How to Reduce Turnover

Employee turnover — it’s a phrase on everybody’s lips as the effects of the Great Resignation persist. Everyone has a reason for leaving their job at some point, whether due to retirement, lack of career opportunities and progression for growth, or a lack of feedback and recognition. While some amount of turnover is normal in every industry, it’s worth considering ways to reduce turnover that will keep employees engaged and, ultimately, produce better business results. It all starts early in an employee’s tenure with basic, people-first training.

Employee turnover is the rate at which employees leave a company and are replaced by new hires. Turnover rates vary by industry, with some industries (like hospitality and manufacturing) having a reliably higher turnover rate than others, due to factors like few advancement opportunities or limited benefits. This rate can be measured on a monthly, quarterly and annual basis and is expressed as a percentage via this equation:

Total # of people leaving a company in a given time period (month, quarter, year)

÷

Avg. # of employees in the company at the beginning and end of that time period

X

100

For example, if 12 people leave a company of 85 in one year, the annual turnover rate is 14.1%. By U.S. standards, this is low — the Bureau of Labor Statistics found that the national turnover rate was 47.2% in 2021.

Employees leave their jobs for a wide variety of reasons. The overall turnover rate at a company encompasses both voluntary and involuntary departures.

Causes of voluntary turnover:

• New job opportunities
• Lack of training
• Lack of advancement opportunities
• Educational opportunities
• Misaligned job expectations
• Lack of good workplace fit
• Lack of benefits
• Retirement
• Family obligations
• Personal reasons (injury, illness, mental health, etc.)
• Workplace health and safety concerns

Causes of involuntary turnover:

• Poor work performance
• Termination
• Layoffs
• Business closure
• Seasonal transition

Though some of these causes are unavoidable or unrelated to work, many fall under the umbrella of company culture. A company with a track record of high turnover due to poor management, a toxic work environment or insufficient training may lack a strong commitment to ensuring employees’ satisfaction and fostering engagement.

Turnover can be predicted using historical data as well as employee engagement survey results. If employees consistently report that they feel unsatisfied with their benefits, frustrated with leadership or unsupported by their managers, turnover rate is likely to increase.

With a high turnover rate, it can be difficult, if not impossible, for a company to achieve its mission and vision. Recruiting, interviewing, onboarding and training take time and resources away from revenue-generating operations like production and sales, and the frequency of filling personnel gaps can slow production down even further.

A 2021 report from HubSpot found that productivity loss — including when employees leave — costs U.S. companies $1.8 trillion a year. This loss of revenue, coupled with the cost of replacing a single employee, is potentially disastrous for overall profitability.

Finances aside, high turnover rates have a significant impact on employee morale. Employees who lose coworkers frequently may have a negative perception of their company and its leadership, and applicants may be hesitant to commit if they know people don’t last long. A workforce that does not feel engaged or supported by their employer will not feel motivated to produce quality work, which in turn has a negative impact on profitability and industry standing.

Some turnover, though inevitable, can nonetheless cause issues for those who remain. When employees retire, companies risk losing their so-called “tribal knowledge,” job-specific skills and information that may not exist in written form. Without proper documentation and standard job training in place, new hires can feel wholly unsupported during the onboarding process. Results of a patchwork approach to training can range from frustrating (everyone has their own way of completing a task) to downright dangerous (the whole team ignores safety precautions).

Engagement is the extent to which an employee commits to their job, whether that’s to the company itself or the people they work with. Engaged employees work hard, suggest improvements, take on challenges and bring issues to management in search of a solution. These employees make positive contributions to their team and express a vested interest in the company’s success.

When employees are generally engaged, it contributes to a positive workplace culture. Teams feel they can trust one another and their managers for support and honest feedback. This relationship has a direct correlation with turnover; employees who feel supported, heard and challenged at work are far less likely (31% less likely, according to research by Deloitte) to leave their jobs voluntarily and will put vested effort into their performance.

However, “engaged” is not the same as “overworked.” Employees who go above and beyond what their job entails can sometimes burn out, and may leave their job if they feel as though management did not step in to mitigate their efforts. Companies need to have strategies in place to respond to burnout and support employees’ overall wellbeing.

A lack of communication regarding employees’ needs can also lead to higher turnover rates. Without a channel for suggestions, feedback and complaints, employees tend to disengage, feeling frustrated and ignored by management and leadership. Training programs that emphasize respect for people and foster productive, constructive conversations can show employees that yes, their employer is listening.

How to Improve Your Hiring & Interview Process

Reducing employee turnover starts even before new employees enter the door. It starts with creating an accurate job description.

Candidates apply to jobs that appear to fit their skills, qualifications and professional goals. If, during the hiring process — or worse, once they’ve officially started — they learn that the actual job they applied for doesn’t match the posted description, they will feel misled. A company that obscures the truth or tells “white lies” about professional opportunities risks eroding its own reputation and losing credibility with current and potential employees.

First, a job description must encompass the comprehensive needs of the job. It should never be a one-off solicitation designed to fill a skills gap — once a viable candidate is hired, upskilling can address specific skills that may be missing from the team or department.

An accurate job description needs interview questions to match. The interview should provide the candidate with more information about the job, so the questions should be designed to convey the actual on-the-job expectations. A job interview is mutually informative for both parties: the interviewer wants to know if the candidate will be a good fit, and the candidate wants to know if the job will utilize their skills and competencies.

Once new employees are oriented, job-specific training can begin. Of course, trainees will need to know how to perform their responsibilities, but they will also need to learn the company culture. This can be accomplished through standardized training programs.

Practical, specific training that prepares workers for the job at hand is essential to retaining employees. When employees feel equipped to do the best job they can, their confidence in their employer grows. But the most effective training program should go beyond practical skill-building. It should also address the aspects of the job that are more difficult to teach, such as clear communication, respect for others, conflict resolution and empathy.

In a Training Within Industry (TWI) program, Job Relations (JR) teaches managers and supervisors how to engage employees, acknowledge their strengths, make them feel heard and help them resolve issues. TWI Job Safety (JS) coaches workers in maintaining physical safety, while JR helps build an environment that emphasizes psychological safety, where employees can trust that their ideas and concerns will be heard without judgment or retribution.

Implementing these people-focused training programs can foster an authentic, organization-wide commitment to success — not only the company’s success, but each others’ as well. Here are some things to keep in mind throughout employees’ tenure, and even during the onboarding and probationary period:

Communicate values and behavioral expectations early. Make sure new hires know what’s allowed, what’s not and where to find your company’s policies and code of conduct in writing. The sooner employees know the rules, processes and expectations for your workplace, the better equipped they will be to start work with confidence.

First impressions count. While a probationary period is typically established by the organization, it’s also the time during which recent hires determine whether their new job is actually the right fit. An employee’s impression of a job starts right away, so organizations should be mindful of how the training and onboarding process supports the employee.

Make upskilling and reskilling a priority. In light of rising demand for talented workers, organizations need to be prepared to train quickly and effectively. TWI Job Instruction (JI) can help onboard or upskill employees efficiently while JR helps them navigate any issues or challenges that arise from expedited training. Communicate to new hires that continuing professional development will be available, should they want or need it.

Recognize a job well done. Workplace validation is more powerful than you might think. Acknowledging an employee’s specific contributions in a timely manner positions the recognition as authentic and genuine. It also fosters respect for leadership and management if recognition is a formal part of the workday.

Go to the gemba (the actual place). Employees respect leaders and supervisors who make an effort to visit the floor where the work is actually done. Going to the gemba is valuable not only for the leadership team’s knowledge, but also for gaining employees’ trust.

Use surveys to chart the onboarding experience. It’s almost never too early to solicit feedback. Asking new hires about their experience during their first few weeks will help your trainers and hiring teams improve their processes and will convey to the employee that the company cares what they think.

Implement post-termination support. Layoffs are sometimes an unfortunate part of business, but they don’t need to result in immediately cutting all ties with a former employee. JR training for HR teams can help employees navigate unemployment or solicit referrals and letters of recommendation. Make sure each employee has the opportunity for an exit interview with an objective party, so they can provide honest, constructive feedback about their time at the company.

Look for opportunities for automation. Maybe your organization features some repetitive or difficult tasks that put employees at risk of boredom or injury. Can you automate these tasks so employees’ skills can be put to better use elsewhere?

Leverage technology to increase efficiency. Time is money, and when it comes to efficiency, you need to be sure you’re using your employees’ time in the most optimal way possible. If employees are spending too long on one task, see if there’s a tech solution that could speed up the process and help them accomplish more in the same amount of time.

Most of these recommendations can be accomplished through some form of people-centered training. Even if implementing or building a training program feels like a significant investment, your team’s resulting competency and loyalty will more than make up for the initial expense.

If you’d like to learn more about training that can help your workforce stick around long term, explore the TWI Institute’s continuous improvement programs.