Control staff turnover

When you run a business, it is good practice to be aware of factors that commonly lead to high staff turnover rates, so that you can take steps to reduce them.

Pay is rarely the only reason why people leave, although low pay levels are often a disincentive to stay.

Consider how your business achieves in the following areas.

Staff recruitment and induction

• Recruiting the right staff - are you getting the staff selection process right? Are you attracting staff that are suitable for vacant roles and the right match for your business? See recruiting staff.
• Staff induction - how do you welcome and orientate new employees? How do you let them know where things are, what's expected of them and what they and their colleagues are supposed to do? An effective induction programme will familiarise new staff with the culture and values of your business and make them feel part of the team - see advantages job inductions.
• Flexible working arrangements - do you recognise your employees' changing needs to achieve work-life balance? See advantages of flexible working.

Training and staff development

• Motivation - how supportive and encouraging is your business to its employees? See lead and motivate your staff.
• Organisational culture - what are you doing to promote a diverse and inclusive culture in which staff are aware of and committed to the business' aims? See promoting equality and diversity.
• Matching jobs to people - are you making the best use of skills, experience and competencies, and helping staff fulfil their aspirations?
• Staff training and development - are you investing in your staff by giving them time and opportunities to learn new skills? See staff training and development.
• Formal appraisals - how often do you give your staff the opportunity to discuss their performance? Setting measurable goals can help staff improve their performance and they can take confidence in seeing how their efforts contribute to the success of your business. See advantages of performance appraisals.
• Effective grievance procedure - do staff know how to register a grievance and are they making use of the procedure? See handling grievances.
• Team working - do you encourage common goals and discourage unhealthy individual rivalries?

Contracts, pay and working environment

• Employment contracts - do the terms and conditions of your contracts encourage staff loyalty? See the employment contract.
• Competitive pay rates and a fair, transparent pay system - are they in line with your industry? See set the right pay rates.
• Incentives and other staff benefits - are they relevant for your staff? Can staff choose the ones they need? See implement staff incentive schemes.
• The office environment - is the physical office environment pleasant and well designed? Are noise, light and ventilation levels acceptable?

Regular monitoring of staff turnover can show you why it is happening and enable you to control and forecast it.

Staff turnover: measure and benchmark

You should measure your current staff turnover in percentage terms, following this simple two-step calculation:

1. Add together the number of staff working at the beginning of the time period and the number of staff working at the end of the period and divide by two. This will give you your average number of staff working within this time period - you will need this number for the next stage.

2. Work out the number of employees leaving over the time period, multiply by 100 and then divide by the average number of people working in that same period.

This formula will give you a percentage for your business, known as the separation rate that you can compare over time. You can also use this indicator to see how your business compares with staff turnover averages in your business industry for benchmarking purposes.

Employee stability index

To measure how experienced employees are being retained, you can calculate the employee stability index - number of workers with one year's service or more, divided by number of workers with less than 12 months' service, multiplied by 100 = stability index percentage rate.

Employee turnover patterns

The characteristic pattern of employee turnover is high for new starters, then decreases the longer an employee works for you. This pattern will vary in any single organisation and can be shown graphically. It is known as the 'survival curve' and can be extremely helpful in understanding the nature of employee turnover, but must always be used in conjunction with employee turnover rate.

To create the survival curve, you must plot the number of leavers against the period for which they were working.

Examine the causes of staff turnover

To make a meaningful assessment of your current business' position, try to identify the causes of employee turnover:

• It is often effective to have consultations with individuals or groups of staff. Engaging with staff will help root out any underlying problems and causes of dissatisfaction within your business.
• Exit interviews are carried out by many businesses, can reveal common reasons why staff leave your employment and highlight any emerging patterns. See when an employee resigns.
• Regular staff surveys can often indicate general satisfaction levels, but remember to address any issues arising so that they know you take their views seriously. See staff feedback, ideas and forums.
• Analyse your recruitment and selection procedures to see if you can identify expectations or potential problems at an early stage. Alternatively you may need to make the business' expectations clearer at the recruitment stage. See taking on staff.

Managing attendance and employee turnover - Acas guidance.

There are a number of costs associated with staff leaving your employment. The obvious ones are time and money to replace staff and cover workloads, but there are also some hidden costs of high staff turnover.

Staff turnover: monetary and time costs

When a member of staff leaves your employment, there may be costs associated with:

• leaver administration tasks, eg exit interviews and payroll changes
• loss of experienced or skilled members of staff
• covering a vacancy until it's filled, eg through the use of temporary staff or overtime payments
• advertising for a replacement or using a recruitment agency
• dealing with recruitment and selection tasks, eg checking applications, and organising and attending interviews
• the induction and getting new recruits started
• training and development of new staff

Staff turnover: hidden costs

High staff turnover may result in the following effects across your business:

• other staff expressing a wish to leave
• higher levels of stress-related absence as your remaining staff may need to take on the burden of additional workloads
• missed deadlines or interruptions to workflow
• a reduction in productivity, levels of customer service or standards of quality
• a drop in staff morale, particularly if the leaver was popular and good at their job
• damage to the business reputation that can negatively impact your effectiveness to attract future staff

Rising employee turnover often develops into a 'vicious circle' as low morale causes more workers to leave, which in turn reduces the morale of those who remain, and so on. Taking practical steps to reduce staff turnover will help your business avoid the costs associated with high employee turnover.

Reducing staff turnover helps to minimise the costs and negative impact of unwanted and unplanned resignations. You can help limit employee turnover via staff consultation, succession planning, performance management and staff incentivisation.

How to reduce staff turnover of new starters

You may find that your business experiences high staff turnover amongst new recruits. If this is the case you can reduce this by addressing the following:

• Recruitment and selection process
  • ensure job adverts give an accurate description of the job role
  • selection tests can help identify suitable applicants
  • don't try to appoint over qualified staff as they are likely to become bored and leave
  • don't be rushed into appointing anyone just to fill the role
  • see taking on staff
• Staff induction
  • develop an induction programme that gives a well-rounded feeling for the business as a whole
  • get staff members to feed into your induction programme - ask them what they would find useful to know if they were new to the business
  • encourage staff from different areas of the business to participate in the induction programme eg as part of the induction programme spending some time with new recruits explaining their team's function within the business
  • invite questions from new recruits during their induction and let them know if they have any concerns or something they are unsure about that they can come to you or any member of staff for help at any time
  • see induction programme: what to include
• Job training
  • establish a training schedule that gradually introduces the new recruit to various tasks their role will require - don't overwhelm them with everything at once
  • use a buddy system where a new recruit is partnered with an existing member of staff - this can be useful for on the job learning
  • the line manager should monitor the new recruit's progress
  • see training your staff

How to reduce staff turnover of longer-term employees

If your business suffers from the loss of employees that have been with you for a while then you may need to look at wider issues such as business culture, business organisational structure or management style. Engaged employees are less likely to leave an organisation. Some of the following methods may help reduce staff turnover in your business:

• Management support - staff that are supported by you will feel valued and motivated within their job roles.
• Leadership - show clear leadership so employees know what direction the business is going in and let staff know how they can contribute.
• Business culture - look to develop a culture within your business that can help foster a happy and productive workforce such as building trust, improving communication, valuing staff feedback and providing opportunities for staff development.
• Share control - give staff the power to make some decisions themselves rather than imposing control and restrictions. This can also help build trust and staff engagement.
• Thank your staff - ensure you thank your staff for a job well done to let them know they are valued and appreciated.
• Staff feedback - establish employee voice in your business enabling them to highlight concerns or suggest improvements.
• Pay rates - check that your pay rates are fair and competitive, see set the right pay rates.
• Equal opportunities - make sure that opportunities for training, incentives and promotion are open to all staff.
• Diversity - encouraging diversity in your business can have a positive effect highlighting that differences are embraced and welcomed and that no one is discriminated against.
• Communication - clear communication and consultation within the business engages staff, reassures them and prevents suspicion and rumours.
• Discipline and grievance - you should have proper disciplinary and grievance procedures in place and you should apply them properly and effectively.
• Performance management - link employee's personal objectives with overall organisational goals so that staff know how their role is important to the overall success of the business, see managing staff performance.
• Training and development opportunities - give employees control over their personal development and encourage ways in which they can develop eg through training or experiencing other roles within the business.
• Job role diversity - ensure the tasks your staff carry on a daily basis aren't mundane and repetitive. By introducing a variety of tasks you can maintain staff interest and motivation.
• Working conditions - do you provide suitable working conditions such as work spaces, kitchen facilities, toilets, rest areas?
• Working hours - is there a need to reorganise working patterns, offer flexible working, job sharing or working from home?
• Staff incentives - you may want to consider different incentives for staff including individual or team productivity bonuses, performance-related pay, non-financial incentives, eg healthcare provision, flexible working, additional leave, attractive pension arrangements.

Managing attendance and employee turnover - Acas guidance.

There is a strong business case for developing your staff as it will help ensure that your business runs smoothly and with consistently good results. You should also be able to reduce staff turnover by training your managers to lead and motivate your staff.

Staff training and development

Although helping staff develop their existing skills and learn new ones can cost your business time and money, training and development is crucial to improving your business' performance and can actually help minimise staff turnover.

This is especially the case if your staff see that what they are learning is relevant to them and the business, and they can readily put their new knowledge into practice.

It's important that your staff training and development policy is fair and clearly understood by your staff as early as possible in their employment. If they know that you will spend time training and developing them, they will feel valued and are more likely to continue working for you.

Training and development can be delivered by experienced workers through on-the-job training or from external sources such as training organisations or consultants. See training your staff.

Leadership and people management

A positive business culture can influence the retention of staff and is often defined through leadership. You can foster leadership skills in your staff that will promote a culture they want to belong to.

People who feel good about their development and contribution to the business are likely to reflect this in their performance and how they interact with colleagues and customers. They help drive the business forward and develop other workers.

Finally, remember that good people management helps retain valuable staff. A poor relationship with a manager, who may be skilled in other areas, is one of the main reasons why workers decide to leave. Therefore, you may want to train your managers to coach and supervise other people.

See using mentoring to increase employee performance.

Staff turnover can help introduce fresh ideas and skills into your business, but too high a level of employee turnover can be a sign of underlying problems that can ultimately have a negative effect on business performance.

You will be better prepared for dealing with leavers if you understand why employees leave, and if you structure a programme to manage staff effectively from the time they are recruited. Make sure you:

• keep records of staff leavers
• monitor your rate of turnover at regular intervals
• benchmark your staff turnover
• address issues facing new recruits and long-term workers
• analyse your business culture
• refine your recruitment and selection process
• review and benchmark your pay and benefits policy
• assess your training, development and promotion policy
• refine your appraisal process and management of individual/team performance
• review your work-life balance arrangements - are your workers able to manage both their home and work commitments?
• assess the management style of your business
• formulate contingency plans for coping with leavers
• create and regularly review succession plans
• examine your staff and your managers' leadership styles

See reduce staff turnover.

Exit interviews and attitude surveys

A common way of discovering why employees leave or how current employees feel about your business is through exit interviews and attitude surveys.

When an employee leaves your employment, use an exit interview to ask them their reasons for leaving and what they think the positive and negative things are about your business. It may be difficult for an employee to express their honest reasons or opinions, but you can help them to be open by using some simple strategies, such as:

• interview away from work space
• do not use the employee's direct manager
• guarantee confidentiality
• explain why the interview is needed
• assure the employee answers will not affect future references

You should objectively review any information you gather from the exit interview and use it as a foundation for making improvements to your business. This, in turn, could strengthen your business' name, helping to retain existing staff and attracting others to your business.

For an attitude survey, you can include all employees or select a sample for more in-depth interviews. If you use a questionnaire, make sure it is well designed. Another method to consider is a confidential focus group supported by someone outside your business.

Make sure the survey is freely communicated to employees and acted on, otherwise, it may well be counterproductive.