Since employees are generally considered to be a company’s most valuable asset, addressing employee turnover should be one of its most important priorities. Employee turnover is the number of employees who leave a company during a specific time period, including those who leave on their own through resignation, retirement, or departure for personal reasons, plus those who are terminated due to performance issues, and those involved in force reductions. Examining turnover trends can lead to identifying corrective actions.
Reasons for Turnover
When studying turnover trends, reasons to look for include employees who leave due to lack of opportunity for growth, departures due to dissatisfaction with their jobs, a workplace that is regarded as having a toxic culture, employees who say they are overworked, employees who complain that their compensation is less than they deserve, and employees who indicate a lack of recognition from management.
Problems and Effects of Turnover
The negative effects of high turnover include decreased productivity which can cause a company to miss its goals, increased recruitment and retraining costs, lost sales, lowered company morale, and even more employee turnover.
When an employee leaves, all the money invested in his/her training, plus all the knowledge and experience possessed by that individual walk out the door. So, it costs money to replace those things. There is also a cost of time for the organization to advertise, search, interview, hire, onboard, supervise and train new employees. New employees will impact the dynamics of a team and the organization as well.
Turnover Trends by Industry
Because labor markets are increasingly competitive, the cost of employee turnover is increasing for most if not all industries. The U.S. Bureau of Labor Statistics reported that the average employee turnover rate in 2021 was 47.2 %, up from 45.1% in 2019. 2020 was clearly an anomaly due to the wide-ranging effects of the COVID-19 pandemic. Here are the turnover trends, comparing 2021 to 2019 for the following industries:
- Leisure and hospitality: 85% in 2021, up 6 percentage points from 2019
- Professional and business services: 64%, equal to 2019
- Construction: 57%: 8 points lower than 2019
- Trade, transportation and utilities: 55%, up 5 points from 2019
- Manufacturing: 40%, up 8 points from 2019
- Information: 39%, up 1 point from 2019
- Education and health: 37%, up four points from 2019
- Mining and logging: 36%, down 12 points from 2019
- Financial activities: 29%, even with 2019
- Government: 18%, one point lower than 2019
These turnover trends have been influenced and are likely to continue to be influenced as higher economic costs have prompted some employees to look for higher pay elsewhere. In 2023, industries are seeing new trends in turnover that are impacted by a change in what employees desire from their work. Additionally, workers now seek greater working flexibility including remote work. These challenges can be met with more employee engagement, more employee training, quality payroll practices, good HR services, and paying more or compensating employees differently.
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