While US business seem to have finally emerged from the Great Resignation and the Great Rehire new trends are setting in that may give rise to continued turnover as well as a trend of quiet quitting. If you’re business is still feeling like employees are jumping ship, leaving you scrambling to fill roles and maintain productivity, you’re not alone. According to Express Employment Professionals and The Harris Poll, thirty three percent of U.S. hiring managers believe employee turnover will increase for their employees in 2024.
While it seems like the Great Resignation has drawn to a close, and employee retention seems to have increased, there doesn’t seem to be a reason to breathe a sigh of relief. While inflation drove Americans back to the labor market in 2022 and 2023, Employees are still reporting a deep dissatisfied with their jobs. According to the ASA, 53% of employees feel that their paycheck isn’t keeping up with inflation with many of them stating that their financial situation is more stressful than last year. Further, many employees are just going through the motions. With unemployment at an all-time low, talent is in high demand. For employers that means that if they don’t keep their employees engaged and financially satisfied, their competition will.
Now is a great time for businesses to take steps to boost workplace morale and prevent another wave of departures.
Why Employees Leave
Underneath the broader numerical data lies a crucial context explaining turnover causes.
Key turnover reasons include:
- Dissatisfaction with pay and compensation mentioned by 63% of departing employees (BetterUp).
- Feeling undervalued and ignored, leading to 79% of resignations (NBC News).
- Inadequate management, the top reason for 82% of departures due to bad bosses (GoodHire).
- Weak company culture and branding, resulting in 34% of new hires quitting within 90 days (Jobvite).
- Lack of career growth opportunities, prompting 66% of employees to seek new roles (Workplace Intelligence).
While financial rewards are crucial, factors like organizational culture, effective feedback and career advancement prospects are equally important, particularly for younger Millennial and Gen Z employees.
Maybe you’ve noticed a lack of enthusiasm among your team or a disconnect between their expectations and the reality of their roles. These challenges can lead to increased turnover and hinder your company’s success.
Direct costs of turnover
The cost of replacing an employee in the U.S. can vary significantly depending on several factors, including the position level, industry, and company. However, here are some general insights:
- For non-exempt (hourly) employees, the cost can be around 16% of their annual salary1.
- For exempt (salaried) employees, the cost can be as high as 213% of their annual salary2.
- On average, it’s estimated to be about 150% of the employee’s annual salary3.
- For executive roles, the replacement costs can reach hundreds of thousands of dollars2.
- The Society for Human Resource Management (SHRM) suggests that replacement costs can equal six to nine months of the employee’s salary2.
- Another approach is to double the employee’s annual salary for an approximation2.
Hidden costs of turnover
Reputation Harm
Elevated turnover rates can tarnish a company’s reputation across employees, potential hires, and customers. Employees may experience morale issues and question leadership credibility in the face of frequent departures.
Likewise, prospective employees are less likely to consider joining a company known for high turnover.
Furthermore, customers and investors may raise concerns about your stability and financial well-being during periods of high turnover, potentially straining business relationships.
Operational Disruptions and Mistakes
Employee departures carry away not just skills but also institutional knowledge, leading to disruptions in business operations. This often translates into decreased work quality, heightened errors, missed deadlines, and other operational challenges.
The resulting productivity dip can incur significant costs, impacting revenue until a replacement is onboarded and fully trained.
Customer service decline and client attrition
Business disruptions can harm your reputation with both current and potential customers, potentially leading to lost business relationships. Additionally, decreased morale among the remaining employees can contribute to subpar customer service experiences.
Furthermore, businesses may lose customers who follow departing employees to their new roles. Collectively, these factors can result in reduced sales for the company.Top of Form
Low team morale and burnout
Experiencing the departure of team members can deeply affect team morale. Employees who have formed strong bonds with departing colleagues may need time to adapt to the change.
High turnover rates, particularly during periods of layoffs, can induce stress among employees. They grapple with the loss of their coworkers while also facing concerns about their own job security.
In the interim before a position is filled and the new hire is fully integrated, existing employees often shoulder additional workloads to meet deadlines. This can breed feelings of resentment and contribute to burnout among the team.
Ultimately, low team morale can lead to more departures and significantly inflate turnover costs for the organization.
Operational disruption and mistakes
When employees depart, they take with them valuable skills and institutional knowledge, leading to disruptions in business operations. This can manifest as a decline in work quality, heightened errors, missed deadlines, and other challenges.
The resulting decrease in productivity can be costly, impacting revenue until a replacement is recruited and fully acclimated to their role.
The Solution to Employee Turnover
Reducing employee turnover requires strategic planning and a focus on creating a positive work environment.
If you’re looking to boost employee retention and create a thriving workplace culture, consider implementing my guide, “Mastering Talent Retention: 6 Game-Changing Steps” These steps outline key strategies to engage employees, address their needs, and foster a sense of belonging and purpose within your organization. Each step includes actionable tactics and metrics to help you measure progress and make data-driven decisions.
Investing in your employees’ satisfaction and growth not only reduces turnover but also enhances productivity, innovation, and overall business success.
Don’t let valuable talent slip away. Implement these strategies today to build a loyal and high-performing team.
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