As per recent reports, employees are quitting their jobs faster than businesses can replace them. This leads to huge financial losses. In December 2021, only 4.3 million workers quit their jobs. As a result, due to the record-breaking retention rates, employee turnover has become a hot topic. But what is employee turnover? Let’s delve into the details now.
Employee Turnover
Employee turnover means employees leaving their employers. On the other hand, a healthy turnover rate means the amount of employees leaving their jobs in a certain period of time. One thing one must remember is that turnover is a broad phase; it may occur in a variety of ways, both undesired and positive, and should not be confused with attrition. Let’s dig further into some of these types. There are two primary types of turnovers: voluntary and involuntary.
Voluntary Turnover
Voluntary turnover happens when an employee leaves the organisation on his or her own initiative rather than at the employer’s request. This type of turnover can take numerous forms, including transfer to another organisation, retirement, resignation, relocation or travel with spouses. Voluntary turnover is often a source of anxiety for executives since it is unpredictable, beyond the employer’s control, and can cause significant disruptions in the workplace. Furthermore, voluntary turnover may be costly, directly (retiring) and indirectly (losing outstanding personnel).
Involuntary Turnover
This type of turnover occurs when employees part ways with organisations for reasons out of employees’ hands. It is divided mainly into two subtypes:
Controllable: This happens when a company ends an employee’s contract or asks them to quit. The cause is frequently poor performance, which disrupts the flow of the workplace or the firm itself, or unprofessional behaviour by the employee, such as breaching one or more workplace regulations.
Uncontrollable: This type of involuntary turnover may involve situations neither party controls, including incapacity, downsizing and death. Depending on the circumstances, involuntary turnover can have both advantages and disadvantages. Some employees may be concerned about their job security, but it may also help restore the workflow and productivity of those a dismissed employee has severely impacted.
What Are The Causes of Undesirable Turnover?
When turnovers happen, and a company ends up losing their top personnel, it causes hindrances in the day-to-day operations of a company. As a result, all business owners and executives should consider the reasons for employee departures and the situations that precipitate a hasty exit. This not only aids in retaining top personnel but also increases job productivity and prepares you to deal with unforeseen occurrences should they occur again.
Here are some of the reasons why an employee might part ways with their existing organisation.
Employees feel undervalued and overworked by their companies.
Trying to achieve a better work-life balance.
Employees are unsatisfied with their wages and are yearning for higher compensation, with rival firms making them unsolicited job offers with greater pay.
Employees feel undervalued and overworked by their companies.
Personal reasons like resignation to care for an ailing family member, marital issues, divorce, inheritance, migrating to a new workplace and more.
Conflicts with business rules and visions or with the overall working culture.
Seeking another job title at a firm that offers better professional progression chances.
How Can Businesses Understand that Employees Are Ready to Leave?
For every business, high turnover can be a big problem. Thus, it is important to spot the symptoms of an employee about to quit so that the company can seek to reduce these causes. While this may not be enough to rescue the individuals who have already decided to go, it will save time and money in the long run.
The most visible indications of an employee going out of the workplace are:
Increased participation in job-finding applications and websites, such as LinkedIn
A significant drop in the employee’s production level.
Showing less interest in committing to long-term goals and initiatives
Avoiding social gatherings held at work or leaving as soon as feasible
Privately or openly voicing unhappiness with the job environment or their superiors.
Taking more time off or longer vacations than usual.
These are the traits in most employees who willingly want to leave a company or an organisation.
What Happens if the Employee Turnover Rate is High?
There are various occasions in which employees leave a company. However, when the turnover rate is higher than usual, it can cause an environment of instability in the organisation. High employee turnover can affect a business in the following ways:
High turnover may be expensive to a firm in a variety of ways. One method is to train new personnel, which might be costly continually. With new workers come additional training expenditures, which may accumulate over time.
With a high turnover rate, it can be challenging for a company to keep the best talents. The greatest workers may not want to work for a continuously changing firm, particularly introverted managers and leaders who need time to adjust to new situations.
High employee turnover may increase labour expenses, This is because you may need to pay extra in overtime or recruit temporary staff to replace those who have quit.
Turnover and insurance costs are connected. It is because when an employee departs, the company is frequently liable for their health insurance until they find another work.
If you have a high turnover rate, this might be costly over time.
A high turnover rate might result in a deterioration in customer service. New staff may be unfamiliar with your products or services, limiting their ability to give the quality of service that your consumers demand.
Conclusion
Employee turnover is a natural phenomenon in every organisation. However, it is important to calculate employee turnover rate to understand how much personnel a company has. It is mostly the responsibility of the Human Resources team. They use various software to calculate employee retention and turnover. One of those software is ProHance. It is a workforce analytics tool that measures the productivity of employees. It formulates effective strategies for employee retention, capacity planning and operations management so that businesses can make informed decisions in no time.