Staff discussing their staff turnover
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Staff Turnover: Definition and HR Guide

15 Nov 2023

Staff turnover is defined as the number of employees who leave a business, on a year-on-year basis, as a percentage of the total workforce.

When people think of staff turnover they think of leavers, but that is not always the case. Staff turnover is an amalgamation of staff who have resigned, retired, and been made redundant (both voluntarily and involuntarily).

For many small businesses, a high turnover can signal the beginning of the end due to the ongoing war for talent, making it difficult to find suitable replacements.

The total number of jobs available in the UK is still higher than at any time pre-pandemic, despite the current economic downturn. The current labour market shows how many other companies are competing for staff.

Additionally, we found the average cost of replacing staff for SMEs is £12,000. So, it’s not just the difficulty of hiring new staff, but the cost too.

The opposite of staff turnover is employee retention, which is a measure of how many of your employees have been with the company for over a year as a percentage of the total workforce.

Because staff turnover numbers can have such a high impact on your business, we’ve put together a handy guide to keeping your employees happy.

How to reduce staff turnover

Bring in the right people

Before you begin to improve your workplace, you need to hire the right people. Start by hiring people who fit specific roles for your organisation. That means creating precise personal specifications so new employees have a clear understanding of their new role.

When hiring, managers will usually have an unconscious preference for people with the right ‘attitude’ or just someone whose personality they like.

Hiring practices that focus heavily on candidates’ cultural fit, run a very serious risk of unintentional discriminatory hiring practices. 

Hiring only cultural fits means hiring too many people who all think the same causing a potentially critical lack of diverse opinions, vital in solving complex problems.  

An article by the BBC discusses how instead of ‘cultural fits’, hiring managers should look at ‘cultural adds’. Looking for cultural adds fosters the acceptance of diverse opinions, which studies show is beneficial for overall business success.

Read more on the difference between cultural fits and cultural adds.

Keep wages competitive 

It’s no surprise that salary is a key indicator to keeping someone in their job. Although, not the most important factor, paying your employees less than the competitive rate will likely have them keeping their options open.

Employees paid competitively are more likely to give that little bit more effort. If there’s ever any internal turbulence impacting your company’s culture, a good salary can stop employees from looking for the door.

Recognise your employees

Celebrating the successes of your employees, and giving recognition where it’s due will go a long way in building a great company culture.

There are three ways you can do this, through either social, financial, or peer-to-peer recognition.

Put simply social recognition is about making the excellent work your employees do stand out.

Monetary recognition means bonus structures and financial incentives for reaching targets.

Finally, peer-to-peer recognition is about fostering a workplace where employees naturally want to celebrate each other.

Whichever method you choose, whether one or multiple, it will let employees know that they are valued, appreciated and most importantly respected at work.

Place importance on performance reviews

Performance reviews are places for staff to be open and honest about their experience at your company. Building an environment where employees can feel safe speaking freely will only benefit communication across the business.

Without effective communication, management will continue to make the same mistakes, forcing staff out the door. Additionally, any misunderstandings between management and staff will continue. In turn, this causes a host of productivity problems, such as staff unknowingly duplicating work.

Invest in employees’ personal development

Employee personal development is the most obvious one on this list. Personal development not only keeps your employees happy, but it improves their skills, making them more valuable to the business.

By offering personal development opportunities to your staff, you get a double whammy of increased productivity. How? The first is that happy employees are more productive. Second, better-trained employees will do a better job, simple as that.

By not training staff you run the risk of losing them, and in some cases will be undertrained to fulfil their job requirements.

Final thoughts

A  high staff turnover can bring down any business. However, small businesses with fewer resources to win the war for talent can be hit especially hard.

But, by having the right strategy in place and genuinely caring about your teams, you can keep turnover numbers low and increase productivity.

If you need any advice about managing your business’s staff turnover, contact us and our HR experts will be in touch.

And if you want the down low on everything human resources get up to, check our latest human resources guide.