Thanks for subscribing!
You will now receive future content from Lyra Health.
What is employee turnover?
Employee turnover is the rate at which employees leave an organization and are replaced by new workers. Employee turnover is measured over a specific period and reflects a company’s ability to retain its workforce. There are two types of employee turnover:
Voluntary turnover
Employees willingly choose to leave their positions for reasons such as better opportunities, dissatisfaction with their current role or company culture, or personal reasons like relocation, family responsibilities, or career change.
Involuntary turnover
Employees are terminated or dismissed from their positions for poor performance, misconduct, downsizing, or restructuring.
How to calculate turnover
Employee retention is measured by tracking the number of employees that remain with a company over a specified period (often annually). Some companies analyze employee turnover rates by department, tenure, or demographic factors to understand areas for improvement and tailor future retention strategies.
To calculate employee turnover, some organizations use the formula
Total number of separations during the measurement period
Average number of employees during the measurement period
x 100
What’s a “good” job turnover rate?” It varies by industry, region, and the types of roles in your organization. The Bureau of Labor Statistics reports that rates range from about 15% to 85%. Every organization’s ideal turnover rate is different, and may consider historical turnover rate, internal promotion rate, and other factors.
Causes of employee turnover
Low pay, limited opportunities for advancement, and disrespect are some top reasons employees quit, according to a Pew Research Center survey. Let’s take a closer look at the most common causes of employee turnover:
1. Low pay
Compensation was workers’ number-one reason for quitting in the Pew Research survey. Financial stress is high in today’s market. In Lyra’s 2024 State of the Workforce Mental Health report, 73% of employees said their financial well-being directly impacts their mental health.
2. Poor management
It’s often said that “people leave managers, not companies.” One poll cited employees’ relationship with their boss as the main reason for leaving a job. Managers are crucial in creating a supportive team culture, problem-solving, and setting a healthy example of work-life balance, respectful communication, and managing stress. Without the right training, managers may unintentionally contribute to causes of employee turnover by engaging in behaviors like expecting availability after work hours, not communicating, or failing to create an inclusive environment.
Additionally, managers are often struggling with their own stress and mental health, which makes it difficult for them to show up for their teams as they’d like. Research shows 43% of managers report burnout—higher rates than other job levels.
3. Untreated mental health conditions
Employee turnover is sometimes a byproduct of unaddressed workforce mental health challenges. In one survey, 50% of employees reported leaving a role due to mental health reasons. Workers with depression experience much higher job turnover than those without it, even if they’re able to keep up with job demands. Our 2024 State of the Workforce Mental Health report found that 1 in 5 workers considered leaving their company in 2023 due to their mental health’s impact on their ability to work.
4. Inadequate benefits
Benefits are important. In our 2024 State of the Workforce Mental Health report, 80% of U.S. employees ranked a prospective employer’s mental health care benefits as “somewhat” or “very important” to their job decision process. A LinkedIn report found that 60% of job seekers cited compensation and benefits as a top priority when choosing a job. Many companies have begun to offer mental health support and other highly desired benefits to stay competitive and meet their employees’ most vital needs, in addition to traditional offerings like paid time off and health insurance.
5. Poor engagement
Employee engagement and retention go hand in hand. Disengaged employees put companies at greater risk for high turnover rates. Organizations that score in the top 20% in engagement have 59% less employee turnover and consequently, lower hiring costs. In our 2024 State of the Mental Health report, 42% of employees said that their company’s commitment to mental health and well-being has positively affected engagement and productivity.
6. Lack of work-life balance
Poor work-life balance can lead to burnout and high employee turnover. According to one survey, better work-life balance is a key reason people want to change careers. However, when people can successfully balance their professional and personal lives, they’re 17% more likely to still work at their organization in a year.
7. Lack of opportunity for professional development
Most employees want to learn and grow in their jobs. In fact, limited opportunities for advancement was a leading cause of employee turnover in the Pew Research survey.
8. Unreasonable expectations
Constant pressure and unrealistically high expectations can set employees up to miss deadlines, lose motivation, produce low-quality work, and feel stressed or anxious. Since most employees want to make a positive impact, unachievable goals leave them feeling discouraged, inadequate, and more likely to leave.
9. Lack of flexibility
Flexible work options are one of the most sought-after non-insurance benefits. Hybrid and remote work allow employees to choose when and where they work most effectively, while helping organizations lower costs, increase productivity, reduce employee turnover, and attract and retain talent.
10. Lack of autonomy
Allowing employees the autonomy to decide how to do their jobs, rather than providing strict oversight or micro-managing, increases job satisfaction, productivity, and staff retention.
11. Feeling disconnected from co-workers
Connection is an essential human need, yet research shows employees feel isolated at work. This hurts workers as well as companies. People who feel a sense of belonging have a 56% increase in job performance, a 50% lower job turnover risk, 75% fewer sick days, and are 167% more likely to recommend their company to others.
12. Unchallenging work
Boredom can destroy even your best employees’ motivation. People want to feel that their role is evolving as they learn and grow, with new challenges and responsibilities to keep them engaged.
13. Lack of recognition
Most employees feel energized by doing valuable work and being recognized for it. Yet in a Gallup survey, only 1 in 3 workers said they’d been recognized for good work in the past week. And those who didn’t feel adequately recognized were twice as likely to quit in the next year.
While not everyone can get promoted, managers can help employees define growth paths and opportunities for learning and development. Recognition fosters a sense of purpose by helping people see how their work contributes to the broader company mission.
14. Inadequate resources or training
Employees can’t do their jobs well if they don’t have the knowledge, team, budget, or other resources they need. This can lead to low morale, which may contribute to a high turnover rate.
15. Dissatisfaction with company culture
Organizational culture influences where people apply for jobs and how long they stay. Most workers feel a strong workplace culture is even more important than salary, according to a Glassdoor survey.
16. Disconnect with the company mission
People want to feel their work is meaningful. If company values or mission are unclear, or managers don’t connect the dots between employees’ work and the company’s impact, workers may search for new jobs where they feel like they’re making a difference.
It’s important to note that employees aren’t necessarily happy with their jobs if a company doesn’t have high employee turnover. Many other factors can impact retention rate, which is why it’s important to understand your employees’ values and tailor your retention strategies to them. Some non-work factors that influence employee turnover include:
- Market or industry conditions, such as a tight job market
- Disinterest in searching for a new job
- Lack of employment options
- Financial responsibilities
- Location preference
- A planned life change such as a move or returning to school
- Ties to friends or family at a company
- Work ethic and personal values
Recognizing early signs that employees are unhappy allows you to address issues and prevent employee turnover before the issue worsens. Some red flags include:
- Disengaged or disinterested during meetings, projects, or daily tasks
- Consistent negativity, cynicism, or irritability
- A decline in taking on new challenges, suggesting ideas, or seeking out growth opportunities
- Withdrawing from social interactions with co-workers or avoiding workplace events
- Showing physical discomfort such as tense body language, tiredness, or anxiety signs
- Making more mistakes or errors than usual
- Reluctance or opposition to changes
- Expressing frustration with the lack of opportunities for career advancement or professional growth
- Updating their LinkedIn profile frequently
How to reduce high employee turnover
The cost of employee turnover is high—with some estimates calculating losses of up to 1 trillion annually for U.S. businesses, not to mention the cost to employee morale, team dynamics, loss of institutional knowledge, and compromised customer relationships and service. It’s critical to have a solid employee retention plan to survive and thrive in today’s evolving business landscape.
Effective ways to avoid a high turnover rate begin with understanding employee turnover’s impact through data and employee feedback. Then:
- Reevaluate hiring practices and organizational needs
- Implement ways to address the unique needs of a diverse workforce
- Develop a comprehensive retention strategy plan based on key metrics such as satisfaction surveys, job turnover rates, and performance evaluations, incorporating strategies like professional development and transparent communication
- Consistently monitor your retention plan effectiveness and employee turnover data, promotions, grievances, and other metrics to fine-tune retention efforts
Keep your top talent
A comprehensive employee retention strategy isn’t just about reducing the cost of employee turnover. It’s an investment in a motivated, engaged workforce that keeps your organization moving toward long-term success. Lyra Health can help with assessing the workplace, analyzing data, and developing tailored retention strategies.
Explore more strategies to reduce turnover and boost employee engagement
Read more
By
The Lyra Team
5 of March 2024 - 7 min read
Mental health at work
Stay in touch and get the latest blogs
