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How to conquer staff turnover

Let's look at what staff turnover really means, how you can calculate it and what to do with the results.
Published 17 Sep 2020
6 min read

Staff turnover affects even the most successful of businesses. It can be for a wide range of reasons; employees follow their partners across the country, they want to spend more time at home with children, they are looking into a major change in career, following a career promotion, or workers who want to go back to school.

Those reasons are tough to address by an employer because they involve life events in the employee’s world outside of work. But, there are also reasons employees leave jobs which are fully in control of you as an employer.

We want to look at what staff turnover really means, how you can calculate it and what to do with the results. Let’s go…

What does staff turnover mean?

Staff or employee turnover is the measurement of the number of employees who leave your business during a specified time period (usually one year). There are two types of staff turnover, voluntary and involuntary;

Voluntary turnover

Refers to any instance in which an employee actively chooses to leave a business.

Involuntary turnover

Occurs whenever an employer chooses to terminate an employee.

Within every business, low staff turnover is the goal. The industry standard can of course change. For example, industries such as retail and hospitality have a much higher average turnover rate than say a finance or insurance company.

The average staff turnover rate in Australia in 2019 was 8.5%. The highest contributor was hospitality with 17.9% turnover, whereas the lowest was public administration at 5.3%. To see the full list of employee turnover rates by industry in Australia click here.

A high turnover rate is one that is significantly above the average for the relevant industry. When creating targets for your business, make sure to be realistic by measuring against the industry average rather than the national average.

The who, when and why?

You should regularly review your staff turnover rate. Looking at who the employees that leave actually are, when did they leave and why did they leave?

Make sure to track changes in staff turnover rates against changes you make to the business. You may start noticing trends across teams or the whole business that you can then start to work on.

The who

If a lot of your top performers are leaving, then you should take immediate action, otherwise, your company’s performance will flag.

You want to look at what you could have done to improve the employee experience of that employee or look into any salary discrepancies that may have led them to look elsewhere. On the other hand, if your low performers are leaving, you could stand to gain by enjoying better employee engagement, productivity and profits.

If the majority of your employee leavers are low performing this may be an indication that you’re hiring the wrong people in the first place. The way you look at who leaves your business is otherwise referred to as regrettable and non-regrettable leave.

  • Regrettable leave Refers to when an employee’s departure from a company has a negative impact on the team or business. You don’t want them to leave because they are a good worker, top talent or just a great cultural fit to your business.
  • Unregrettable leave This means you don’t regret dismissing an employee. It’s a good thing. This may be because they weren’t a good fit for your business or they weren’t performing up to standard.


The when

Be sure to track when people leave your business. Your new employee turnover rate can offer a lot of insight. It can tell you whether your recruitment methods are working.

If a significant number of your new employees leave because they found their job duties different to, or more complicated than what they were expecting, perhaps you should consider reviewing your job descriptions.

Investing more time and money developing your orientation process could help too if employees leave because of cultural mismatches. You could also consider offering other employee engagement programs like parental leave or flexible working hours if your employees struggle with work-life balance.

If, however, you notice that a lot of old-timers are leaving the business after years of services you might want to look into your retention incentives. Are you offering them enough of a career path, do you offer enough rewards for their loyal service?

The why

When you know why your employees leave, you can change your company’s management style or policies in response.

Exit interviews are a useful way to see whether people give similar reasons for leaving, or whether they offer useful suggestions for how you can improve. Staff turnover rates can uncover hidden problems within your business that you didn’t know you had.

A high turnover rate is a warning sign you shouldn’t ignore. Review your recruitment processes, change your compensation and benefits plan or incorporate a succession planning policy. Ultimately, if you respond to turnover issues proactively, you will improve your company and retain great employees.

How to lower your staff turnover rates?

1. Hire The Right People

Keeping employees starts with hiring the right employees. You likely hire employees who have strong skills that match your open position. But, how well do your employees fit in with your business’s culture?

You must hire employees who are behavioural and cultural fits for the job. You can ask employees behavioural interview questions to find out how they react in certain situations. Also, during interviews, be sure to ask some of these great interview questions that could help reveal a toxic employee!

If employees don’t fit in with your work environment, they won’t be happy and will end up leaving the business sooner rather than later.

2. Offer Competitive Pay And Benefits

People want to be compensated well. Even the most passionate of employees aren’t just working for the love of the business.

They need to cover standard expenses like housing, utilities and food. And most people want enough money for extras, too. If you don’t pay your employees well, they’ll find a business that will.

3. Reward and Recognition

Your employees need encouragement and recognition. It’s human nature.

Early last year, we looked at what Australian employees really want from their employers and how you can set up reward and recognition initiatives that won’t cost your business the big bucks.

Reward and recognition is a huge factor in your overall employee engagement and happiness. Employees who feel valued for the work they do will show higher levels of engagement with your business. They will contribute more effectively, work innovatively and perform highly in their role. That’s a fact. Companies with recognition programs that are effective at improving employee engagement have 31% lower voluntary turnover.

4. Career Pathing

Helping your employees along their career path is very important. A lot of time, employees will leave a business as they feel they have no future there. They will then look elsewhere for promotion.

You want to make sure your employees are aware of exactly where their job is going within the business. Nurturing their growth and development will help to increase their engagement, boost their productivity and potentially, save time and money on your staff turnover.

According to a survey by Robert Half Finance & Accounting, 40% of 1,200 professionals said their managers never discussed their career paths with them — but the same research revealed a whopping 93% are desperate for this type of information and management. In light of this data, bosses who are not discussing career progression with their workers are missing out on an important opportunity to engage and retain team members.

5. Flexible Work

Here at Employment Hero, we know a thing or two about flexible working. Flexible working policies and practices allow employees to adjust their work time and location to what suits them. Employees can create a work-life balance for themselves.

In 2020, this may refer to encouraging remote work or offering more support for those impacted by the virus and lockdown. Flexible work schedules might not be possible for all businesses, but we’ve thought it’s a great way to make sure your company culture is good for your entire workforce.


The Wrap Up

As you can see staff turnover rates are a really important factor to know about your business. Look into your staff turnover rates and see what you can change in your business to make sure your employees are engaged and the retention levels are high.

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Engaging Employees: A Competitive Differentiator

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