Understanding the Causes of Employee Turnover: Strategies to Retain Your Team

Many business owners face high employee turnover and are often left wondering, what drives employees to leave? Understanding the causes of employee turnover is critical for any organization looking to maintain a strong and dedicated workforce. 

High employee turnover can stem from various factors such as inadequate compensation, lack of growth opportunities, poor management, and a negative workplace culture. Implementing strategies used by most HR professionals and/or recommended by authoritative sources like SHRM can address and help you prevent these issues. 

Read on to uncover actionable insights that will help you keep your top talent engaged and committed. 

Identifying the Key Causes of Employee Turnover 

High employee turnover is a complex issue influenced by many factors, including poor compensation and ineffective management strategies. It depletes organizational resources and damages the company’s reputation within the job market. With potential costs soaring to as much as 213% of an executive’s yearly salary, the high rate of employee turnover demands immediate attention. 

The reasons behind employees leaving vary from: 

• discontent with pay 

• absence of engaging tasks 

• limited opportunities for career advancement 

• conflicts in the workplace 

• lack of recognition 

Understanding these primary causes gives companies the ability to identify warning signs quickly and take effective measures to reduce employee turnover. 

1. Inadequate Compensation and Benefits 

A lack of competitive compensation and benefits is frequently cited as a main reason for high employee turnover. Younger employees are more inclined to switch jobs if they feel they can find better pay elsewhere. This tendency is most pronounced among those earning lower wages, where we typically see higher rates of departures. 

These quick actionable steps can help avoid high employee turnover due to inadequate compensation: 

• Conduct periodic market analyses to ensure competitive pay scales 

• Establish transparent salary bands and progression criteria 

• Offer performance bonuses or incentive programs 

• Provide non-monetary benefits such as health insurance, retirement plans, and wellness programs 

• Engage in open communication about compensation and how it is determined 

• Recognize and reward exceptional employee performance promptly 

Such practices play a crucial role in ensuring that your organization offers competitive pay which helps to hold on to valuable employees. Understanding the importance of fair compensation is an essential first step. It’s just as vital for organizations to invest sufficiently in these areas—something many HR experts note that companies often overlook. 

2. Limited Growth and Development Opportunities 

A substantial factor driving employees away  is the absence of opportunities for personal growth and professional development. From 2010 to 2019, this issue has led to an alarming 170% surge in employee turnover rates. This trend aligns with statistics showing that 22% of workers point to a lack of career progression as the main reason they decide to part ways with an employer. 

To combat this problem, companies should: 

• Develop transparent career advancement tracks with defined milestones for progress 

• Offer ongoing professional development and skill-building opportunities 

• Promote from within whenever possible to encourage employee loyalty and career growth 

• Provide a benefits package that addresses the diverse needs of the workforce 

• Utilize objective performance assessments to guide fair and transparent promotions 

By implementing these measures, organizations can create tailored strategies for individual employee advancement within the company. This approach  prepares employees for upward movement, and  decreases reliance on hiring externally. Additionally  strengthens internal mobility among staff members is strengthened, contributing to a more dynamic and adaptable workforce. 

3. Poor Leadership and Management Practices 

Many employees who leave their jobs on their own accord may feel there were measures which could have been taken by either their manager or the company to avert them from leaving. This lack of effective management can lead to employee discontent, which has a substantial effect on an organization’s turnover rates. 

To address this issue, you should: 

• Provide managers with comprehensive leadership training 

• Encourage frequent manager-employee interactions through performance evaluations 

• Foster a positive work environment 

• Aim to reduce employee turnover rates with strategic HR management 

Adopting these tactics will aid in equipping managers with better capabilities for leading their teams effectively and meeting organizational objectives. 

4. Negative Workplace Culture 

An environment rife with disrespect and ongoing conflict can push employees toward leaving workplaces that offer more affirming atmospheres. It has been estimated that negative workplace environments have led to significant financial losses for businesses, tallying approximately $223 billion over a period of five years. 

To alleviate this problem and lower employee turnover rates, companies can take proactive steps by: 

• Improving management approaches 

• Making roles clear-cut along with delineating responsibilities 

• Actively involving employees through regular feedback mechanisms like labor turnover surveys 

• Conducting team-building exercises 

These measures aim to create an environment characterized by cooperation and inclusivity, which may contribute to decreased levels of employee attrition. 

Addressing Work-Life Balance Concerns 

Stress from poor work-life balance and constant connectivity contributes to turnover. When possible, employers should look to offer flexible work options, such as flexible hours, remote work, and ample paid time off, to maintain a committed workforce and reduce turnover. 

Flexible Work Arrangements 

Following the COVID-19 pandemic, workers globally now highly prioritize remote work opportunities and flexible schedules. A rigid approach to scheduling could drive employees towards companies that offer more flexibility if they see no negative impact on productivity or financial outcomes. 

80% of employees favor positions with flexible timing options, and some are even open to taking a pay cut of up to 8% for this benefit. Consequently, offering flexibility in work isn’t merely an extra advantage. It’s a significant draw for job seekers, enabling employers to stand out when vying for premier candidates. 

Encouraging Appropriate Breaks 

Encouraging employees to take regular breaks can enhance their job satisfaction and diminish the likelihood of burnout, thereby leading to better retention rates. When employees forgo taking frequent time off, they are at a greater risk of suffering from burnout and diminished productivity due to the inevitable exhaustion and stress that comes with continuous work. 

The effectiveness of these breaks is also influenced by when they occur during the day. Shorter breaks tend to be more revitalizing in the morning hours while taking longer pauses later in the afternoon can be more restorative as fatigue tends to build up over the course of a workday. By advocating for periodic time away from work tasks, businesses not only ward off employee burnout but simultaneously bolster overall job contentment among their staff. 

Fostering Employee Engagement and Recognition 

Formal recognition programs can reduce turnover, as acknowledgement boosts commitment. Managers expressing gratitude and recognizing achievements can significantly impact an employee’s company loyalty. 

Promoting workplace community and strong employee relationships through team-building and cross-departmental collaboration enhances engagement. Recognizing contributions and celebrating professional milestones encourages a culture of continuous employee involvement and career development. 

Mentorship Programs 

Mentorship programs enhance promotion rates for mentors and career advancement for mentees. Such initiatives encourage professional growth, reducing turnover and retaining talent. Effective mentors can reveal and nurture an employee's potential, benefiting both individuals’ careers and the organization. A culture of continuous learning, supported by mentorship, helps maintain a skilled and engaged workforce. 

Regular Feedback and Performance Reviews 

Maintaining employee engagement and satisfaction is heavily dependent on regular feedback and performance reviews. Fostering an environment of feedback and recognition allows employees to track their progress and reaffirm their skills in their roles. However, a lack of feedback or recognition from managers is a key reason for employees to seek new job opportunities elsewhere. 

Assessing progress and providing feedback during onboarding and throughout an employee’s tenure helps them succeed and feel engaged.  

Thus, organizations should: 

• Hold regular reviews 

• Award high achievements 

• Seek out opportunities to praise the staff 

• Encourage a culture of peer-to-peer praise 

These actions can help address the lack of recognition and create a positive work environment. 

Implementing Diversity and Inclusion Initiatives 

In today’s interconnected work environment, initiatives focusing on diversity and inclusion are essential for employee retention. Discriminatory behavior towards individuals based on ethnicity, sexual orientation, or personal beliefs can result in employees leaving the company and may also precipitate legal action and regulatory challenges. Even if employees don’t experience discrimination directly, witnessing a colleague go through this, will cause a similar negative response. 

To mitigate such issues, companies should adopt measures including: 

• Ensuring unbiased and just recruitment processes 

• Fostering an environment that values inclusive practices 

• Providing ongoing educational opportunities to personnel 

By adopting these strategies, companies can create a welcoming and comfortable work environment that not only motivates their workforce but also nurtures their professional growth. This supportive atmosphere leads to a deeper sense of commitment among employees, which is instrumental in enhancing overall retention rates. 

Fair Hiring Practices 

Equal Employment Opportunity (EEO) principles encourage the creation of a varied workplace and bolster employee empowerment, leading to sustained improvement in organizational performance. By guaranteeing equal opportunities for talented professionals, EEO fosters an environment rich with innovation and fresh perspectives. 

Firms that uphold robust EEO practices benefit from enhanced brand recognition, which can draw in greater numbers of highly skilled applicants and strengthen their position within their job market. Adherence to EEO enables companies to access a broader spectrum of talent by making hiring decisions centered on proficiency and abilities instead of yielding to prejudice or discriminatory influences. 

Preparing for Inevitable Turnover 

Despite best efforts, employee turnover is inevitable. Companies should proactively prepare by cross-training employees, maintaining a talent pipeline through networking and recruitment, and developing succession plans for retirees. Streamlining the hiring process can also reduce the impact of turnover, ensuring quick and effective replacement of staff. 

Succession Planning 

Succession planning is crucial for maintaining leadership continuity and the stability of an organization. It preserves vital institutional knowledge even when key employees depart, ensuring that this wisdom remains within the company. Succession planning also fosters employee progression , which can lead to enhanced morale and help keep leading performers on board. 

When confronting retirements—a typical reason for employee exits—having a robust succession plan in place is instrumental. Such planning allows organizations to tackle these changes head-on, limiting interruptions and promoting seamless transitions in positions of leadership. 

Exit Interviews 

Conducting thorough exit interviews can yield valuable data that exposes the underlying causes of employee turnover and identifies areas within the organization that may need adjustments. The insights gleaned from these sessions have the potential to drive change and enhance both company culture and retention approaches. 

Securing genuine feedback depends greatly on when exit interviews are scheduled. They should ideally take place post-resignation but prior to an employee’s full disengagement. Additional insights may be attained through subsequent follow-up discussions. Combining hard numbers from performance management systems with qualitative revelations from exit interviews offers businesses a well-rounded understanding of why employees are leaving. 

Find The Causes Of and Reduce Employee Turnover with Landrum Workforce Solutions 

Partner with Landrum Workforce Solutions to enhance your team's engagement and loyalty. Leveraging over half a century of experience in workplace optimization, we're poised to convert your employee challenges into avenues for growth. 

Working with us provides a competitive advantage, allowing your team to concentrate on primary business goals while we navigate the intricacies of nurturing employee commitment and longevity. We specialize in pinpointing your organization's specific needs and devising comprehensive strategies that resonate with your company’s objectives. 

Reach out to us to learn how we can assist in curbing employee turnover, paving the way for a more cohesive and prosperous workforce.