How to reduce your turnover

Published on 10 April 2019 by Charlotte in Change Management

For the past couple years, companies have been facing a crucial challenge: retaining their talent. 

Employees’ expectations are evolving. Meaning, fulfillment and quality of life at work are some of the questions that employees are asking themselves. Human resources departments therefore have to adapt to these new priorities to avoid too high a turnover. 

According to the Harvard Business Review, in order for your HR actions to fundamentally improve your employees’ performance and well-being, you have to manage HR risks. 

What are HR risks?

Too often reduced to the notion of psychosocial risks, there HR risks. The best-known issue of turnover is among them — and it can be very costly when you combine the annual salary for an equivalent position and the costs of the recruitment process (sourcing and promoting vacancies, screening applications, conducting interviews, selecting the candidate, negotiating, etc.) and the integration process (administrative procedures, introduction to the teams and training).

So how do you reduce your turnover?

To set yourself apart and convince your internal talent to stay by your side, you have to start by measuring and analysing your current turnover. Once the preliminary work has been completed, this is the point where you implement appropriate corrective actions. 

Let's look at these, one by one.

How do you calculate your company’s turnover?

Turnover is an indicator of how healthy your company is. Our friend Google defines it in (just) 7 words as thereplacement rate of staff at a company."

The reality is a bit more complex. 

What does this rate correspond to exactly? 

Turnover (or rotation rate) enables you to measure the movements of employees joining your company and those leaving it over a given period. It is generally calculated over a quarter, half-year period or year. 

Do not overlook it: This figure generally reflects your company’s overall state of health! This indicator should be tracked over time. It is also interesting to put it into perspective in terms of ‘exceptional’ events that may arise within your company.  

What is the formula for calculating turnover?

To find out your turnover, the formula is simple:

formula for calculating turnover rate

Let’s take an example.

As of 1 January 2018, company XYZ has 300 employees. During the course of 2018, the company recruits 30 new employees. 50 departures (it doesn’t matter whether these are voluntary or not) also took place over the same period. 

example for calculating turnover using 365talents formula

Company XYZ has therefore replaced 13.3% of their workforce in 2018.

To gain insight into the efficiency of your HR policy, now focus more specifically on the departures.

If you are mapping these, there are two types of departures:

  • Involuntary departures: Redundancies, sickness, internal reorganisation, etc.
  • Voluntary departures: Divided into two categories: unplanned and dysfunctional departures

It is clear that you should focus on the dysfunctional departures to have an impact on reducing your turnover. But we will come back to that.

When do you measure your turnover?

We recommend that you analyse your turnover as part of monthly or quarterly reporting. This will enable you to be more agile in implementing actions and projects to improve your employees’ engagement.

How do you assess your turnover rate?

As with any indicator, calculating your turnover is only useful if you analyze it.

At that point, three interpretations are possible:

  • Your turnover is low (less than 15%)  ✅

The social situation at your company is healthy.

  • Your turnover is zero (0%).

Your company risks a lack of internal impetus and could be missing out on new talents. Understand that turnover is healthy to a certain extent.

  • Your turnover is high (more than 15%) ❌

You need to reflect on the root causes for this turnover. There could be various reasons for this (organization, social climate, few benefits, lack of responsibility, no training options, few progression opportunities, etc.).

What to consider when analyzing turnover

There are exceptions to every rule.

Cultural context

Working for decades in the same job is no longer the norm for the new generation. The figures bear witness to this: In 30 years, the rotation rate has multiplied by five. Your employees will tend to prefer to increase their number of experiences in order to boost their careers.

Our advice? Internal mobility is still not being sufficiently leveraged by companies to meet this interest. We will go back to this in another upcoming article.

If your turnover has increased over the past few years, you can rest assured that one of the reasons (but it might not be the only one) is down to a fully transforming economic and social context.

Business sector

The second element to take into account is your business sector. Each one of them is subject to a different turnover rate. Therefore, the reference skill sets to consider are not the same. For example, the hospitality sector has a higher than average turnover rate.

On the contrary, the public sector has one of the lowest turnover rates. Why? Simply because in many countries civil servant status guarantees a job for life: an employee therefore thinks twice before leaving the civil service.

Furthermore, the company’s classification and lines of business (sometimes at odds) can also influence your turnover.

How do you explain a high turnover?

If your turnover is higher than the average for your sector without there being any specific contextual explanation, it is time to revisit the details of your policy and internal organisation.

Several factors come into play for explaining these figures. We have selected a few questions for you.

  • Do your management methods match your employees’ expectations?
  • In fact, what are your employees’ expectations when it comes to management issues?
  • How do you communicate the company’s results internally? Are you transparent enough?
  • What means are available to your employees for continuously developing themselves? Is information (and training) readily available?
  • What are the different benefits offered to your employees? What are the actions and projects implemented to promote internal mobility? Do you have a real development policy that is clear, transparent and adapted to your employees’ needs?

After these initial reflections, it is time to put a plan of action into place to rectify any weak points.

How do you reduce your company’s turnover?

Unfortunately, that there is no magic formula for determining these actions. But that is not to say that we aren’t going to give you some ideas. In fact, they seem essential to us for reducing turnover. 
One of the first things to do would be to take the time to have discussions with your employees. Organize group or individual sessions on specific topics. They will enable you to spend some valuable time addressing their current frustrations and expectations in terms of HR policy. 
Your employees will feel all the more important and engaged by the company. However, in order to engage with your employees (and reduce turnover), here are some paths of reflection to explore. 

1. Empower your teams

It can never be said enough that empowering your employees will strengthen their self-confidence, initiative-taking and, by extension, the commitment that they may have to your company. Therefore, involve managers in these reflections. There is no place for micromanagement anymore.

2. Improve your employees’ working environment

And this includes areas that are furnished, so that your employees can talk to one another, take a break and relax. OK, putting a foosball game right in the middle of an open space wouldn’t really make sense.  But similar actions must be integrated into a wider approach to ensuring your employees’ comfort and well-being. We are convinced that these investments work in the long-term. Without knowing it, they give a strong indication, both internally and externally, of good working conditions and environment on a day-to-day basis.

3. Offer exclusive social benefits

Restaurant vouchers have almost become the norm nowadays. However, you can use health plans or similar benefits to differentiate yourself from other companies. Also, use annual events to launch new benefits: special rates for certain shows or even putting new services into place for employees (meal delivery, valet or concierge services, etc.). Discuss these with your employees to find out what they want. A young employee aged 26 may not have the same wants as a father of three.

4. Talk about internal mobility and progression opportunities

These two points are essential and bring several advantages for both the employee and the company. 

For the company, internal mobility allows you to:

  • Save time and money (the employees are already part of the company)
  • Evaluate your employees’ talents
  • Know the company
  • Drive career paths
  • Develop a new wide-scale vision of employment

For your employees, it offers:

  • Real and realistic progression opportunities
  • Confidence and motivation to excel
  • A sense of belonging to the company
  • Skills development
  • Recognition from superiors for delivered work

5. Develop internal training

In-company learning transforms. With e-learning, digital learning has become more and more developed over the past few years to speed up internal training. You have to consider long-term training. It must enable your employees to perform better in their everyday lives in order to ultimately improve the company’s performance.

Conduct internal surveys and interviews with employees and their managers to find out their training needs. In this way, you are better informed and more level-headed regarding the relevance or irrelevance of such training.

6. Involve your employees in your HR projects

We have already talked about the fact that we are all searching for meaning in our respective careers. Your role is also to reassure your employees about their future and the importance of their job within the company.

Also, be transparent regarding ongoing projects and upcoming improvements. Few companies have succeeded in creating a true culture of transparency. We know that it isn’t easy and that it takes time. But start to think about it today, that’s already a step towards getting ahead of other companies tomorrow.

In summary

As we have seen, high turnover is very costly. But how do you succeed in reducing turnover? 

For your company’s health and your employees’ well-being, we have developed 3 key steps throughout this article.

  • Calculate your turnover and break down your results according to the reasons behind the departures.
  • Analyse them without forgetting to take into account the context, your business sector and the type of job.
  • Put a plan of action into place according to your employees’ expectations.

And that starts today! 

Ready to chart a new course for your people at work? To learn more about the skills gap or get started on the solution with our AI-powered talent experience platform, book a demo today.

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