12 Major Causes of Employee Turnover
It is no secret that employee turnover can be costly for businesses. In fact, it is often cited as one of the leading causes of business failure. So why do so many companies struggle with retaining their employees? Here, we talk about twelve reasons for high employee turnover. Understanding these factors can help you create a workplace that's more likely to retain employees.
What Is Employee Turnover Rate?
Employee turnover rate is a measure of how often employees leave a company. It's usually expressed as a percentage of the total number of workers. For example, if a company has 100 employees and 10 of them leave in a year, the turnover rate would be 10%.
There are several reasons why companies keep track of their employee turnover rate. First, it can be an indicator of how well the company is doing. If voluntary turnover is high, it may be because employees are unhappy with their jobs or the company's policies. High turnover can also be costly because it costs money to hire and train new employees.
As a general rule, a good employee turnover rate is 10% or below.
Top Reasons for Employee Turnover
When you're looking for ways to reduce employee turnover, it's important to identify the reasons why employees choose to leave. There are many factors that can lead them toward this decision and the causes below often contribute in some way or another.
Dissatisfied with Position
Dissatisfaction with the current job title is one of the most important causes of employee turnover. When workers are unhappy with their positions at work, they are less likely to feel invested and more likely to look for new opportunities.
The University of Chicago published a report that lists job satisfaction ranked by job title. Some of the jobs with the highest employee satisfaction included firefighters, artists, teachers, psychologists, and physical therapists. Some of the least satisfying jobs, according to the same report, were waiters, cashiers, roofers, clothes and furniture salespersons, and parking lot attendants. [1]
This list suggests that employees in positions that directly help people and require creativity are more satisfied. In addition, those positions seem to be offering higher pay and benefits. Finally, flexibility and diversity of tasks seem to be important features of these roles. These factors should be taken into account when offering an employee a position, in order to avoid high turnover in the long run.
Discrimination
There is a strong correlation between discrimination and employee turnover. Employees who feel that they are being treated unfairly are more likely to leave their jobs than those who feel respected and valued.
This is especially true if workplace discrimination is based on factors that are beyond the employee's control, such as race or gender. A 2019 study found that nearly half of employees across the US, the UK, France, and Germany have witnessed or experienced discrimination based on race, gender (or gender identity), or age. [2]
Not only does discrimination lead to dissatisfaction among employees, but it can also create a general atmosphere of mistrust and hostility. This can make it difficult for managers to retain good workers.
Retaliation
One of the common reasons for high turnover rates is retaliation. Retaliation occurs when an employer takes action against an employee in response to that employee engaging in protected activity, such as filing a complaint about discrimination or harassment.
Employees who experience retaliation are more likely to suffer from anxiety, depression, and stress which may cause them to leave their jobs.
According to EEOC, out of all discrimination charges, 56% were related to retaliation. The growth in retaliation cases has been significant - in 1997 it made up only 23% of all charges. [3] It suggests that it is a serious issue that should be considered if your organization is experiencing high turnover rates.
Favoritism
It's no secret that people feel more comfortable around colleagues who share their values and experiences, and as a result, they're more likely to trust and cooperate with them. This tendency is called favoritism, and it can have a big impact on employee retention.
When employees feel that they are being treated unfairly or that their opportunities for advancement are limited, they are more likely to look for new jobs. Favoritism can also lead to conflict within teams, as those who feel they are being excluded may become resentful and uncooperative, and as a result, leave the organization.
Nepotism
It's often heard that family-owned businesses give preferential treatment to relatives when it comes to the hiring process and promotions. This practice, known as nepotism, can create a number of problems for employers, including high employee turnover rates.
After all, if people feel like they're constantly being passed over for opportunities in favor of someone with family ties to the company, they're not going to stick around for long. Nepotism can lead to shady company policies and the appointment of incompetent friends and relatives to positions of authority.
Not only does this put the company at a disadvantage, but it also undermines employees' faith in their leaders which contributes to high turnover.
Intimidation
With the constant pressure to perform and meet deadlines at work, it's easy to see how things can get tense. Whether it's colleagues who make snide comments or managers who push employees to perform better by yelling, intimidation is a serious problem in the workplace. In fact, 1 in 4 British workers reported being bullied at work in 2019. [4]
Sadly, intimidation is often a major contributor to employee turnover. After all, who wants to stick around in an environment where instead of receiving honest feedback they feel belittled or threatened? When employees feel like they're constantly walking on eggshells, it's only a matter of time before they start looking for greener pastures.
Toxic Work Environment
Toxic work environments often lead to workers that are disgruntled and on the constant lookout for better opportunities.
Toxic workplace culture is characterized by all the aforementioned factors, and also includes poor communication, unrealistic expectations, and a general feeling of being unappreciated. In addition, a toxic work environment often breeds discontentment and office politics, which can make it difficult for employees to get their work done.
As a result, it's not surprising that employees who are subjected to a toxic work environment are more likely to look for another job.
Work-Life Balance
Work-life balance is often thought of in terms of hours spent at work versus hours spent at home. However, it can also be viewed as the amount of time and energy that an employee invests in their job versus their personal life. For example, an employee who is able to set boundaries between work and home is more likely to have a healthy work-life balance.
Conversely, an employee who doesn't have a good work-life balance is more likely to become disengaged and eventually leave the company. It is no surprise that 33% of employees who report having a healthy work-life balance say they intend to stay in their current job. [5]
Job Satisfaction
Just like being dissatisfied with your position causes high turnover, employee engagement, and job satisfaction result in higher retention rates.
There are many factors that contribute to employee happiness, such as pay, benefits, working conditions, and relationships with co-workers and supervisors.
A study found a significant relationship between job satisfaction and employee turnover intention in small businesses. [6] Unsurprisingly, employees are more likely to stick around when they are satisfied with their jobs.
Lack of Training
Training is essential for any employee as it provides the opportunity to learn about the company, the products, and the procedures. It also helps employees to develop the skills and knowledge they need to do their job effectively.
However, many companies do not invest enough in training. In 2018, the U.S. Bureau of Labor Statistics found that companies that had less than 100 employees provided only 12 minutes of training to managers twice a year. Organizations with 100-500 employees gave just 6 minutes. In the words of John Tschohl - a professional speaker and consultant, "If this holds true for managers, how much training do front line employees get?" [7]
When employees feel unprepared or unable to perform their duties, they are more likely to look for other opportunities. Employees who are not properly trained are often less engaged with their work, and this can have a ripple effect on the entire team, also causing them to feel like it's time to leave the organization.
Poor Leadership
Good leaders are the foundation of any strong organization. They provide direction and vision, inspire employees to achieve ambitious goals, and create a culture of trust and respect.
On the other hand, poor leaders can have the opposite effect. They may be indecisive, micromanaging, or simply unable to motivate their team.
As a result, employees may become disengaged, leading to high turnover rates. In fact, poor leadership was found to be the most common reason why employees leave their jobs in the corporate yacht crew workforce - 64% of surveyed employees indicated that managers were the top reason for leaving. [8]
Short Term Thinking
In today's business climate, companies are under constant pressure to increase profits and shareholder value. As a result, they often focus on short-term goals and objectives at the expense of long-term planning.
They focus on offering high salaries and generous benefits, rather than investing in long-term initiatives that would create a positive work environment. As a result, these companies often find themselves struggling to retain their top talent.
When employees feel that they are nothing more than a means to an end, they become disillusioned and less engaged in their work. This can lead to a feeling of apathy and cynicism, which in turn can make them more likely to leave for another job.
Compensation
Compensation is one of the top causes of high voluntary employee turnover. It's not surprising that employees are more likely to stick around if they feel like they're being compensated fairly.
But what exactly does "fair compensation" mean? In general, it refers to the total package of benefits and perks that an employee receives in exchange for their work. This can include everything from base salary and bonuses to health insurance and retirement savings plans. Of course, the specifics will vary from one company to the next.
In general, employees are more likely to be satisfied with their compensation if it meets (or exceeds) their basic needs and provides some additional perks that improve their quality of life. By offering a competitive compensation package, companies can improve employee retention.
Lack of Flexibility
In today's world, workers are looking for jobs that fit into their lifestyle, rather than the other way around. With more and more people working remotely or needing to take care of family commitments, the traditional 9-5 job is becoming less and less attractive to job seekers.
If businesses want to retain their employees, they need to be open to offering flexible working arrangements. This could involve allowing employees to set their own hours, or work from home when necessary. Making these changes can be a big challenge for companies, but it's essential if they want to keep their best workers.
Lack of Learning and Development Opportunities
Statistics show that workers in companies that invest in employee learning are 83% more likely to feel happy in their jobs. [9]
Learning and career development opportunities can include things like job shadowing, mentorship programs, and educational stipends. When employees feel like they are stuck in a dead-end job with no opportunity to grow, it's no surprise that they start looking for a way out.
Scant Career Advancement Opportunities
According to a recent report, 34% of employees who left their job did it to gain more career development opportunities. [10]
Employees are more likely to stick around when they feel like they're able to move up within a company. After all, who wants to stay in the same position year after year with no hope of ever seeing a promotion?
Unfortunately, many companies today are guilty of offering scant career advancement opportunities to their employees. As a result, employee turnover rates are high, and morale is often low among remaining employees.
Frequently Asked Questions
What Is the Number One Cause of Employee Turnover?
Compensation is often cited as one of the top reasons for looking for a new job, however, things seem to be changing. A 2022 survey showed that work-life balance trumps bank balance - 63% of job seekers selected a good balance between work and personal life as a top priority when looking for a new job, followed by compensation (60%), relationships with colleagues and work culture (40%). [11]
Focusing on improving work-life balance can decrease employee turnover and save companies money in the long run. Ultimately, this appears to be one of the most effective employee retention strategies.
How Does Job Satisfaction Affect Absenteeism and Turnover?
As mentioned previously, job satisfaction is a measure of how content an individual is with their job. It is often used as a predictor of employee productivity and motivation, as well as of absenteeism and turnover.
An employee who is satisfied with their job is more likely to be engaged in their work and have a positive attitude towards their employer. This, in turn, can encourage employees to perform better and be absent less.
Satisfied employees are also less likely to leave their jobs, meaning that turnover is lower. In other words, job satisfaction has a direct impact on both absenteeism and turnover.
How Does Company Culture Affect Turnover?
Workplace culture plays a big role in employee turnover. If employees feel like they're in a toxic environment, they're much more likely to look for a new job.
One factor that contributes to company culture is how management treats employees. If management is disrespectful or doesn't value employee input, that can create a negative environment. Another factor is the way that employees interact with each other. If there's a lot of competition or backstabbing, that can also create a negative environment.
Ultimately, if employees don't feel like they fit into the company culture or their needs aren't being met, they're much more likely to look for a new job.
Why Might an Organization Have High Turnover Levels?
High turnover levels can be a sign of a number of underlying problems within an organization. One common cause is poor management. If employees feel disrespected or micromanaged, they will be more likely to look for a new job.
Another possibility is that the workplace culture is not a good fit for the employees. If workers feel like they are not valued or their skills are not being used, they will be more likely to leave.
Finally, high turnover can also be a sign of low morale. If employees are unhappy with their work, they will be less likely to stick around.
In general, any of the 12 reasons above (or a combination of them) can be a reason for high turnover rates in an organization.
Resources
1 Smith, 2006. https://news.uchicago.edu/
2 Glassdoor, 2019. Diversity & Inclusion Study 2019. https://about-content.glassdoor.com/app/uploads/sites/2/2019/10/Glassdoor-Diversity-Survey-Supplement-1.pdf
3 Flynn, 2022. 31 Alarming Employment Discrimination Statistics [2022]: The State Of Employment Discrimination In The U.S. https://www.zippia.com/advice/employment-discrimination-statistics/#:~:text=What%20is%20the%20most%20common,up%2022.6%25%20of%20all%20charges
4 Rosling, 2020. https://www.smeloans.co.uk/blog/bullying-in-the-workplace-statistics-uk/
5 Zuckerman, 2020. https://comparecamp.com/work-life-balance-statistics/
6 Reukauf, 2018. https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?article=5425&context=dissertations&httpsredir=1&referer=
7 Tschohl, 2018. https://www.linkedin.com/pulse/you-worth-more-than-6-12-minutes-training-every-six-john-tschohl
8 Passman, 2022. https://www.impactcrew.com/
9 Ceridian, 2018. 2018-19 Pulse of Talent. Retention throughout the employee lifecycle. https://go.ceridian.com/rs/285-SCZ-328/images/GD-NA-EN-HCM-114754-106-Pulse-of-Talent-2018.pdf
10 How to get today's employees to stay and engage? Develop their careers. 2019. https://www.prnewswire.com/news-releases/how-to-get-todays-employees-to-stay-and-engage-develop-their-careers-300860067.html
11 LinkedIn, 2022. 2022 Global Talent Trends. The Reinvention of Company Culture. https://business.linkedin.com/talent-solutions/global-talent-trends
