Causes of high employee turnover

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Author: Future Manager Research Center

Having turnover is normal and it is part of the healthy life cycle of every organization. However, if this turnover hinders the firm’s goals achievement due to crucial positions always vacant, there is a major issue within the organization.

Moreover, the cost for employees turnover (although it may vary significantly from business to business and seniority) is quite high: it has been estimated that for each employee that leaves and has to be replaced the cost is around €35,000 per employee.

This amount includes:

  • Administrative cost of resignation
  • Recruitment costs
  • Training of the new resource and loss of productivity costs

Although many can be the causes that can contribute to high turnover, the hiring process of the organization should be among the first areas to be examined. A faulty hiring process often leads to hires who are poor fits and will be unlikely to stay.

Major pain points in the recruitment and hiring process that can cause misfits may be:

  • Definition of core competences and personality traits: soft and hard skills must be set with a clear picture of the role but also considers the labor market current availabilities and not set requirements that no candidate could realistically fulfill.
  • Stretch the decision to hire for more than three/four interviews: by delaying the decision it is highly probable that the most promising candidates will accept an offer from another firm.
  • Share the company’s culture and values: avoiding to talk about the company’s culture during the recruitment process may lead candidates to the wrong idea or setting the wrong expectations.

If after assessing the hiring process no issues have arisen, other common areas that could rise turnover are:

  • Growth and progression opportunities: give to employees the opportunity to grow, be promoted or learn a new skill
  • Work-life balance: if employees are working repeatedly long hours and weekend, they are most likely to feel exhausted and frustrated and search for another opportunity.
  • Micromanaging: micromanaging stamps out the opportunity for innovation, while employees should be trusted to be part of the decision making process.

These are some of the causes of a high turnover rate; as each firm is different, the causes underlying the issue could be the most diverse. Nonetheless, it is always a good practice to identify the problematic areas before the situation degenerates and find adeguate solutions that may improve the situation. Even if it may be an exhausting internal assessment process, the benefits outweigh the hassle and gives the organization a better knowledge of the internal dynamics.