Employee Turnover: What Is It? & Why Should It Matter?

Employee turnover is a metric that comes up again and again for HR managers. Most businesses know they need to be looking out for it, but often the reason behind the result goes uninvestigated. Often, figuring out why your turnover rate is so poor, or even why it’s so good for that matter, is much easier when you actually speak to your employees and look to the data.

Why Employee Turnover Is So Important?

Just in case you weren’t sure, let’s go over why employee turnover is so important. Turnover rate is the figure that tells you how many of your employees are leaving, and high turnover is bad news. But why is employee turnover a problem for your business? It predominantly comes down to cost. Sourcing, recruiting and training new employees is one of the biggest price tags in the business, let alone in the HR department.

It’s also time-consuming which often equates to even more money. Whether you have a high number of employees leaving or just a frequent number, high turnover means you need to spend even more money on finding and training new employees to replace them.

Cost is usually what has most businesses shaking in their boots at the mention of employee turnover. However, business image and productivity are also equally, if not more, important. Time spent finding new employees and training them equals to the time that your business isn’t working at full productivity. This means potential money in your competitor’s pockets.

And speaking of competitors, that’s where some of your best talent could be going if you suffer from high turnover. Even if they don’t end up at a competitor, there’s still the chance that employees who leave may not have the greatest things to say about your business. That could really damage your business image and drive great potential talent to your competitors as well.

Why Understand Turnover Rate?

It’s almost impossible to significantly reduce turnover without understanding why employees leave, yet many companies fall short in this area. Often employees leave with businesses having little to no understanding about their reasons for doing so. For many leavers, it’s assumed that they simply wanted a change.

While it’s true that sometimes a sense of monotony can set in, satisfied employees will often stay for decades. As well as keeping these employees by providing a superior workplace experience, understanding why employees leave may also reveal some more serious underlying problems that need to be addressed.

Whether you have a problematic employee turnover rate or not, understanding why each employee leaves the company can:

•      Help you spot key problems and trends to be able to prevent them in the future.
•      Give better care and consideration to new hires early on to improve employee retention.
•      Stop employees from going to competitors.

Using Data To Understand Why Employees Leave

What is the key to understanding why employees are leaving? Data! Both quantitative and qualitative data need to be used together if companies want to be able to spot trends and problems at the top level. This will also enable delving deeper to get a more detailed look.

Of course, good data mining requires a good HRIS to mine from. Cloud solutions like SuccessFactors Analytics can collect a wide range of data from employees across your entire business to show important metrics and easy to understand data visualisation. By accessing data from multiple and disparate sources for Human Capital Management (HCM), businesses can begin to ask and answer questions like “Is employee turnover an issue?” and “What type of employee tends to leave voluntarily?” Not only can this help companies identify important reasons for employee turnover, but it can also help to forecast and predict future problems before they even occur so that a preventative strategy can be implemented.

Quantitative data and metrics is a great way to get an overview of issues to quickly identify problems and trends. Looking at metrics such as how many employees have left in a given period, which department has the highest turnover and how long are they with the company before they leave can help to highlight problematic trends.

More in-depth metrics such as employee flight risk can take your analytics even further by providing a predictive measurement. By following up with qualitative data such as voluntary questionnaires and interviews right when employees hand in their notice, it’s possible to understand in great detail the source and reasons for turnover.

Take a look at some of the key data and metrics we think is worth looking at to help you understand why employees leave. Here are the top reasons for employee turnover:

1. Diversity and inclusivity

Data on ethnicity, sexual orientation and disabilities can be measured against turnover to help identify if there may be any diversity or inclusivity issues in your business. For example, you may find that a lot of people with disabilities are leaving. This is a strong indication that you need to address these issues within your business.

Not only are you losing current talent, but inclusivity problems are some of the worst for the image of the business and are likely a huge barrier for any new potential talent. Take a look at your diversity and inclusion policy as well as things like accessibility around the office or workplace itself.

2. Number of roles and progression

Take a look at the number of roles an employee had before they left and whether there was any progression during their time with your company. If they held the same place for a majority or even all of their career, then chances are you could have a problem with development and succession. Career progression and development opportunities are a huge draw for employees and are the number one reason for them not only choosing their new job but also choosing to stay.

You may need to look at providing more learning and training opportunities.  Also, identify progression opportunities that would match current employees to vacancies. Take a look at your employee review procedure, goal setting, and support. Employees may not be encouraged to set challenging targets, be presented with promotion opportunities or have strong mentorship and support.

You can find out more about providing better career development and succession opportunities for your employees here.

3. Who was their manager?

Strong leadership is integral to inspiring employees, encouraging productivity and cementing teams together. Just as a strong leadership can make a team or department, weak leadership can break it. This may be due to managing styles not meshing well with the group, a lack of training or support in the leadership role or a range of other factors. Whatever the case, making a note of the manager of each employee that leaves could help you to identify problem areas within the business. If you do find that several employees seem to be leaving from the same department or from under the same manager, it might be time to look at providing additional training and support to help.

What Is Employee Flight Risk?

An employee flight risk is a metric or score that can help you take your analytics to the next level. It can help to predict the likelihood of a current employee leaving voluntarily by comparing and contrasting employee details from those who have already left to those who have stayed. By using employee headcount and voluntary terminations, some of the following data can be used to identify trends and highlight current employees that meet these trends:

•      Demographics including age, gender, disability, and ethnicity
•      Compensation including salary, stock, and options
•      Development which includes key position, performance rating and potential rating
•      Employment which includes job category, employee class, employment level, and grade
•      Successions including critical job role, succession rating, and successor readiness

Once this data from voluntary terminations has been gathered and compared to those currently employed, it’s possible to identify individuals within the business who might be a flight risk in the near future. It’s then possible to begin a preventative strategy by looking at the problems indicated by the data and finding ways to address them.

Getting Your Employees To Stay

Once you understand why employees are leaving, you can finally begin to start working on getting them to stay. There is a whole range of factors that go into Employee Retention i.e. ensuring an employee is happy and satisfied in their job, but also you’ll need to understand what your specific problems are within the business to really focus on the important ones. You can find out more about improving employee retention with these top tips.

Want to know about how you can identify turnover problems and start to solve them? Contact us today to talk about how Workforce Analytics could give you access to the data you need to make decision making, while the rest of the SuccessFactors suite works to put solutions in place.