Main Causes of Employee Turnover
Irish companies are facing a growing problem when it comes to employee turnover and retention. Currently most companies have a growing employee turnover rate, which can make it a real challenge to retain staff. Subsequently this can cause numerous issues for your business; understaffing being just one of these issues. Of course some amount of turnover is unavoidable, however, there are both direct and residual effects if you have a high turnover rate.
What is an employee turnover rate?
An employee turnover rate is the percentage of employees that leave your business within a certain period of time. This period of time could be yearly, monthly, or even weekly depending on how you want to calculate it. Most businesses calculate their annual turnover rate; but if you think you have a problem with employee retention, it is a handy way to find out.
Use our free turnover rate calculator to find out what your turnover rate is now.
What effects does this have on my business?
If you have a revolving door of staff this can seriously impact employee morale. Nobody likes to see their co-workers constantly leaving and it can make them question if they should leave too. As well as this, it leads to a loss in engagement, and an overall loss in productivity in your remaining staff.
It is estimated that losing an entry-level employee can cost your business up to 50% of their annual salary. This could be due to the loss in productivity mentioned above or hiring costs but really there are many costs and effects associated with losing an employee for more info read our article ‘The Cost of Employee Turnover’.
What are the main causes of employee turnover?
There are a number of reasons that employees can leave a company; and some of them are unavoidable. However, a lot of them can be prevented or circumvented. Some of the major causes of turnover are:
- (Bad) Management – most people don’t quit a company but rather quit their boss
- Lack of growth and progression
- Team members being treated differently or held to different standards
- Being overworked
- Lack of recognition or feedback
Thankfully there are solutions that can help negate the loss of staff resulting from these causes. Training your managers and being careful with who you place in managerial positions should prevent bad management. Rewarding your staff and offering them training opportunities should help with some of the other causes of turnover such as lack of recognition. For a breakdown on each cause and its solution check out our article on the Best Ways to Retain Employees Part 1 and Part 2. Really the main thing is to place some employee retention strategy in place so that you stop losing staff and start promoting engagement. According to Gallup, the U.S., researched based, global performance management consulting company, employees who are “engaged and thriving” are 59% less likely to look for a job with a different organisation in the next year. Engaging your employees and catering to their needs is paramount to retaining staff. For some more statistics about employee well-being and engagement you can check out Gallup’s article here. It's very important to nurture your employee's well-being, that's why we also have an article on 'Managing Stress in the Kitchen', or if it's coming up to the Christmas period our article 'How to Keep Your Staff Sane This Christmas' is a great resource.
How Do You Fund Your Retention Strategy?
You know that implementing an employee retention strategy will save you money in the long term, but what can you do if you don’t have the funds available right now? Well there are a number of options available. You could consider getting a cash advance loan. Alternatively, you could free up some of the funds that are currently caught up in your invoices by applying for invoice financing. For a further look at these options and how they can help fund your employee retention check out our article on 'How to Finance Your Employee Retention Methods'.
Letting an employee go is never an easy task for a manager or business owner. You could hire an amazing person, but the role may not be a good fit, or there might not be enough work for them. It’s important to be direct, clear and yet sensitive as this can be a life changing event for the employee. However, your business should come first, and sometimes an employee just doesn’t work out. Sometimes firing an employee is an unavoidable form of employee turnover that is a natural part of running a business; but there are also costs associated with this. To find out what some of these costs are (for example the cost of finding a replacement) and for some tips on how to deal with them check out our article on 'The Hidden Costs of Firing an Employee'. This article is specially aimed at those in the hospitality industry but many of the tips can be applied to any industry.