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Employee turnover rate is the term used to describe the percentage of workers that leave a company and need to be replaced within a certain period of time.

People join and leave companies; this isn’t new. There are many reasons why someone could leave your organization. Some reasons are nothing to be concerned about as they are largely unavoidable. However, if your workers are leaving due to unhappiness at work, or you are constantly finding yourself firing under-performing employees, you have a problem.

With the unemployment rate hovering at an historic low of 4.1% and the department of labor reporting average job tenure declining, retaining the employees you have is much more important now than it was a few years ago.

How do you know if you have an employee turnover issue? Calculate it, then compare your employee retention and staff turnover with other businesses in your industry. Take a look at the data chart below from Indeed showing how long most employees stay with one company.

Average number of years employees stay with the same company

The good news is that once you find out what your employee retention issues are, you can work with senior management to correct the issues.

In this article, we will discuss common reasons employee retention may be low in your organization, then we’ll give you tips to acquire and retain top talent using sound HR best practices.

  • What Causes Low Employee Retention?
  • What Factors Affect Retention Rate?
  • What are Low Employee Retention Rates?
  • What is Employee Attrition?
  • What Causes Employee Attrition?
  • What are the 6 Main Drivers of Employee Retention?
  • What are the Issues for Retention?
  • How do you Fix Low Employee Retention?
  • What are the 4 Modes of Attrition?

What Causes Low Employee Retention?

Employee turnover is the rate at which employees leave an organization. Reasons behind employee turnover include lack of growth and progression, inadequate compensation, and inefficient management. Understanding the causes of high staff turnover can help managers know how it affects the company.

Here is a list of reasons why employees quit companies

1. Lack of growth and progression

Lack of growth and progression is one of the main factors affecting turnover. According to a report from Gallup, 87% of millennials shared that opportunities for growth and development are one of the most important factors for career satisfaction. Roughly 70% of professionals in other generations echoed the sentiment.

Read Also: Smart Practices to Increase Motivation Among Employees

Ambitious professionals are not content to secure a good job and collect paychecks until retirement. Many modern workers have career plans and desires to move up within their fields. Plus, professionals who keep their skills sharp typically spend less time unemployed if unexpectedly laid off.

Calling a career a “dead-end job” is one of the most devastating professional insults. Human beings crave progress and aim for continuous professional improvement. Employees who stop learning, growing, and setting higher goals grow bored, restless, and anxious, and are likely to start seeking new opportunities elsewhere.

2. No innovation

Meaningful work is a necessary condition for job satisfaction. Many employees long to contribute to society, solve complex problems, and affect change. Generating new ideas and ushering in the future is an enticing prospect. When companies fail to innovate and evolve, bright employees feel stagnated.

Top talent may leave organizations for the chance to engineer a new product, found a company, or launch a service. Not to mention, if companies fail to innovate, then employees may wonder about future job security, as companies who fail to evolve rarely continue to dominate the market.

3. Inefficient management

As the saying goes, “employees don’t leave companies, they leave managers.” According to an employee retention report from TINYpulse, employees who rate supervisor performance as subpar are four times more likely to look for a new job.

Hostile or incompetent management can be a major source of stress for staff. On the flip side, supportive and skilled managers can inspire loyalty and high performance. Leaders play a large role in shaping the worker experience and have a responsibility to make that responsibility as positive and productive as possible.

4. Inadequate compensation

Pay is one of the main causes of employee turnover. A study from Paychex revealed that 70% of respondents would leave a job because of low pay. As this Forbes article notes, the average employee can expect a 3% annual increase when staying with the same company, as opposed to a 10 to 20% pay boost for switching organizations. Moving companies gives job seekers the chance to negotiate pay and benefits as part of the interview process.

Salary and hourly wage are not the only forms of pay. Perks and benefits also factor into compensation. For instance, high health premiums could result in lesser take-home pay. In-house daycares or flexible working hours lessen the costs of childcare for working parents. Perks like complimentary meals or internet reimbursement offset staff’s out-of-pocket expenses.

Bare minimum pay and benefits inspires minimal effort and loyalty. Yet even the most devoted employees may leave if presented with a more attractive offer.

5. Absence of camaraderie

Roughly two thirds of professionals would reject a new job offer if they had work friends at their current company, says a survey analysis from the Society of Human Resources Management.

Social ties are important. When a sense of belonging and community exists in the workplace, teammates feel responsibility towards coworkers. Commitment to colleagues inspires a sense of commitment to the company and the job. Conversely, when coworkers feel more like strangers or enemies than collaborators and friends, then professionals have much fewer qualms about seeking new opportunities.

Feelings of distance and disconnection from colleagues can often provide enough motivation to consider switching companies. Remote work is especially prone to inspiring feelings of loneliness or isolation, making virtual team building a must. Team rapport and camaraderie improves employee engagement and productivity as well as raising retention rates.

6. Diversity deficiencies

Diversity and inclusion are important factors in the office atmosphere. All employees want to feel safe, accepted, and empowered to do their best work. Discrimination puts significant stress on employees, and can contribute to burnout. Not every identity will be equally respected in the workplace. However, there should be equal respect for different backgrounds, perspectives, or ideas. No employee should feel targeted, disadvantaged, or left out at work.

Having to demand equal opportunities and fair treatment can take a toll on staff. Without a genuine show of support from the company, employees may opt to leave quietly instead of fighting a seemingly unwinnable battle. Not to mention, word can spread throughout the hiring pool, affecting future recruitment.

7. Life events

Occasionally, employees leave organizations because of extenuating life circumstances, and not due to any fault of the employer. Reasons for these departures may include moving, having children, caring for an ill family member, tending to medical conditions, enrolling in school, or starting a new business. The employee may simply need to take time to rest, or may desire a career change. Continuing to work while tending to such situations may not be a viable option.

8. Organizational restructuring

Organizational restructuring is one of the main involuntary turnover reasons. Conditions such as changes in leadership, organizational sale or merger, financial hardships, global events, or company pivots could trigger layoffs. In this case, the company decides to terminate employees instead of workers leaving of their own volition.

9. Transfers & promotions

In the best case scenario, positions open because the employees level up and accept higher roles within the organization. While transfers and promotions are cause for celebration, they are also catalysts for hiring. Depending on how an organization calculates the rates, these instances may not officially affect employee turnover statistics. However, from the outside, there may be an appearance of high turnover if a company grows quickly and promotes primarily from within.

10. Inflexible work environment

According to a recent survey from Flexjobs, 82% of respondents claimed that they would feel more compelled to stay with an employer who offered flexible working arrangements.

The worldwide coronavirus crisis forced a majority of the office-workforce to work remotely for an extended period of time. Many workers found themselves asking why they should return to the office full time if they could do their jobs from home. In fact, a study from PwC found that 83% of workers wanted to continue working from home at least one day a week.

If a loose working structure does not impact productivity, work quality, or budget, then employees are bound to question why the company refuses to make concessions, and may leave for a more accommodating organization.

11. Poor workplace culture

Poor workplace culture is one of the biggest drivers of employee turnover. Factors that can contribute to toxic culture include:

  • Gossip
  • Unclear or insufficient communication
  • Failure to address conflict
  • Unfriendly coworker competition
  • No accountability or ownership
  • Unequal work distribution
  • Lack of support from management
  • Inappropriate and unprofessional conduct
  • Emphasis on punishment over growth
  • Micromanagement and arbitrary rules

There are many other factors that either constitute a harmful office culture, or prevent a cohesive culture from forming. However, there are many steps organizations can take to ensure the work environment is positive and welcoming to all employees.

12. Overwork

Overwork is one of the major reasons why employees quit jobs. A recent Deloitte survey uncovered that 77% of respondents experienced burnout at their current job and 42% had left a position for this reason. Even more specifically, 84% of millennials self-reported burnout. Over half of these respondents cited this burnout as a reason for quitting. Younger generations increasingly demand more sustainable work-life balance.

Occasional hustle and increased workloads are not completely avoidable. Busy seasons or bigger projects may require employees to put in extra hours. However, extended periods of overwork leads to staff dissatisfaction and burnout.  Constant overwork is often a sign of understaffing, poor planning and human capital management, and an undesirable work culture.

13. Lack of recognition and appreciation

Recognition is a large part of the employee engagement puzzle. Organizations that praise workers send the message that hard work is meaningful and does not go unnoticed. Positive feedback reassures the staff that individual efforts contribute towards larger goals, making the job more meaningful and enjoyable.

A culture of appreciation banishes doubt and boosts productivity. Most folks are grateful for an occasional pat on the back and an acknowledgement of great performance. Not to mention, rewards and recognition show the staff that the company considers the workers as more than just numbers or tools.

14. Retirement

Retirement lurks at the end of the employee life cycle. Every career must eventually come to an end. Even if a worker spends the bulk of a career at one company, they will inevitably age out of the workforce. Organizations should be mindful as workers reach retirement age, especially if large sections of the staff are likely to resign at the same time.

However, even the retirement of a single team member can throw the office off-kilter if managers fail to prepare. The time to find replacements and train new staff arrives long before the retirement party. Otherwise, companies and departments are vulnerable to losing valuable knowledge and expertise accrued by seasoned staff.

What Factors Affect Retention Rate?

More and more employers are investing in employee retention. Hiring can be expensive and it’s easier to retain great employees than hunt for new ones. Additionally, great employees can help shape a positive work culture, thereby attracting more great employees and boosting your company’s productivity. As a values-driven tech recruitment company, we’re on a mission to change the culture of work, for the better.

With that in mind, here are the top factors for driving better employee retention.

1. People and culture

A positive working environment or company culture should fit like your favourite pair of jeans. It should be comfortable, a good fit, and make you feel fantastic. According to a 2018 study by LinkedIn, 70% of professionals would not work at a leading company if it meant they had to tolerate bad workplace culture.

Humans are social creatures, so it makes sense that employees crave workspaces where they feel like they belong and can bring their whole selves to work. While it may seem counter-intuitive, investing the time to foster a positive working environment at your company will mean less time concerned about productivity, engagement, motivation and retention.

Take a closer look at your company values and explore opportunities to tangibly demonstrate those values to your employees. If respect is a company value, provide diversity and inclusion training or show employees that you’re actively listening by actioning feedback.

If transparency is important, make it easy for employees to access relevant documentation and approach conflict-resolution situations with empathetic honesty. If your company values innovation or flexibility, work with employees to set up flexible working arrangements as suited to the individual’s and company’s needs.

Culture is created by people so by investing in your people, you are investing in your culture.

2. Work acknowledgement

As mentioned earlier, humans are social beings and as such respond well to positive reinforcement. Research by experts at Meta Learning and University of Michigan Business School revealed that the highest performing business teams offered a 5.6 to 1 ratio of positive-to-negative reinforcement (meaning an average of 5.6 pieces of positive feedback to 1 piece of negative feedback). Comparatively, the lowest performing teams received an average positive-to-negative reinforcement of 1 to 3.

This illustrates how important it is to discover ways employees can feel heard and acknowledged. In fact, active listening from leadership and recognising accomplishments are important factors in employee retention.

In practice, this might look like:

  • Offering annual performance reviews.
  • Training management personnel in positive reinforcement and leadership techniques.
  • Recognising the value of regular one-to-one feedback sessions between employees and their managers.

3. Meaningful benefits  

Employees stay with a company when they receive competitive benefits, have opportunities to grow, feel respected and valued, and support the company’s culture and mission. 

Provide tangible reminders of your company’s values to keep your employees motivated. Chances are that your company’s values were an important part of your employees’ decision-making when you hired them. According to LinkedIn, 44% of professionals care about strong workplace benefits such as paid time off, parental leave, and healthcare plans.

You may want to look at implementing a results-based rewards system where top performing employees get access to an experiential benefit, such as a coffee voucher or a yoga class. Even more importantly, consider researching what ongoing benefits your company could reasonably offer for all employees. Offering benefits does not necessarily make the company “lose money”. Research from the University of Oxford has found that workers are 13% more productive when they are happy. And worker productivity means more money back in the company’s pocket.

4. Ongoing training  

Studies show that employees find “opportunities to grow” a key factor in remaining with their company. Training could take shape as a seminar or conference, in-company apprenticeships or mentoring, online learning, or through an advisory agency. 

By investing in employees, you are demonstrating care regarding their professional growth and potential to progress to more senior positions within the company. This feeds into a positive loop of belonging, motivation, productivity, and ultimately, retention.

5. Workplace environment  

Imagine working your 9-to-5 in a room dominated by the bluish glow of computer screens and the artificial glare of too-bright lights. Now imagine going to work in an airy space with pot plants and windows that allow plenty of natural light. Where would you prefer to spend your workdays? 

It should come as no surprise that environment can have a big impact in your employee retention strategy. Access to daylight directly relates to employee health and wellbeing. Surrounding yourself with real or fake plants can decrease stress and increase productivity. Other factors like noise, ergonomics, and daily movement can also affect employee performance. 

Since we know that environment has such a big impact on a person’s wellbeing and energy levels, it makes sense for your company to invest in a good workplace environment setup.

6. Mission and values alignment  

People spend about 90,000 hours of their lifetime working. The Huffington Post estimates that number even higher at 13 years of your life. Considering how much time employees spend at a workplace, it’s natural to want to feel good about the work you produce.

Richard N. Bolles, author of What Color is Your Parachute?, agrees that defining an individual’s purpose and mission may help employees to pick the kinds of organizations they’d prefer to work for – one that ideally holds similar values to their own.

What are Low Employee Retention Rates?

Employee retention rate is a measure of an organization’s ability to retain a stable workforce. It shows the number of employees who stay in a company for a certain period of time compared to the total number of employees in that period.

Below is the formula to calculate employee retention: 

Here are a few simplified examples of how you would use the formula:

Example 1

A digital marketing company has 300 employees. During the last year, 15 employees left. 

Employee retention rate = ((300 – 15) / 300) x 100 = 95% employee retention.

Example 2

At the start of the COVID-19 pandemic, a live events company had to retrench over 2,000 employees. At the time, their headcount was 5,000. 

Employee retention rate = ((5000 – 2000 ) / 5000 ) x 100 = 60% employee retention

Example 3

Over the last year, a multi-national bank decided to move towards a digital bank, and as a result, closed down all their bank branches. As a result, over 10,000 employees (bank tellers, receptionists, etc.) lost their jobs. They had an average headcount of 200,000. 

Employee retention rate = ((200 000 – 10 000) / 200 000 ) x 100 = 95% employee retention

What is Employee Attrition?

Employee attrition happens when employees retire, resign, or simply aren’t replaced. Although employee attrition can be company-wide, it may also be confined to specific parts of a business. This is often the case when employees are replaced by automation or the adoption of new technologies. 

Employee attrition can happen for several reasons. These include unhappiness about employee benefits or the pay structure, a lack of employee development opportunities, and even poor conditions in the workplace.

In a world where the skill sets required are constantly changing, some positions also become obsolete over time. As employees leave and a new future of work emerges, not every role is filled in the same cookie-cutter way. 

With this, a new world of work means a new look at leadership. In some cases, this is driven by a desire to modernize. In others, it’s due to a lack of skilled younger talent in certain industries and geographies.

Employee attrition also refers to the downsizing of an organization’s workforce. This means that attrition can be voluntary or involuntary. Employee attrition can be problematic as it often reduces talent within the company and the workforce in general. But employee attrition isn’t all bad. 

It can be positive because it allows the company to identify and address problematic issues for its employees. For example, a high attrition rate could be from employees leaving due to a poor workplace culture. Only by investigating the reasons for this employee attrition can management make changes to improve the organization’s work culture for other employees.

While companies will usually try to avoid employee attrition, it can sometimes help cut down costs associated with labor. It can also attract new employees with fresh talent to organizations.

There are three main types of employee attrition: 

1. Involuntary attrition

Involuntary attrition happens when the company decides to part ways with the employee. Rather than the employee deciding to leave, it is the company’s decision to let go of the employee.

This can be due to:

  • Position elimination
  • Termination
  • Layoffs

The most common example of involuntary attrition is when the company eliminates a specific position. This decision to remove a position could be to reduce staffing costs and stay financially afloat. 

Even though this decision is made from a financial point of view, those in charge of decision-making must be mindful of the future. Instead of laying off employees, focusing on talent development through cross-training may be a better solution.

2. Voluntary attrition

Voluntary attrition happens when an employee decides to leave the company. This can be for many reasons. 

Common reasons for voluntary attrition include: 

  • Accepting a new job offer 
  • Making a career change
  • Moving across the country to be with family and loved ones 

But the reasons can also be more regrettable, such as when an employee resigns from their job for ill-health reasons. Or even resignation to get out of a toxic work environment.

3. Retirement attrition

Retirement attrition happens when employees reach their stage in life for retirement. 

If only a small percentage of employees retire from your company, this will not have a big effect. However, if a significant chunk of your workforce retires simultaneously, this can cause a high attrition rate.

What Causes Employee Attrition?

For many, leaving a job is due to personal reasons. However, understanding tendencies and “leaving patterns” can be crucial for a company to understand. This is often the first step in preventing employee attrition in the future. 

Let’s look at six common reasons for employee attrition: 

1. Poor job satisfaction and pay

Job satisfaction and pay often go hand-in-hand. While employee satisfaction isn’t only about how much an employee is paid, few employees will be happy at their job without a competitive salary.

For many people, their wages have not kept up with inflation, their expectations, or both. Pay isn’t only the amount of money an employee gets to take home at the end of every month. It’s also measured by things like bonuses, annual increases, and other financial incentives. These all contribute to financial security, which is an important part of financial wellness.

From an employer’s point of view, it’s important to keep in mind the high cost of replacing an employee. The cost of replacing an individual employee can range from 1/2 to two times the employee’s annual salary.

2. Not enough career opportunities 

Having career development opportunities keeps employees interested in staying with the organization long-term. It creates focus and gives employees purpose and something to aim for.

But the opposite is also true. When companies don’t invest in employees’ career paths, they may leave in search of greener pastures.

Because in-house career opportunities aren’t always possible, you can offer sabbaticals or reskilling opportunities instead.

3. Poor workplace culture

Workplace culture has a resounding effect on employee attrition. Every company has its own set of rules (both written and unwritten), attitudes, and core values that make up its unique company culture. If the culture doesn’t resonate with an employee’s workplace values, they are more likely to leave. 

This is why a company must set its cultural tone very early on.

4. Lack of employee motivation

Workplace motivation affects how happy and driven an employee is to succeed in their role and responsibilities. There are many benefits to a motivated team.

Having motivated employees reduces absenteeism and increases employee retention. It can also improve relations between management and employees.

5. Poor work-life balance

When employees feel as though they have a positive work-life balance, they’ll enjoy greater job satisfaction. As a result, they are more likely to stay at their company. 

Having a balance between work life and home life makes people happy and promotes mental well-being and mental fitness. Companies need to make this balance a central part of the human resource strategy.

6. Not fitting in and feeling a sense of belonging

Even though people are employed to work and earn a living, we’re all social creatures. We’re hard-wired to want to belong, fit in, and be part of a community. 

Research shows that fostering a sense of belonging within the workplace can lead to a 50% lower risk of turnover.

What are the 6 Main Drivers of Employee Retention?

Companies with a high employee retention rate and highly engaged employees focus on a few important methods for retaining employees.

1. Recognition and appreciation

Employee retention starts with creating a healthy work culture and recognizing people as individuals rather than replaceable parts. That means demonstrating authentic appreciation for the jobs team members are doing and recognizing their contributions.

Most feedback employees get is negative or corrective and it carries a lot of weight. Business leaders need to ensure they are also providing positive feedback regularly. A study published in the Harvard Business Review shows a direct correlation between positive and negative feedback and performance.

When team members received a higher ratio of positive to negative feedback, it resulted in high-performing teams. The study shows that the highest-performing teams had a ratio of 5.6 positive comments to each negative one.

2. Work balance

There’s a lot of talk these days about achieving a work-life balance. While that’s important, what’s often overlooked is creating an equitable work balance.

In most organizations, high achievers tend to get rewarded with … more work. If you want to retain your best team members, make sure you aren’t overloading them. Fairly distribute the work across your team.

When employees feel overwhelmed or burned out, they tend to shut down and performance suffers. The flip side is true, too. When employees don’t feel energized and challenged by the work they have to perform, it can lead to disengagement. Find the right balance for your team.

3. Flexibility

Flexibility in work accommodations has become the norm in 2022, at least as far as employees are concerned. A lot of employees have had the opportunity to work from home or work remotely over the past year, and they decided they liked it.

More than half of employees surveyed by YouGov and Microsoft said they would quit their jobs if their employers won’t offer remote or hybrid job opportunities.

Offer employees an opportunity to help design their work schedule to accommodate a better work-life balance. Be open to work arrangements beyond the traditional 9-to-5. Options to explore include remote/hybrid work, flex time, part-time arrangements, and job sharing.

4. Training and development

Developing your employees is essential to improving their job skills and positioning them for promotions. It also plays an important role in employee retention.

LinkedIn’s Workforce Learning Report showed that 94% of employees would stay at a company longer if it invested in helping them learn and grow. Gen Zers and Millennials, now the largest groups in the workforce, say learning is the number one thing that makes them happy at work. More than 1 in 4 say lack of learning opportunities is the top reason they’d leave their jobs.

Providing ad-hoc, informal, and formal training pays dividends.

5. Organizational and individual alignment

When employees don’t feel connected to their work, engagement suffers. The job can feel like it’s just a paycheck. High-performing organizations work hard to create organizational and individual alignment to give employees a sense of belonging and purpose.

Employees need to understand the company’s goals and their part in achieving those goals. This requires a strong culture along with consistent communication about goals and roles. Employees want to understand how the job they do ties to organizational goals and what they get out of doing the work besides a paycheck.

When goals are aligned, engagement soars. Employees that understand and embrace the mission see greater purpose in their work and stay longer.

6. Competitive pay plans

Pay and benefits have always been an important part of hiring and retaining employees. With so many workers considering switching jobs right now, examining pay plans is essential.

If you haven’t done it recently, you need to review your compensation plans to ensure you remain competitive. A review should include:

  • Industry benchmarks
  • Geographic location and cost of living
  • Required skills and experience
  • Competitor pay and benefits
  • Supply and demand

Keep in mind that companies offering remote work can reduce geographical limitations for job seekers, so you may be competing with salary packages from anywhere these days.

What are the Issues for Retention?

Dissatisfaction of Salary

It goes without saying that in the absence of the right incentives, employees will be on the constant lookout for a new job. Some estimates show that most employees would leave for a 10 percent hike offered by another company.

As a result, if you don’t want to have an increased cost of employee turnover then you need to break from the trend of miserly salaries and hikes. However, employees are not just looking for great salaries; they are also interested in the benefits on offer. This is shown by a study done by Aflac that concludes that 1 out of every four employees believe that a good package is an indication of the company’s concern for employees.  

As part of the package, most employees look for retirement benefits, paid sick leave, and health insurance, and failing to provide these can lead to a loss of talented employees. Nowadays, there are unconventional incentives that employees have come to expect, such as onsite childcare and pet insurance.

If an employee turns out to be a high performer, there is also the expectation of bonus programs and awards for employees to be put in place. In most cases, these can be in the form of stock options that make sure the employee feels more connected to the company.

Besides, employees also tend to not favor companies with rigid working hours.

Better job opportunities in the market 

Based on a recent survey by The Harris Poll found that people mainly leave their jobs due to a lack of career development, employee recognition, job satisfaction, and career growth opportunities, we can conclude that employees value upward mobility in their job. If you fail to provide the same, you stand the risk of losing one in three employees, as the aforementioned study pointed out. 

Notably, employee attrition has been a thing even among companies that strive to provide developmental tools. This is largely because only 26 percent of employees found the tools effective. 

For more proof, look no further than the study put out by Global Talent Monitor, which concluded that there was a strong correlation between employees leaving and the fact that they did not see a viable future in the company. 

The employees feel the urge to leave by also seeing their colleagues walking out of the door. They feel the ripple effects of more workload, new employee trainings as well as not seeing any company growth.

This feeling is generally a result of spending countless years toiling away without any upward mobility. People may also shift to another job if they do not find their role with the current employer challenging enough. They may even leave the company if they feel they are not learning enough, and then they come across an opening that promises them rapid employee growth and advancement when it comes to skills.

Hiring wrong Candidates

If there is one thing a company needs to know, it is that employee retention starts with the hiring process. It cannot be overstated how important it is to hire the right people for your team. One of the major employee retention objectives is to avoid hiring the wrong candidates.

Making sure you pick the right person is especially important given how employees who have been with you longer tend to be the most productive. One of the key element of employee attrition is the fact that managers place little emphasis on whether the people they hire can fit into the organizational culture. Also, there are times when managers have to on-board people rapidly without thinking about long-term ramifications.

That is a huge mistake!

Ideally, a candidate should have spent a significant amount of time in their previous company, which is a good sign of good employee engagement and the ability to stay committed to a role. Another thing managers need to look for before taking on staff is whether the employee has a volunteering record. 

Checking whether potential employees have been involved in any kind of team sports is another way to gauge if they will be ready to commit to your company.  

Of course, you can choose your own metrics to pick the right person, but remember how costly it is to pick the wrong person who refuses to stick around for long.

Lack of Appreciation

Like everyone else, employees feel the need to be thanked and appreciated for what they bring to the table. To have the best chance of talent retention, you need to prioritize in lifting the employee morale,  appreciating them and focusing on employee experience, which will lead to an engaged and motivated workforce.

As per a comprehensive study, most senior executives think their company has in place mechanisms to reward employees for good work, but only around thirty percent of employees feel the same way. This means that there is a lot of work left to be done if you are serious about your talent retention efforts.

The gaps in showing employees that you value their work is quite prevalent around the world, as evidenced by a Gallup study that showed only one in three American workers got praised for something they had achieved in the last week. This is especially alarming given how employees who feel they are not valued enough are twice as likely to quit within a year.

The issue of lack of appreciation is especially severe when employees feel that an unqualified person has gotten a promotion ahead of them. This brings in them a lack of confidence to stick on with their current employer.

Unrealistic expectations from Employees

As per recent data from the American Institute of Stress, more than half the workforce is stressed at work. This trend has been consistent over the last five years, according to the same source.

Unsurprisingly, the unrealistic expectations from employees are the key driver of this stress, which consequently leads to employees quitting in droves. This means that the impetus is on managers to play an active role in helping employees cope with stress.

It is worth noting that the youngest employees who might be new to the corporate work culture, are the most stressed out. Specifically, it was people between 18 and 34 who felt the most stress from having to face unrealistic expectations at work.

Unrealistic expectations that lead to employee exits from their jobs can take the following forms:

  • Work overload
  • High-pressure deadlines
  • Unreasonable expectations of quality

Now, what could be the cause of this? There are quite a few, but the most prominent ones are:

  • Poor leadership
  • Lack of communication
  • Lack of flexibility in work timings
  • Unclear goals
  • Lack of employee development

When an employee feels that they have to shoulder unrealistic expectations, they tend to lose morale and tend to burnout, which is when they decide to quit the company.

How do you Fix Low Employee Retention?

Below are some tips you can leverage when formulating a meaningful employee retention strategy and nurture a positive work environment.

1. Hire the right resources

Hiring a resource should never be a spur of the moment decision. It requires meticulous planning and preparation to ensure the right fit for successful project implementation.

An efficient capacity planning solution identifies the skill gap and helps employers recruit the right talent ahead of time. It provides foresight into the capacity and demand gap and enables you to take the right measures to mitigate shortages or excesses of resources. Managers can stay forewarned and proactively implement the resourcing treatments such as training, hiring, adjusting timelines, actively marketing excess capacity etc. to bridge this gap.

It eliminates last minute hiring costs and maintains a quality resource pool to avoid future project bottlenecks.

2. Allocate the right resource to the right job

If managers allocate a task to a resource that does not align with his/her skill set, it will disengage them and reduce their productivity. If the resources are underqualified, then they can feel frustrated, burnout and delay delivery. If the resources are overqualified, they might lose interest and feel their potential is not getting realized. In either case, chances of turnover are high. Allocating the right resource to the right job is therefore important to ensure both employee and client satisfaction.

To ensure successful resource allocation across the enterprise, managers need to implement an intuitive resource scheduling tool. It provides a unified view of their workforce’s skills and schedules and allows you to book on suitable projects. When your employees feel their competencies are deployed in the right place, they will feel motivated and continue with your organization.

3. Optimize workforce utilization

Deloitte survey reveals that “42% of employees have left their job due to burnout”. Overutilization can put employees under immense pressure and can contribute to employee attrition. At the same time, underutilization can lead to disengagement and low morale. Thus, optimizing employees’ utilization is critical to leverage their skills at maximum potential and retain them.

Managers need to keep in mind that effective utilization is not just about working too many hours. Productivity must go hand in hand with utilization. They must therefore ascertain that employees’ maximum time is booked for strategic/billable work. Spending time on mundane admin tasks or BAU activities will neither put their skillset to the right use nor generate profits for the firm.

Employers can make adequate use of dashboards to measure and get a comprehensive view of employee utilization levels.

4. Minimize bench time

Once a project gets over and if resources are not scheduled for another project, they will spend bench-time until they are allocated a new project. Extended bench time leads to significant issues such as lesser ROI as the resources are not generating any revenue for the organization. It can lead to planned attrition which affects firm’s reputation as well as unplanned attrition when employees begin to look for other job opportunities for growth and development.

For effective bench-management and to reduce unplanned attrition, managers can employ an effective resource management tool which will predict resources that will end up on the bench in advance. Project vacancy reports can be used to quickly assign them to billable or strategic work before they land-up on bench. In case their skills are not suitable for project vacancies, on the job training or reskilling can be taken up to make them billable. Moreover, advanced planning on pipeline projects will help you allocate them better

5. Organize effective team-building activities

Facilitating strong bonds amongst colleagues is proven to improve the efficacy of employees and enhance employee engagement. Companies that provide a high emphasis on employee retention must highly value interpersonal relationships. This is because coherent teams result in enhanced communication, lower stress levels, and greater output

According to Goremotely, “extremely connected teams demonstrate a 21% increase in profitability”. Moreover, if employees feel they have made meaningful friendships at the workplace, they are more likely to stick around.

Managers should therefore invest in team-building activities to promote a cohesive work culture. One example is the buddy system- when a new employee joins, they are assigned a mentor (buddy) from the same team who hand-holds in following the protocols. The Buddy system ensures the new employee is well integrated into the team and company. Other ways to empower the team are organizing monthly team lunches, weekly informal meetings, and so on.

What are the 4 Modes of Attrition?

1. Personal motivation

There has been a change in an employee’s personal life that compels them to switch jobs. New parents might want to move to a city with better schools, a mid-career professional may want to return to school – these reasons are endless.

Read Also: Performance-based Pay: An Effective Motivator or Stress Inducer?

By conducting detailed exit interviews, you can keep in touch with these employees and ensure that they consider your company in the future, whenever they have an opportunity.

2. Professional motivation

This is where HR could play a massive role in controlling attrition. An employee might leave because they felt there simply aren’t enough opportunities for career progression in your organization. This is the case in several technology companies, where technical talent is forced to fight for managerial positions as they move up the ladder. Take inspiration from Microsoft, which created a long-term technical track to prevent professionally-motivated attrition.

3. Challenges with the workplace

This is another common reason for attrition. Challenges in the workplace can range from uncollaborative leadership to the lack of requisite tools for work.

This type of attrition is relatively easy to fix. Ask for regular feedback, listen to the voice of the employee, and address any gaps in their employee experience. Typically, someone who is happy with their job won’t quit if most of their workplace requirements are met.

4. Poor employee-to-job fitment

We have all seen employees who join a company full of enthusiasm, only to leave a month or two later. This could be an indicator that the job was not right for that candidate, to begin with.

You can address attrition arising from this factor by fine-tuning your job descriptions as well as the onboarding process. Employees will know exactly what to expect, and you are less likely to witness new-hire attrition.

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