the obvious solution, but if you can't afford that, work on automating everything you can and outsourcing when possible (outsourcing mundane HR tasks can really help here). Encourage overworked employees to delegate to those who do have downtime and help spread the load around more fairly. 


Toxic Culture 

Is your office culture toxic? Nobody wants to admit to this, but if you're seeing signs of it, you need to step back and fix it. Signs include: 

  1. Excessive importance being placed on titles, job descriptions, and rules. 
  2. Lack of interaction between managers and employees. 
  3. Uninvolved HR (or HR who keep acting as if nothing is wrong when it clearly is). 
  4. A focus on negative criticism, with few or no rewards. 
  5. People not speaking up even if they are unhappy, being given unrealistic targets, etc. 
  6. Things getting to people through the "grapevine" way faster than official communication. 
  7. Lack of trust, micromanaging, etc. 

HR needs to get involved to fix company culture problems, ideally before they reach this level of toxicity. This can be a challenge, but it is well worth it. Outsourcing mundane HR tasks frees up HR to deal with the toxic culture. 


Lack of Recognition 

Everyone needs to be recognized. However, many managers take employees for granted. They assume that a steady job and a paycheck is enough to show people that they are, in fact, appreciated. 

Unfortunately, this can leave people feeling as if no matter what they do, they will never be good enough. This can cause some employees to coast, but others will shop their resumes. Or they will become so-called passive candidates, sticking around only until a better offer comes around. 

The obvious solution is some kind of simple employee recognition program. Regular one-on-ones in which the manager tells the employee what they have done well, mitigating any criticism, can also help. Small rewards such as gift cards or food can go a long way towards making people feel appreciated. HR can put together recognition programs, including peer recognition (which can help build a supportive environment). 


No Career Progression 

32% of people who quit their jobs do so because they feel as if they lack the opportunity to progress or get promoted. This can be particularly challenging for smaller companies, who may genuinely have few opportunities to offer and may end up resorting to creative re-titling of positions to create "paper promotions." 

Employees need to feel that they are not in a dead-end job. If your company is growing, then educating them on how their position might grow with it and what future opportunities might come their way can help. You also need to make your expectations clear. What do employees need to do to get a promotion or a significant raise?  

Employees are also more likely to stick around if they have opportunities for ongoing professional development and training. 


The Role of Human Resources 

People leave their jobs for all kinds of reasons. However, there are four main causes of office turnover that you can fix. If you suspect that you have overworked staff, a toxic culture, lack of recognition, or a feeling that there is no room for growth, then you need to fix this. The way you do so is to engage human resources. 

However, small HR teams often have limited time. Outsourced HR can help by taking mundane tasks off of their plate and giving expert advice on fixing your company's problems and help your employees thrive. 

OneSource contact us