0 Comments | May 14, 2010

‘Terrible Ten’ Causes of Employee Turnover

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In a recent cover story, Talent Management warned of what we’ve been predicting for a while: a looming employee turnover rate crisis. The “Great Recession,” as some have called the recent economic downturn, has kept employee turnover rates – and their prohibitive business costs – artificially low.

But that time is ending. Employee turnover rates are expected to rebound this year, and far surpass their ten-year averages (see below).

Ten-Year Avg Employee Turnover Rate

Construction 26.1%
Manufacturing 15.2%
Retail 34.7%
Wholesale Trade 17%
Transportation, Warehousing, Utilities 18.8%
Information Technology 20.5%
Financial Services 18.9%
Insurance 16.9%
Real Estate, Rental, Leasing 24.5%
Professional & Business Services 31.6%
Education 13.2%
Health Care 21.4%
Leisure & Hospitality 51.8%
Arts, Entertainment, Recreation 31.9%
Accommodation & Food Svcs 55.3%
Other Services 26.5%
National Avg 25.8%

Source: Bureau of Labor Statistics, 2010.

Those figures are for voluntary employee turnover rates, not total turnover. That means they’re influenced to a large extent by employment conditions. And the cost of employee turnover is staggering – the average professional firm spends over $4M per year on employee turnover costs alone.

We’ve broken down the “Terrible Ten” employee turnover rate drivers to help you diagnose your business’ employee retention plan.

  1. Poor leadership. Can you do much about this one? Absolutely. It’s far more prevalent than most imagine, and it has an astounding impact on employee turnover rates and costs.
  2. Salary. 20% of workers cite this as their top employee retention consideration.
  3. Employee benefits packages. Another 20% claim this as their most important employee retention consideration. Far more than salary, an effective employee benefits plan can generate an exceptionally high ROI as an employee retention strategy.
  4. Lack of education opportunities. Employees’ top request was for professional education and enhancement programs. Another name for stagnant employees: job seekers!
  5. Poor wellness offerings. If your staff doesn’t like your employee health and wellness programs, they are four times more likely to leave your company.
  6. Toxic workplace environment. This is due in part to poor leadership, but interpersonal stress at the workplace contributes to absenteeism and low employee motivation, and ultimately, high employee turnover rates.
  7. Lack of progression opportunity. If your employees see no hope for promotion, they will absolutely look elsewhere for employment. So if the idiot son-in-law is a permanent fixture in the corner office, beware!
  8. Personal reasons. There’s not much you can do about this one. Just like the toymaker elf who wanted to be a dentist, if an employee’s life ambition takes them in a different direction, your best bet is to let them go.
  9. Lack of FUN. The best jobs I’ve ever had have been fun. Not surprisingly, they’ve also been the jobs at which I’ve worked the hardest and produced the most. The same holds true for your employees. Do everything possible to add fun back into life at work.
  10. Lack of life balance. Give your employees time away. Make sure they take it. And give them a vehicle to take high-end destination vacations at low cost. The mental and physical health benefits of wellness travel are staggering, and the impact on retention is powerful.

It isn’t rocket science. But it takes attention, money, and time to implement best practices for employee retention. With an employee turnover costs crisis looming, now is the time to start!