Table of Contents
Table of Contents
What Is Voluntary Turnover?
Voluntary turnover is an HR metric that measures the amount of a company’s workforce who end their employment for their own reasons and not the company’s reasons.
57% of HR professionals are seeing higher levels of voluntary turnover than they have in the past
Excessive voluntary turnover can be damaging to a business. When your office becomes a rotating door of unfamiliar faces, it’s hard to build momentum, create a winning culture, and make progress towards your goals.
Turnover is also costly; high turnover companies spend thousands of dollars a year hiring and training new employees. In fact, the Society for Human Resource Management (SHRM) recently estimated that a company will spend between 3-9 months of an employee’s salary in order to find and train a replacement. This means that each time an employee making $60,000/year leaves your organization, you’ll spend between $15,000-$45,000 to hire and properly train their replacement. This is a massive financial burden and one that can only be avoided by reducing employee turnover.
Healthy vs Unhealthy Turnover
While the focus of this article is on preventing and reducing voluntary turnover, not all turnover is bad. There is such a thing as “healthy” turnover. For example, imagine that one of your employees has worked in your company for years and has no further growth opportunities. If they get job offer elsewhere that will allow them to continue their career progression, you can celebrate that employee’s move. You may also be grateful to rid yourself of employees who do poor work, sink company morale, or unfavorably represent your company to prospective customers. Unhealthy turnover happens when you frequently lose people, often due to problems within the company.
Primary Causes of Voluntary Turnover
An employee can end their employment for any reason. This section discusses five common reasons you may see at your organization.
An employee can experience job dissatisfaction if they lack interest in their job or are overwhelmed by the stress associated with it.
Some positions only progress to a certain title or level of responsibility. Employees may leave to find a position that allows them to continue to advance their careers.
Employees leave when they realize competitors pay better and/or have better benefits.
An employee who feels bullied or harassed by a stressful relationship with their manager may feel resentful and leave the organization.
Lack of Flexibility
The kids get home from school, dentist appointments, the plumber is scheduled to come Tuesday—no one wants to schedule their life around their job. Employers who don’t provide flexibility may see an increase in voluntary turnover.
Those who quit their jobs in 2021 cited low pay (63%), lack of advancement opportunities (63%) and feeling disrespected (57%) as major reason for leaving
How to Calculate Voluntary Turnover
Collecting a few numbers and doing some quick math will give you the voluntary turnover rate for your organization. Here’s how.
Step 1: Data Collection
In your HRIS system or other data-storage methods, you will have a record of terminations and a description of whether they were voluntary or involuntary. Find the total count for the previous 12 months (i.e., 25 employees left voluntarily in the last 12 months).
Second, you need to know the total employee headcount at the beginning of the same 12-month period (i.e., 250 total employees)
Step 2: Divide
Time for some math. Divide the number of employees who left voluntarily by the total employee headcount at the beginning of the 12 month period.
Example: 25 terminated employees / 250 total employees = 0.10
Step 3: Multiply by 100
Take the resulting amount and multiply by 100.
0.10 x 100 = 10
The result from our example is 10 and can be interpreted as a 10% voluntary turnover rate for the organization.
Tips to Prevent Voluntary Turnover
If your voluntary turnover rate seems high, see if you can narrow down the causes (exit interviews should gather this information) and address them. Besides the issues listed above (job dissatisfaction, lack of career progression, poor compensation, and lack of flexibility), the strongest way to prevent voluntary turnover is by fostering a positive relationship between managers and employees. The following tips will help you support managers in forming positive relationships with their teams.
Tip 1: Make Sure Managers are Connected and Empowered
The importance of the relationship between manager and employee cannot be overstated. Managers are positioned to resolve employee concerns. An HR rep can support them in the decision-making process, but you should not force yourself in the middle.
For example, if an employee needs an accommodated schedule, partner with their manager. The manager will know if the team can maintain the same productivity as when the employee works their normal schedule.
Managers who stay in contact with their employees can learn their concerns and quickly address them. Daily communication in the office helps prevent employees from even thinking about finding a new job.
Tip 2: Remove Toxic Leadership
Does a manager yell at their team or tell others it is their way or the highway? This dictatorship style of leadership will increase voluntary turnover in your organization. There are two options to deal with this behavior.
- Coach the manager. As HR, you can coach the manager on their behavior and how it is driving turnover. If you need additional support, partner with the leader that manager reports to. In most cases, the manager can quickly change their leadership approach and prevent voluntary turnover.
- Move to separation. If the manager refuses to be coached, the toxic manager’s employment should be terminated to maintain company culture and a positive team environment.
Tip 3: Recognize Employees
Recognizing the great work done by employees is a surefire way to reduce turnover. A recent study that surveyed found that 63% of employees who were “always” or “usually” recognized at work said they’d be “very unlikely” to hunt for jobs in the next 3-6 months. LinkedIn conducted a research study that found that employees are 70% more likely to stay at their company if they receive a promotion.
Employees will leave if they feel their work doesn’t matter. Their manager is the best mentor to explain how an employee’s contribution helps fulfill the company’s mission.
When employees are recognized at work they feel happier, more confident, more engaged, and more loyal. Their productivity goes up and their attitude and morale go up with it. All of this translates to lowering or preventing employee turnover.
Tip 4: Show Empathy
It is easy to feel powerless in the face of a problem an employee brings to you. Nevertheless, a few words that shows them you understand and care, or advice on how to begin tackling the problem, is support that increases the odds the employee will want to stay.
Tip 5: Hire People That Fit
Reducing employee turnover begins before you ever hire an employee. The best and most reliable way to reduce or prevent employee turnover is by hiring the right people who will want to stay with you. The following questions can assess whether a new hire is the right fit for your organization:
- Does the employee’s skill set fit the job they’re being hired for?
- Will the employee’s previous experience fit the role they’ll be asked to play in your company?
- Will the employee’s personality, work style, and attitude fit the culture and environment you’ve created?
- Does the employee’s belief and vision for the future of the company fit into what you believe and envision?
- Does the employee fit and agree with the values your company promotes?
Tip 6: Onboard and Train New Employees
After making a decision to hire an employee, the next step is to make sure they are onboarded and trained. Unfortunately, many companies think of onboarding as nothing more than document signing. While paperwork and employment docs are a big part of the onboarding process, the training aspect is equally important.
20% of employee turnover happens within the first 45 days of employment. If employees aren’t properly trained during the onboarding process, they feel uncomfortable in their new position and many of them leave. To prevent this, it’s important that you create processes to get employees trained.
Not only will training employees help prevent turnover, but it will also help employees succeed in their job. If an employee feels successful, they’re more likely to stick around, further preventing turnover down the road.
Tip 7: Offer Competitive Compensation
When an employee is fairly compensated, they’re more likely to feel higher levels of job satisfaction and be happier at work. Add that to a substantial benefits package that covers things like health insurance, and you’ll make it difficult for an employee to want to leave.
If you’re worried that you cannot afford the same type of salaries as competitors in your area, you may choose to get creative with your compensation and offer performance-based bonuses. A great bonus plan can galvanize employees to work hard and be productive because they know there are financial incentives tied to their performance.
Tip 8: Demonstrate a Career Path
When an employee joins your organization, they join with the idea that they’ll be able to use this job as a stepping stone to further their career. Knowing this, it’s important that you demonstrate to employees that there is a career path within the company that will help them achieve their goals.
Speak to employees about their career ambitions early and often. You may even choose to do this during the onboarding and training phase. Help employees see themselves in your company long-term. Create for them a future in which they have more responsibility, better pay, and a more prestigious title. Lay out the path they need to follow in order to reach such achievements. Then make good on your promises, doing what you can to ensure the career path you outlined is obtainable.
Tip 9: Clearly Communicate Goals and Expectation
Not only do employees want to know how they’ll fit into your company long-term, but they’ll also be curious as to what you expect them to achieve in the short and medium-term. To help them, you’ll need to sit down regularly and discuss goals and expectations.
Employees should not only be aware of what their manager expects of them, but they should also know what their team, department, and company goals are. The employees’ personal goals and objectives should contribute to each of these higher-level goals. When the employee understands how they’re contributing to the overall growth and success of the organization, they’ll be much less likely to leave.
Tip 10: Encourage Team Building
It’s important for employees to not only get to know the people they work with, but enjoy working with those people. Doing team-building activities is a great way to have employees socialize, form friendships, and develop trust. These team-building activities can pay huge dividends when it comes to retention.
Tip 11: Be Flexible
It’s human nature to crave flexibility. Each of us likes to feel that we are in control of our own lives, our own decisions. Employers who recognize this can reduce turnover by giving their employees some freedom to choose.
Being flexible with employee schedules, work locations, and even work hours is a great way to show employees that you care about them, that you view them as responsible adults, and that you want them to belong to your company. This naturally increases their loyalty, boosts morale, and raises satisfaction levels, thus resulting in the reduction or prevention of voluntary turnover.
Tip 12: Check In Regularly
Employees want feedback. Over 65% of employees say that they want more feedback than they’re already receiving. Why? Because that’s how employees are able to gauge whether or not they’re doing a good job. Training employees, laying out their career path, and setting expectations is a great way to start, but without the follow-up and regular check-ins, you’re missing the mark.
There are many ways to check-in. A common, popular check-in method is a one-on-one meeting. These meetings are typically held on a regular cadence (once a week is recommended), and give employees and managers an opportunity to connect, get on the same page, and review progress.
Tip 13: Don’t Tolerate Toxic Employees
Toxic employees can cause innumerable problems throughout your organization. They hamper morale, interact poorly with customers, over promise and under deliver, and push good employees out of the company.
When good employees see their company tolerate (or promote) bad employees, it rubs them the wrong way. A good employee will never understand how bad behavior is rewarded, and rather than stick around to find out, they’ll leave your company as fast as they can.
Of course, it’s important to give every employee a fair chance to succeed. But there should be a limit to what you tolerate. If you continue to tolerate bad behavior or poor performance, your highest value employees will lose respect for you and your organization. Take action to discipline—or even terminate—toxic employees.
Take care of your people and protect your business with Eddy
Questions You’ve Asked Us About Voluntary Turnover
Ryan is an HR Director with four years of experience and three masters degrees. One accomplishment he is proud of is the design and launch of a learning and development program for 800+ employees.