Why is employee turnover on the rise?
How can you keep your top talent from leaving your organization in search of other opportunities? It starts with understanding the reasons that could drive them to leave.
Some causes are a matter of common sense. For instance, low morale, poor outlook for the organization, less-than-competitive salaries and unhealthy work-life balance may lead workers to polish up their resumes. However, external factors come into play as well, and some might not seem like obvious red flags.
Considering the high cost of replacing talented staff, HR teams can benefit from a deeper look at the additional conditions that could cause their workers to think about leaving. From there, they can put strategies in place to address potential turnover trends.
Turnover when times are good
When the going gets tough, business leaders might expect their workers to seek alternative career options. However, recent research from the United States highlighted the role that more positive indicators can play in rising turnover rates.
According to the latest Bersin by Deloitte HR Factbook, employee turnover reached 20 percent across U.S. organizations in 2013 – a three percentage point increase from the 17 percent recorded in 2010. These findings correlate to one out of every five employees in the U.S. leaving their employer for greener pastures during 2013.
Interestingly, these higher turnover numbers can largely be attributed to positive external factors such as the national economic recovery.
The White House Council of Economic Advisors reported that gross domestic product rose for four straight quarters in 2013, with particularly strong improvements seen during the second half of the year in the private sector.
This contributed to more economic certainty and greater business confidence, which in turn led to job creation. More than 8 million new jobs were created in the four years leading up to the end of 2013, increasing employment prospects for individuals in many industries.
With more employment opportunities available, employees are always going to be looking at their options outside the business. For organizations seeking to retain workers, more forward-thinking and effective talent management is required to ensure key staff do not jump to the competition.
What about Australia?
The rising turnover rates in the U.S. amidst economic recovery is concerning news for Australian businesses, where the economy remains relatively stable.
A 2013 study from the Australian Human Resources Institute placed the average turnover rate at 13 percent in 2013, while a 2014 report by Mercer put the general turnover rate at 15 percent. As the economy and employment index improves, should companies anticipate greater degrees of movement in their workforce?
It certainly is plausible: A 2013 Australian Human Resources Institute survey posited that turnover rates declining with economic conditions meant there were limited job opportunities elsewhere – which means the tides could turn as those employment prospects improve.
In addition to economic factors, the upcoming wave of retirement as the population ages could create a surge of opportunities for workers to seize. Therefore, having strategies in place now to start engaging and retaining workers will prove beneficial when these openings emerge.
Battling turnover in a growing economy
The key to retaining employees in a strong employment economy is maximizing engagement, and ensuring their personal and professional needs are met.
Employees working in a struggling economy with high unemployment may choose to stay with an employer even when not fully engaged in their work. However, when unemployment is low and job prospects are high, employees are much more likely to pursue external opportunities if they are unhappy with their current role.
Interestingly, Gallup’s 2013 State of the Global Workplace report found that 18 per cent of US-based employees were ‘actively disengaged’ in 2011-12 – a number that correlates closely with 2013 turnover and may offer some insight into why so many staff members looked to leave their employer when economic conditions improved.
With this in mind, it would appear the best way to boost engagement within your organization is through a strategically implemented talent management initiative. Mercer’s study showed that companies with an effective benefits plan had a lower average turnover rate (12 percent) compared to the general industry standard (15 percent). Compensation is just one piece of the puzzle, however: Engaged workers who see clear opportunities to use their talents and advance are more likely to stay, especially if they’re invested in its mission and connected to their peers.
Effective talent management strategies are designed to ensure employees feel motivated, valued and engaged while on the job. When aligned effectively with wider business strategies, a talent management strategy can ensure that businesses are unlocking the full potential of existing employees.
With economic and employment conditions continuing to surge in many developed countries – including the U.S.A., Australia and New Zealand – it would appear that organizations need to increase their commitment to talent management in order to minimize turnover and ensure high-value staff stay on board.
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