How to reduce employee turnover rates

August 10, 2022

In 2021, Forbes published an article describing the poor working conditions in Amazon warehouses leading to increased employee turnover rates. Serving as a cautionary tale, here are some easy ways to improve your own employees' day-to-day experience and minimize turnover.

What is employee turnover?

As described by TalentLyft, employee turnover refers to the number of employees who leave their job within a defined period, whether voluntarily (resignations) or involuntarily (dismissals). In 2021, the Bureau of Labor found that in the transportation, warehousing and utilities sector the turnover rate was a whopping 49%.

Why and when turnover is a bad thing

It's important to remember that a degree of turnover is normal and healthy. However, a problem arises when the turnover rate is higher than the industry standard and the reasons for turnover must be investigated. High turnover rates are generally considered to be negative because:

  • Costs associated with turnover are incredibly high because finding, hiring and onboarding/training new employees is a costly HR exercise. The Society for Human Resource Management found that direct replacement costs can add up to half the leaving employee's salary and total replacement costs can add up to twice the leaving employee's salary.
  • As explained by the Corporate Finance Institute, high turnover rates decrease the morale and productivity of employees who remain in the organization.
  • High turnover rates are bad for an organization's public image.

Why do high turnover rates occur?

As outlined by Bamboo HR, employees leave organizations because they feel:

  • There's no room for career development or growth in their organization. This is often due to a lack of upskilling programs and very little or no chance of promotions and salary increases. Junior employees remain in junior positions, never moving into more senior positions.
  • Overworked and burnt out due to having to put in too much overtime (often not being compensated for their time) or regular working hours are too long and unsustainable.
  • Their work environment isn't conducive to positive and healthy employee-employee or employee-management relations and feel abused at work.
  • They have no work-life balance. This is often because management doesn't give consideration to employees' lives outside of work.

How can you reduce employee turnover rates?

Fortunately, there are many ways in which you can keep your employees happy and reduce turnover rates:

  • Hire the right people with the necessary skills who are a good fit for your company's culture.
  • Offer upskilling and career development programs.
  • Define a clear growth path for employees within your company.
  • Conduct regular performance reviews to provide feedback to employees to help improve their performance
  • Offer promotions and salary increases where appropriate.
  • Set reasonable working hours.
  • Implement effective HR protocols for mediation and employee relations disputes. Communication is key!
  • Provide employees with a sufficient amount of sick days and PTO to help them maintain a healthy work-life balance. Respect employees' commitments outside of work within reason.
  • Offer employees working flexibility, such as a hybrid working model, where applicable.