Employers Can Control Staff Turnover

How employers can improve staff turnover

New research by employee engagement specialists Insync Surveys has revealed that many employees leave their jobs due to a lack of job enrichment and flexibility rather than because of pay or their relationship with managers.

These means that companies seeking to retain their top performers need to think outside the box when trying to encourage them to stay and should ensure employees have plenty of opportunities for training and the ability to work in areas outside their usual job function.

The research findings are based on exit survey responses from more than 11,000 employees from 40 Australian organisations who left their jobs between January 2011 and April 2012. The organisations ranged in size from 50 to 30,000 employees and covered a wide cross section of industries including government, manufacturing, financial and professional services.

The research revealed that there are five factors of staff turnover, three of which are internal and which can be influenced by an employer (job enrichment, interpersonal and structural) and two of which are outside the employer’s direct control (home life and external environment).

Insync Surveys CEO Nicholas Barnett said their research clearly showed that employees primarily leave organisations due to the job itself with 51 per cent identifying job enrichment as most important to them.

“If a job is inherently unfulfilling or unsatisfying it’s highly likely that employees will look elsewhere for other opportunities, no matter what incentives are in place”, said Mr Barnett.

The 2012 Retention Review also revealed the increasing importance of work/life balance to employees and showed that employees will leave an organisation if they can’t access flexible work conditions.

The survey showed that home and family circumstances were important to both men and women with 40 per cent of men saying their home life was the reason why they left their organisation and 47 per cent of women identifying the same.

“It is important organisations realise the importance of flexibility to all staff, not just women who are traditionally seen as the jugglers of work and family commitments. Although men highly value job and structural factors such as career opportunities, professional development and job satisfaction, home life reasons are also on their radar when it comes to deciding to leave their employer,” said Mr Barnett.

The Insync Survey findings showed that people will leave their jobs if:

  1. Their job is no longer fulfilling or stimulating
  2. They lack resources to do their job well and/or don’t feel fairly rewarded
  3. They don’t feel strongly connected to their colleagues, manager or organisation
  4. Their life circumstances change (personal reasons, retirement, family, etc)
  5. They are approached by other employers with a better job offer

The good news is the top three of those factors can be directly influenced and improved by employers and Insync Surveys suggests that organisations base their retention strategies around the variables they can control by considering:

  • What strategies they have in place to continually review and reinvigorate job enrichment, structural and interpersonal factors within the organisation?
  • How the organisation addresses and assesses a mismatch between employee’s needs and expectations with what the organisation has to offer during the recruitment and assessment phase of a job placement?
  • How the organisation fosters flexibility in both the short and long term to retain employees and accommodate their home life challenges?
  • How the organisation is keeping its vision and mission fresh and compelling over time to retain experienced and capable employees?

Financial motivations for boosting retention rates

Insync Surveys CEO Nicholas Barnett says the financial impact of high staff turnover rates are a burden for organisations and small improvements in retention can drive great returns at the bottom line.

“There are 11.5 million people employed in Australia earning $638 billion per year. When you consider that around two million Australians are likely to leave their jobs in the next 12 months, staff turnover costs this country around $83 billion every year. A reduction in turnover of just 5 per cent (i.e. from 18 per cent to 13 per cent) could save the Australian economy $23 billion each year,” he said.

Mr Barnett says those figures can be applied to individual organisations as well and that the figures provide a compelling motivation for improving retention rates, especially in a low growth economy:

“An average staff turnover rate of 18 per cent costs organisations with 100 employees around $1 million every year. Employers can save around $280,000 per year for every 100 staff they employ by reducing their turnover by just five per cent. This assumes an average annual salary of $75,000 and a conservative turnover cost per employee of 75 per cent of annual salary (including the cost of recruitment, selection, induction, training and lost productivity whilst getting up to speed). This should be achievable for many Australian companies as our research shows 80 per cent of turnover is within their control.”

Five steps to success

Nicholas Barnett says the research suggests there are five key steps organisations can take to reduce staff turnover, drive internal efficiencies, enhance customer relationships and increase profitability:

“The first step is to measure turnover to develop a clear retention roadmap, then continue making jobs more meaningful, foster a positive workplace culture, enable and recognise performance and accommodate home life circumstances.

Reducing staff turnover is not just an HR issue; it requires the focus and attention of the whole executive team, supported by managers at all levels,” said Barnett.

Further reading

Insync Surveys 2012 Retention Review

1. 2012 Retention Review by Insync Surveys

 This Better Workplace Bulletin was First Published in May 2013