EMPLOYEE EXIT & RETENTION DECISIONS

WHAT IS EMPLOYEE RETENTION?

Employee retention refers to the ability of an organization to retain its employees.

Good organizations hire the best talents and know how to retain them for a more extended period. Employees
are the lifeline of any organization. When these skilled employees walk out of the door, it becomes challenging
to find suitable replacements. High turnover not only affects an organization’s bottom line but also is a costly
process. And it is often more challenging to train new employees. Studies say that for a new employee to fully
adapt to a new organization, it takes more than eight months of onboarding and sometimes even more. Even
with reasonable compensation and benefits, employees quit. The reason for this varies with many factors.
Employee retention refers to the strategies and processes an organization develops to keep its top talent and
mitigate turnover risks. Employee retention and turnover is a leading workforce management challenge for
many organizations and human resources (HR) professionals, creating significant operational costs for
employers and compromising their growth and profit.

WHY EMPLOYEE RETENTION MATTERS TO HR

A comprehensive human capital management strategy includes a well-thought-out plan for retaining valuable
employees your organization took time to recruit, onboard and train. It makes sound business sense: The cost to
replace an employee can range from one-half to two times the employee’s annual salary. Company culture,
employee satisfaction and other soft costs add up, too. Companies that fail to prioritize employee retention
clearly pay a steep price. However, those that invest in improving employee retention and addressing turnover
risks reap significant rewards. They report sales growth, improved productivity and work quality, as well as
higher employee morale.

BENEFITS OF EMPLOYEE RETENTION

1. Cost Reduction-Large employers spend upwards of $1 trillion on finding and recruiting replacement workers
annually. Costs include advertising, interviewing and screening. On boarding expenses, like training and
management oversight, also add up. Other issues include lost productivity, lower engagement, customer
service problems and company culture impact, all of which compounds the cost of turnover.
2. Morale Improvement- A revolving door environment can dampen employee morale. Aside from lost
connections, employees who remain may have to take on heavier workloads or responsibilities. As a result,
their motivation and satisfaction can also nosedive. Just as concerning is the contagious nature of turnover.
Employees may decide to leave because they notice others are job hunting, talking about quitting or actually
leaving the company. Organizations with successful employee retention programs can lift employee morale,
enable greater connectedness and engagement, and create contagions of positive emotions in the workplace.
3. Experienced Employees- One crippling cost of high turnover is the loss of institutional knowledge, skills
and relationships — within the organization and with customers and partners — that disappear when an
employee exits. The organization also loses the potential value the employee could have delivered, also
known as the opportunity cost. When senior employees depart, the loss can impact succession planning as
well. These employees — particularly top performers or those with in-demand skills — are often at risk for
turnover even in times of high unemployment. Organizations that focus on retaining more senior or
experienced employees see significant returns as these professionals are apt to solve complex issues on their
own, which benefits the organization.
4. Recruitment and Training Efficiency- Replacing an employee carries significant costs. After an
organization finds qualified employees and successfully recruits and onboards them, they have to be trained.
Should a new hire leave, all that money goes down the drain. By focusing on employee retention, recruiting
costs can be dramatically reduced. Another consideration is to recruit from within the organization. The cost
to train and reskill an employee from within can save an organization tens of thousands of dollars per person.
5. Increased Productivity- Persistent turnover causes a host of issues for employers. The most immediate
impact is loss of productivity. On average, it can take a new hire one to two years to reach the productivity of
an existing employee. In addition, new hires need time to build relationships with co-workers and customers.
An understaffed environment also causes problems of its own — among them, employee overtime and
burnout, lower work quality and delays. Effective employee retention can save an organization from
productivity losses. High-retention workplaces tend to employ more engaged workers who, in turn, get more
done. Engaged employees are more likely to improve customer relationships, and teams that have had time
to coalesce also tend to be more productive.
6. Better Customer Experience- Customer experience is a customer’s perception or opinion about their
interactions with a business, from their first interaction to post-sale support. These interactions depend on
employees whose own experiences can impact how they engage with customers. This is where turnover can
take a toll. For example, new employees might take longer to get things done, may be less adept at problem-
solving and are more prone to customer service mistakes — all of which can damage the customer experience.
In turn, customers might share their negative experiences, putting the organization’s reputation at risk. On the
other hand, satisfied employees typically have higher morale and capabilities that shine through when
working with customers.
7. Improved Corporate Culture- The perceptions, preferences and behaviors of people who work at a
company form its corporate culture, which plays an indisputable role in recruiting and retaining the right
people. When an employee leaves, others will often wonder why and perhaps start to question their own
loyalty to the organization. Conversely, when engaged employees who are aligned with an organization’s
culture stay, they strengthen the organizational ethos and environment.
8. Better Employee Experience- Employee experience is an employee’s perception of their interactions within
an organization — from when they first applied for a position to when they leave. It also takes into
consideration each person’s relationships with co-workers, managers and customers. A positive employee
experience often fuels productivity and fosters more positive customer experiences, which can lead to greater
customer loyalty. Many factors impacting employee experience are outside HR’s control. However, by
focusing on what employees want and keeping more of their best talent on board, organizations can build a
better employee experience, which in turn drives retention.
9. Increased Revenue- Revenue gains stem from reduced hiring costs, increases in productivity, and the
delivery of better customer experiences, among others. Tracking revenue increases from retention policies
can be an important HR metric to demonstrate the return on investment of those initiatives.
10. Improved Employee Engagement and Satisfaction -A positive employee experience can boost employee
engagement, defined as the level of connection and dedication a person has to their role and organization.
Engaged employees feel motivated and care about their work and company; they feel they have proverbial
skin in the game and are more likely to stay. The level of engagement is closely tied to employee satisfaction
and morale, all of which are critical to an organization’s success. An added bonus: Engaged employees often
become brand ambassadors who speak positively about their companies across their networks. Focusing on
employee retention pays dividends across the organization. An effective employee retention strategy is a
critical component of comprehensive workforce planning.

HOW MANAGEMENT CAN IMPROVE EMPLOYEE RETENTION

Many leaders are out of touch with how happy or engaged their people are—especially in remote or hybrid work
situations. To create effective strategies and reap the benefits of employee retention, employers must try to
understand why employees are leaving in the first place. In a 2022 survey, the top factors employees cited as
reasons for quitting were that they didn’t feel valued by their organizations or their managers or because they
didn’t feel a sense of belonging at work.
However, every organization is unique, so employers should conduct their own internal discussions to gain insight
on morale, employee satisfaction, motivators for potential attrition, and current perceptions of employees’
experiences. Gallup suggests gathering data on the following areas as a starting point:
Employees’ overall experience of working in the organization (role, team, supervisor, job duties, advancement
and development opportunities, and so on)
 Aspects of the work culture
 Initial reasons for joining the company
 Reasons they may consider leaving
 Professional goals

FACTORS AFFECTING EMPLOYEE RETENTION/ EMPLOYEE RETENTION

STRATEGIES
1. Setting Employees Up for Success
A key factor influencing retention is ensuring every employee is set up for success in their roles. Placing
employees in talent-fulfilling positions will motivate the employee and can benefit the organization with higher
quality work and an increase in retention. Happy employees become ambassadors for your organization,
promoting your product and your reputation as an employer to bring in new talent.
2. Work-Life Balance and Personal Well-Being
More and more, employees are expressing concern for “flextime,” allowing them the flexibility to manage their
working hours rather than operating on the traditional 9-5 model. Flexibility will enable employees to focus on
work-life balance while still getting their work done. Trust in your employees can set you apart from competitors
when employee turnover and the job market supply are high. Organizations can step up and account for their
employees’ wellbeing by creating employee wellness programs. Some popular initiatives they can take for on-
site employees are health clinics, interactive sessions in the office to boost employee engagement, etc.
3. Greater Stability and Job Security
Structural elements such as brand reputation, market positioning, company purpose, and growth strategy strongly
influence an employee’s decision to stay with a company. If employees see value in staying at your organization
long-term, they are less likely to search for new opportunities. Communicate—and demonstrate—the long-term
value your organization offers so that employees can envision your company as part of their career trajectory.
4. Significant Increase in Income
With recruitment getting increasingly challenging, organizations are looking for ways to incentivize their
employees to stay loyal. As one might expect, employees react positively to companies that reward quality work
and company loyalty with salary increases. Establish a clearly defined growth track and reward system to discuss
with potential employees upfront during interviews and periodically at goal-setting meetings.
5. Great Company Brand Reputation and Culture
How your organization is viewed externally is often referred to as employer and industry reputation and can
significantly impact recruitment and retention. The industry reputation describes how well a company is
positioned within its market and the quality of its value proposition. Employer reputation measures the quality of
a given company as an employer.
Your company culture can play a massive part in your organization’s reputation. Keep your culture strong by
always being willing to adapt, update, and improve conditions for employees. Establish credibility within your
industry to attract potential candidates and cultivate company culture to promote a positive employer reputation.

6. Relationship between Management and Staff

Employees spend the majority of their day in the office away from their families. In such a scenario, their
colleagues and managers become a work family as well. Employees need to have functional business relationships
in the workplace. This can only be achieved if the managers of the organization are supportive. Just receiving a
good salary and a few perks is not enough to convince them to work longer for the company. If the managers
always micromanage their employees, it will suffocate them, and they may search for greener pastures much
sooner than anticipated. Managers need to be friendly and give employees the space they need to get their tasks
done. In case someone fails to meet their target, blaming them all the time is not a good idea. Sometimes, it is
good to reward their efforts instead. Managers need to increase team bonding in the organization. Good examples
of doing this are team lunches, board games in the workplace, surprise half days from work, etc. Organizations
can give corporate gifts from Offineeds on certain occasions, such as birthdays, anniversaries, etc., to reward
their employees for their dedication to the company.
Do You Really Know Why Employees Leave Your Company- (refer article in the reference material section)
 Employee Retention
Do You
Employees Really Know
Leave Your Why
Company?
by Anthony C. Klotz and Mark C. Bolino
July 31, 2019

Jeffery Hamilton/Getty Images

Summary. Hearing the words “I quit” is rarely pleasant, but managers and HR
professionals can gain valuable knowledge for their firms by taking an evidence-
based approach to finding out why employees leave. Start by looking for patterns
among how people quit. Overall, do employees tend to follow company guidelines?
Is quitting more common in particular departments? Answering these kinds of
questions can help you identify problem areas. Next, see what coworkers who were
closest to the departing employee have to say. Although people will not always be
open to divulging their true reasons for quitting, in many cases their peers may
have insights. Finally, examine what departing employees do next, and learn from
their decisions. HR professionals can do this by tracking where their alumni go.
close
More employees are voluntarily leaving their jobs than at almost
any other time this millennium. When an employee quits, it can
feel like a gut punch, leaving managers scrambling both
emotionally and operationally. The loss can be particularly acute
when employees “ghost” their organization, simply not showing
up to work, sometimes only days after starting the job.

In his New York Times best seller, Principles, Ray Dalio argues
that setbacks, like losing a valued employee, provide an important
learning opportunity for organizations — as long as leaders are
willing to reflect on and identify the root cause of such losses. Too
often, though, managers and HR professionals are so busy doing
damage control that they fail to conduct a thorough autopsy to
help them understand what happened and what corrective action
is needed to prevent similar episodes from occurring in the
future.

Of course, many organizations have an exit interview process that

should, ostensibly, provide insights to help improve employee
retention. However, even when conducted well, these interviews
have serious shortcomings. Most notably, in cases of ghosting and
other acts of impulsive quitting, workers may depart before their
organization has the opportunity to conduct one. Even when exit
interviews take place, research suggests that a large percentage of
employees are not candid. Whereas some departing employees
mask critical feedback in order to leave a positive impression,
others feel that providing this information is a waste of time
because they believe the company is unwilling to change. In
addition, departing employees may feel that, because of how
poorly their company treated them, management does not
deserve to know their true reasons for leaving. In short, exit
interviews are often ineffective.

So how can organizations respond to resignations in more

constructive ways — ways that might transform the pain of
employee turnover into progress? Based on our research studying
the experiences of hundreds of resigning employees and the
managers of recently resigned employees, we offer three
recommendations:
Investigate how the employee resigned. People typically resign
using one of seven styles, which range from positive and
constructive to negative and harmful:

Grateful goodbye: employees show appreciation and provide

assistance as they depart
In the loop: employees keep their supervisor apprised of their
intention to leave
By the book: employees give standard notice and an
explanation for their departure
Perfunctory: employees resign by the book but do not explain
why they are leaving
Avoidant: employees indirectly inform their manager or let
word of their resignation filter back to them
Bridge burning: employees engage in harmful dysfunctional
behavior on their way out
Impulsive quitting: employees walk out without giving any
prior notice

These styles often reflect how departing employees feel they were
treated by their organization and their manager prior to leaving.
Therefore, if many employees within a firm resign by expressing
gratitude and giving reasonable notice, this may signal that the
organization is a healthy place to work. On the other hand, if
bridges tend to get burned during employee resignations, leaders
should take this as a signal that they should investigate the cause
of these destructive departures.

The first step toward turning employee resignations into a source

of organizational learning and improvement, then, is to code
them based on style and review them periodically. If leaders find
patterns in this data, they can start to identify the source of the
problem. Overall, do employees tend to follow company
guidelines when they resign (doing it by the book), or is there a
great deal of variance in how employees quit? Is walking off the
job with no notice more common in particular departments or for
certain workers? Do the employees of certain supervisors always
resign by providing more notice than is required? Closely
examining resignation styles can help organizations clearly
identify bright spots and problem areas.

See what the coworkers closest to the employee have to say.

Although people will not always be open to divulging their true
reasons for quitting, in many cases their peers may have insights
and be motivated to share that information in order to help the
organization improve. Thus, by having informal discussions with
colleagues close to the employee who resigned, companies may be
able to ascertain the motives behind their departure. An added
benefit of this approach is that it gives remaining employees, who
may be disappointed and confused by their coworker’s
resignation, an outlet to discuss their thoughts and opinions,
which may reduce any feelings of distress.

Of course, some colleagues may feel that the company is asking

them to be disloyal to their friend by sharing this potentially
private information. As such, we recommend acknowledging the
tension that this line of inquiry could create. Leaders should
reassure the employees that their participation is voluntary, and
make it clear that the information they seek is only for
improving the experience of the remaining workforce and the
performance of the company. This approach is likely to be most
effective when managers possess good working relationships with
their employees, such that subordinates feel psychologically safe
to share their insights without fear of retribution toward them or
their friend. Likewise, such conversations are more likely to be
constructive when managers have a habit of listening to
employees and acting on their input.

Examine and learn from what the employee does after they
leave. HR professionals can do this by tracking where their
alumni go. If a large proportion of quitters return to school to
pursue graduate degrees, for example, there may be an
opportunity for the company to improve retention by offering
discounted or free education. If several employees leave to
become stay-at-home parents, perhaps more expansive work-
family programs would provide employees with healthier work-
life balance. If there is a trend of employees’ leaving to work for a
particular competitor, then it is certainly worth looking into that
firm’s culture, development programs, compensation, and
benefits to determine why your organization is losing talent to a
rival.

Hearing the words “I quit” is rarely pleasant, but by pushing

through the discomfort and using an evidence-based approach to
determine the cause and nature of the loss, managers and HR
professionals can gain valuable knowledge for their firms. The
next time an employee discloses their plans to leave, instead of
focusing your efforts on replacing this lost human capital and
minimizing the disruption caused by the departure, take the time
to reflect on the nature of the resignation, collect data to
understand the cause of the departure, and consider its broader
organizational implications. Over time, by taking advantage of
the learning opportunity presented by even the most painful
resignations, voluntary turnover can be a source of continuous
improvement for managers and for firms.

AK
Anthony C. Klotz is an Associate Professor of
Organizational Behavior in the UCL School of
Management at University College London. His
research focuses on understanding employees’
relationship with work, through the lenses of
resignations, citizenship behavior, and
biophilic design.

MB
Mark C. Bolino is the David L. Boren Professor
and Michael F. Price Chair in International
Business at the University of Oklahoma’s Price
College of Business. His research focuses on
understanding how an organization can inspire
its employees to go the extra mile without
compromising their personal well-being.
11/2/22, 4:02 PM What is Voluntary Employee Turnover? - Employee Cycle

HR STRATEGY & LEADERSHIP OPINIONS & ADVICE

What is Voluntary Employee Turnover?

by Bruce Marable March 28, 2022

    

As an HR professional, you are aware that there are different types of

employee turnover. Your organization is likely losing employees – are they
quitting, retiring, or being terminated? And, do you know why?

Here are a few employee turnover statistics that may surprise you:

In 2020, the national average annual turnover rate was 57.3%

On average, companies lose 18% of their workforce to turnover each year

In 2018, the overall cost of voluntary employee turnover amounted to $617

billion

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Approximately 60-70% of all turnover is voluntary 

33% of employees quit their jobs within the first 90 days of employment

There are over 10 million job openings in the United States

16.45% of employees quit within their first week of employment, 17.42%

within their first month, and 14.48% within their first six months

In this article, we will define voluntary vs. involuntary turnover briefly. Then
we’ll dig deeper into the voluntary employee turnover types and how they
impact your business.

Voluntary vs. Involuntary Turnover

Involuntary employee turnover happens when employees are terminated
from their positions.

Voluntary employee turnover happens when employees willingly choose to

leave their positions.

Let’s focus on some of the most common categories of voluntary turnover:

Job Abandonment: This happens when an employee doesn’t call or show

up to work for a set period of time. They’ve abandoned their post.

Another Job: This is when an employee finds employment at a different

company. Typically, we see the reason for this move is money-related or
bad management-motivated. If your organization is typical, this category is
probably the most significant percentage of your voluntary turnover. Sound

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risk mitigation for this type of turnover is determining if you are paying your


employees enough for your industry, job role, and region. Or, you may
need to research and investigate your managers to see if there are
personality clashes, leadership conflicts, or other issues that need to be
remedied.

Personal Reasons: This could include health reasons, handling family

issues, and even a change in priorities in their personal life, such as
returning to school, relocating to another state, or wanting a change in
industry.

Job Dissatisfaction: An employee leaves because they are not satisfied

with their position or the organization. Out of these four reasons, this is
something your organization probably has the most control of. By finding
out the causes of your workforce’s dissatisfaction – through surveys,
discussions, coaching – you can start making positive changes in the work
environment fairly quickly.

A Work Institute report from 2020 shows 20% of employees leave their jobs
due to frustration over a lack of growth, job advancement, and development
opportunities. Using your HR data and analytics to drill down to the real
reasons your employees leave will help inform and direct your employee
retention and career growth strategies. And a reduction in employee turnover
will have a positive effect on your organization’s bottom line!

The Costs of Voluntary Turnover

Business leaders must realize the cost of replacing employees is not merely
the price of advertisements or headhunter fees. Filling vacant positions,

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onboarding, training, and lost productivity are expensive costs for 

organizations, especially when employees that leave have in-demand,

specialized skills or valuable institutional knowledge and intellectual assets.
So let’s also consider these factors that are included in the costs:

Paying other employees overtime to handle the role while it’s unfilled

Decreased productivity due to loss of workgroup synergy

Decrease in morale, engagement, and satisfaction by the team

Hiring temporary help while recruiting a replacement

Conducting exit interviews

Recruiting costs

Onboarding

Training

It’s been estimated that each employee that leaves costs their employer
about 33% of their annual earnings. SHRM has estimated that the average
cost to replace a salaried employee is six to nine months of that employee’s
salary. And if they were a senior-level manager, top performer, or had
specialized skills, costs could even reach many times the employee’s annual
salary.

Calculating Employee Turnover Percentage

To calculate employee turnover, you divide the number of employees who left
the company in a specific range of time by the total number of employees you

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started with at that beginning range of time. The number is the percentage of
turnover.

For example, if you start the year with 100 employees and during that year,
five employees left voluntarily, and seven left involuntarily, you end up with a
voluntary annual turnover rate of 5/100 or 5%. Your involuntary turnover rate
is 7/100 or 7%. When you add 5% and 7% together, you have an annual
turnover rate of 12%.

Reducing the employee turnover rate is one of the crucial tasks of team
leaders. Why? Because a high turnover rate implies that the organization is
incurring high costs of operations due to recruiting new employees, the costs
of training and development, the loss of productivity, and possibly even the
loss of business. In the long run, a company will likely lose its competitive
advantages in the marketplace.

Reducing Employee Turnover

This article isn’t all doom and gloom! But, here’s the good part…there are key
tactics that can be implemented to improve the management of employee
turnover! Here are a few you can try:

Hire the Right People: Focus on hiring the right people for the right
positions right from the start. It is essential to write detailed job descriptions
and have a clear idea of the types of candidates you want for the role, but
it’s critical to use HR data to become more strategic in screening
candidates. Many companies also use personality, work environment
preferences, and leadership style assessments to determine if the
candidate possesses exemplary character and competencies for the

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position. When you get the right fit, there or more chances that the 

employee will be satisfied with that job.

Retain Key Employees: Concentrate on retaining key employees because

as stated above, costs begin to add up when employees leave. When you
retain your most experienced, seasoned, and talented employees, you help
ensure your company’s strength. And guess what? Employee retention is
not just the function of the HR department. Employee retention is
everyone’s responsibility through employee recognition, regular
performance feedback, fair rewards according to employees’ contributions,
and even increasing employee retention with HR data.

Create Positive Relationships: Good, open, and honest two-way

communication between managers and employees not only reduces
problems but builds trust in relationships. Companies can also focus on
building support systems, developing programs for stress management,
and empowering employees to participate actively and contribute to
organizational goals. Additionally, the relationship between an employee
and employer (or direct supervisor) is critical. Supervisors can reap great
rewards and improve employee job satisfaction by asking questions,
becoming involved, and being accountable.

Increase Job Satisfaction: Employees who feel valued and cared for tend
to have higher levels of commitment to their employer, are more dedicated
to their responsibilities, are more plugged in and engaged in the
organization, and are even more innovative. Reward that! And rewards
don’t necessarily always have to be monetary. Rewards can also be praise,
mentoring, professional development, managing special projects,
scheduling flexibility, etc. Get creative!
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Wrapping It Up 

We are living in a highly competitive labor market! The Great Resignation is

still in full force, and employers have difficulty filling vacant positions. Ensure
you know how to measure, monitor, and correct your voluntary employee
turnover. If you need help getting started, Employee Cycle can help you
gather your HR data, analyze it, and leverage that power with all of your
metrics in one place with real-time actionable data. Find out how by
scheduling a free demo.

Glossary Guide hiring retention turnover

    

Bruce Marable
Bruce Marable is co-founder and CEO of Employee Cycle, a people dashboard
company that automates HR reporting and analytics. Bruce is a sought-after
speaker, podcast host, contributing writer for SHRM, and an HR tech veteran.
When Bruce is not helping HR executives better understand the story behind their
workforce data, he's serving as Board Chair of the non-profit youth coding program
Coded By Kids, making fun playlists on Spotify, and hunting down the best bread
pudding in whichever city he's in.

 

Similar HR Reads You Might Like

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11/2/22, 4:01 PM What Are The Different Types Of Employee Turnover? | GenesisHR Solutions

Blog | HR April 16, 2020

What Are The Different Types

Of Employee Turnover?

By: Eileen Haggerty

W
hether your company is losing employees
because they’re quitting or because you are
terminating them, you need to know why. In this
article, we’ll discuss voluntary vs. involuntary
employee turnover types and what they mean for your
business.

The Turnover Calculation Formula

First things first: Every HR department should be tracking the

data around departing employees, so they know what the most
frequent causes of turnover are (and can take action if
necessary). Calculating your employee turnover rate can give
you that data. Employee turnover rate is the percentage of
employees who leave your organization during a certain period
of time.

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Using this formula, you can track total turnover, which includes
all terminations and voluntary departures—anyone who has
left the company for any reason. However, in order to use this
information to make positive changes in your company, you
need to be able to sort turnover into two buckets, voluntary
turnover vs. involuntary turnover, and calculate the turnover
rate for each.

Types Of Employee Turnover:

Voluntary Vs. Involuntary

Voluntary employee turnover occurs when employees willingly

choose to leave their positions.

Involuntary employee turnover occurs when employees are

terminated from their positions.

Involuntary Turnover Examples

At Genesis HR, we classify involuntary turnover into more than

a dozen categories for our clients, including the following major
types:

Poor performance: The employee didn’t perform well at the

job, a fact which should be well-documented along with
evidence of training.
Unsatisfactory background check: This includes falsifying
records and failed drug tests.
Unsatisfactory performance within probationary period:
In this case, the employee did not make it through the first
90 days of employment.

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Insubordination/violation of company policy: The

employee clearly made a decision to refuse to follow
directives and/or company policies.
Involuntary lack of work/loss of position: These are
layoffs. (Note: If you’re going through a company
downsizing, this type of involuntary turnover is actually
healthy.)
“Not a fit”

Dealing With Involuntary Turnover

As an HR professional, the presence of a high involuntary

turnover rate should compel you to examine the reasons
behind it and address what you find. It could mean you’re not
looking for the right people from the start, and as a result
wasting time and resources on training and recruiting.

Voluntary Turnover Examples

We classify voluntary turnover into 19 categories, with the most

common being:

Job abandonment: The employee was a no call/no show

for a set period of time, typically 3 days.
Found another job: The employee found employment
elsewhere. (This is typically money- or management-
related. If this classifies a large chunk of your voluntary
turnover, you may need to investigate your managers more
closely, or whether or not you are paying your employees
enough.)
Voluntary personal reasons: This could include reasons
like needing to handle pressing family members, or a
change in priorities within an employee’s personal life (or
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wanting to run off and join a cult or follow their dreams to

play the trombone in the marching band.)
Voluntary return to school
Military reasons
Voluntary job dissatisfaction: The employee is leaving
because they are unsatisfied with the job or company. This
is something employers can control—they simply need to
know the underlying cause of employees’ dissatisfaction.
Voluntary relocation

Dealing With Voluntary Turnover

Because the cost of re-hiring is so high—plus onboarding and

training—a reduction in voluntary turnover is almost always
reflected in the bottom line. When dealing with voluntary
turnover within an employee’s first 90 days, I first look at their
hiring manager (to see if the manager set reasonable
expectations) and the training program (to see if it provides the
employee with the skills and knowledge they need to be
successful in their role). If an employee is leaving for another
job, it’s important to do a comparison between your company’s
payscale and your competitors to see where you land.

What about retirement & internal

transfers?

You may have noticed that neither retirement nor internal

transfers landed on either list. In my mind, these two scenarios
don’t qualify as turnover. Here’s why:

In retirement, your employee isn’t leaving for any competitor

or any negative reason that should be counted against you.

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Your HR team should monitor when employees hit

retirement age, and prepare for the transition of business.
For retirement, your job is to make sure your company has
appropriately trained people to take over the retiree’s
workload and expertise.
Internal transfers are desirable vs. leaving a company,
because your company is retaining and promoting a
valuable employee to a position where they will continue to
contribute.

A note on functional and dysfunctional

turnover:

Another aspect to consider when reviewing employee

turnover is functional vs. dysfunctional turnover.

Functional turnover means poor performers are

leaving your organization. Example: having a poor
performer you are managing through a Performance
Improvement Plan. It is clear the employee simply
cannot meet the goals and expectations of the
position. Rather than terminate the employee for
performance, the employee voluntarily departs.
Another example would be an employee who is on a
final written warning for attendance, the employee
then tells the employer that due to family issues, the
employee can no longer work the hours expected and
gives notice.
Dysfunctional turnover means top performers are
leaving your organization. Example: A high performer
leaves for a competitor to make more money and for a
bigger title. Another example would be when a reliable
employee quits because they needed to adjust their

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work hours and the company could not

accommodate the needs of the employee.

Ideally, you have higher numbers of functional turnover

and low numbers of dysfunctional turnover. However,
calculating this type of turnover can be difficult, because
the criteria for determining high and low performers
changes depending on managers and supervisors.

How much employee turnover is

healthy?

All turnover is not created equal. While many people think any
amount of employee turnover is an ominous sign, I want to
encourage business owners and leaders to view a certain
amount of employee turnover as a good thing. So what are the
numbers you should pay attention to?

Zero turnover is not a viable goal. Some turnover is

healthy; it allows for fresh ideas and new people to come in
and shake up an organization. I actually get nervous when
people say they have extremely low turnover, because that
likely means they’re not innovating!
In my opinion and experience, anything less than 10
percent turnover is a reasonable number I’m not
concerned about (but that I’m certainly monitoring). One
caveat: The threshold for reasonable numbers is, in many
cases, industry-specific; for example, the hospitality
industry has huge turnover.
Turnover rates of more than 20% should be investigated.
An HR professional should have a strong understanding of
the reasons behind turnover if it is greater than 20%. If the

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turnover matches your industry, then you may not have a

concern, but you should have your finger on the pulse.

Zero turnover is not a viable goal. Some

turnover is healthy; it allows for fresh ideas
and new people to come in and shake up an
organization. CLICK TO TWEET

The key here is to measure every single termination. Set your

parameters of voluntary and involuntary turnover; be
consistent in recording and measuring every termination; and
think through the data so you can understand it. By analyzing
the reasons and trends behind departures and taking
corrective action when necessary, you can make your
organization a better place to work.

Want reduced employee turnover?

Consider a PEO like Genesis.

Companies that partner with a Professional Employer

Organization (PEO) like Genesis HR typically have reduced
turnover—as much as 10-14 percent lower annually than that
of comparable companies. Here’s why:

We help you figure out your turnover rates, identify the

reasons people leave, and help you come up with a plan to
address those issues.
We help you manage “good” turnover, so you’re in a better
position to retain the right employees.
We give you access to benefits packages you may not be
able to provide on your own, a factor that becomes

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especially important if you’re losing good talent to

competitors who can offer better benefits.

With Genesis HR on your side, you’ll be able to hire high-

performing employees and keep them from jumping ship. Less
turnover means your company will be better positioned to
meet its goals instead of getting caught in a rehiring/retraining
trap. If that sounds like something you’d be interested in, we’d
love to share more about how our PEO might be able to help
your company reach its goals. Just contact us today!

See related posts

By: Bob Burbidge May 21, 2012

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 Jobs
English Edition | 01 September, 2022, 09:39 AM IST | Today's Paper

Thinking of quitting? Companies are using stay

interviews to make you feel more acceptable
Synopsis
As companies grapple with high attrition especially among top talent that is in demand post pandemic, stay interviews are a tool that help
the HR to make the employees feel that they are instrumental to company's growth.

Agencies
There is a high chance that before you even think of resigning from your current
role, your team leader may ask you to join in a one-on-one interview to let you
know how important you are for the growth of the organisation.

You must have heard about exit interviews at companies but the practice of stay
interviews is now being used to retain top talent.

As companies grapple with high attrition especially among top talent that is in
demand post pandemic, stay interviews are a tool that help the HR to make the
employees feel that they are instrumental to company's growth.

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According to a Times of India report, a senior manager at CIEL was told about his importance for the success of the firm
and its future growth plans.

“We gave the manager a clear picture of where he stands and why he is important for our success now and in future. He
was appreciative of the path and that helped us in retaining this high-potential talent,” MD & CEO Aditya Narayan
Mishra said.

Ritu Rakhra, regional HR head at Dell Technologies, belives that the team leader has to step in and build a rapport with
every member of the team.

“Their priority is to build a personal rapport with every individual member. Whenever there are red flags and a high-
potential employee may be thinking of leaving, we expect the leader to step in and have that conversation and, if
required, pool in the skip-level leader. An additional level can help the team member understand the situation and it also
brings in a different perspective to the conversation. This is important for the team member to understand the
commitment the company is making in his or her career.”

Companies look for signs to understand if an employee feels unwanted in the team. The process kicks in with carrer chats
and interviews with team manager to let the employee understand his or her career path in the company. If need be the
next level manager is also roped in.

Stay interviews are a great tool to make the employee feel psychologically safe and build bonds with management and
help them understand want an employe really wants.

HR experts feel that the leadrs have to be empowered to take such decisions and other tools like counter offers don;t work
as they are deployed post resignation.

Experience Your Economic Times Newspaper,

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Thursday, 01 Sep, 2022

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Economy Grows 13.5% in Q1, Fastest in a Year

India’s economy grew at a four-quarter high of 13.5% in the April-June period
from a year ago, boosted by a strong recovery in construction and contact-…

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