The workforce is the most valuable asset of a company or organization. The employees handle business processes and accomplish specific tasks to ensure day-to-day operations. Without them, a business will be crippled or won’t exist at all.
But how your company hires, manages, and retains people is fundamental to your overall business success and positive employer branding. The last thing you want to happen is to lose some employees without getting them replaced. That’s where the idea of employee turnover comes in.
A report states that a business will have an 18% employee turnover each year on average. Unfortunately, some misconceptions are circulating about staff turnover. Most companies or organizations tend to see this as a negative business occurrence. However, it can be viewed as a positive thing, as long as you make sound business decisions.
In this article, we’ll debunk the common myths about employee turnover. Keep on reading to learn more about the actual truths behind them.
Employee Turnover Explained
Employee turnover refers to people leaving your company and getting replaced in a given time period. It’s a key HR metric measuring how many employees leave your company and how they impact your organization.
It’s crucial to understand the concept of staff turnover. Unlike attrition, where employees either resign or retire without necessarily getting replaced, turnover involves replacing resigned or terminated employees.
Employee turnover can be involuntary or voluntary. Involuntary is when people get terminated or laid off from work. On the other hand, voluntary is when people resign of their own volition. Chances are, they have personal reasons for leaving such as seeking greener pastures.
The Great Resignation has persisted amid this pandemic, with 4.35 million Americans quitting their jobs. As such, it’s crucial to assess your company’s turnover rate now, more than ever. Most importantly, evaluate your business practices to ensure you get the right people and make them stay for the long term.
Unfortunately, employee turnover can be costly. Gallup reported that the cost of replacing a worker ranges from one-half to two times the employee’s salary. Aside from the expensive cost involved, hiring, onboarding, and training people require time and energy.
Employee Turnover Myths Debunked
The idea of employee turnover isn’t outrightly negative. It’s sometimes necessary to terminate the wrong people and hire the right ones.
Let’s look at some common misconceptions about employee turnover and debunk them:
Myth #1. Employee turnover is a negative occurrence in business.
Companies and organizations see employee turnover as a negative business occurrence. Why? It’s costly, time-consuming, and exhausting to replace employees and hire new ones. However, it can somehow be a positive thing.
Michael Nemeroff, Co-founder & CEO at RushOrderTees, believes that staff turnover means accessing global talent and building a workforce.
Nemeroff continued, “It’s about time for some companies and organizations to remove underperforming employees and replace them with better ones. There’s a global pool of talent waiting to get tapped. Leverage their knowledge, skills, and expertise — and reward them.”
Myth #2. Employee turnover is an inevitable business occurrence you cannot prevent
Sure, employees either resigning or getting terminated is inevitable. However, to say that you cannot prevent them from doing so is another. The truth is, you can reduce your employee turnover rate to zero.
The Harvard Business Review studied and assessed the factors for employee turnover based on exit interviews performed by companies. They determined that job satisfaction, business environment, and the degree of comfort will make employees either stay or not.
That said, hire the right people best suited for the jobs and make these jobs fulfilling for them in the long run. Two, create a workplace conducive to working, such as boosting workforce diversity and inclusion. Lastly, keep your employees engaged and make them as comfortable as possible in your company.
“Employee turnover is a fact of business, but it’s not something you can’t influence. Create a workplace that’s not just a job, but a place where employees feel valued and engaged, ensuring they stay long-term.” – Murtaza Oklu, Owner of OMO Transfer.
Myth #3. Employee turnover happens due to employees’ financial dissatisfaction.
They say that most employees leave because of one thing — money. Some individuals resign because they aren’t satisfied with their compensation and benefits. They are probably looking for companies that have better pay.
However, money isn’t always the reason for the turnover. While it may be the primary factor, employees quit for several other reasons. Here are some of these:
- Feeling burnout
- No support from the management
- Toxic environment
- Poor company culture
- Lack of rewards and recognition
- No or limited career advancement
- Boredom
- No work-life balance
Chris Aubeeluck, Head of Sales and Marketing at Osbornes Law, suggests that CEOs, leaders, and managers should conduct employee surveys to determine the high-turnover reasons.
He continued, “From there, you can identify your employees’ needs and provide these needs. For instance, you can boost your engagement activity if you see your people are bored in the workplace.”
Myth #4. Employee turnover boils down to people leaving.
No, employee turnover doesn’t only account for people resigning. As mentioned above, it can either be voluntary or involuntary. In some cases, you need to have a workforce reduction.
A perfect example is when many businesses worldwide laid off some of their employees at the onset of the pandemic. Even major companies and top brands worldwide were not spared from having mass layoffs and furloughs.
John Grant, Founder & CEO at Premier Bidets, recommends setting up a contingency plan for potential business disasters and making robust forecasts for the future. “This way, you can come in prepared and ready for what lies ahead. You can make sound business decisions without your people getting impacted.”
Myth#5. Millennials are the biggest job hoppers.
Tech-savvy and digitally educated millennials are often considered to change jobs quickly on their career path. However, this generation is not that bad. According to a Pew Research study, millennials aren’t job-hopping any faster than Generation X did at their time. In fact, millennials with college education tend to have longer relations with employers compared to Generation X workers when they were at the same age. This stereotype has not been proven by any data.
Matt Wouldes, the founder of Land & Sea NZ, correctly admits that the trend of changing jobs isn’t just for millennials. He adds: ”This movement isn’t solely driven by age—individuals’ preferences for personal development and work-life balance also play a significant role.”
Myth#6. Organizations are to blame for high turnover rates
It is tempting to make organizations fully responsible for high turnover rates. It is easy to assume that when people leave, it’s because the company culture is wrong or some processes are not working properly; however, the reality is more nuanced. Actually, just one manager can seriously spoil the climate within the team. Additionally, employees may simply pursue their individual career goals that have nothing to do with their current employer.
According to Alistair Flett, Managing Director at Pronto Hire, high turnover can be driven by individual career goals, dissatisfaction with managers, or other personal factors. He says: “It’s often the case that employees love the culture but leave due to issues with their supervisors or specific work dynamics.”
Myth#7. Offering perks can solve the high turnover issue
You know the deal: employee of the month awards, bonuses, and mugs—are they really enough to keep people loyal? Unfortunately, these incentives often don’t work as well as you might think. Perks alone won’t solve high turnover issues, especially if only selected employees receive these. Organizations often use attractive benefits as a tool to retain employees. However, if they don’t address the initial reasons for employee dissatisfaction or disconnection from the company culture, perks will never work.
According to Max Tang, CMO at GEEKOM, “Perks can provide temporary satisfaction, but if the core issues—like poor management, lack of career development, or mismatched expectations—aren’t solved, employees will still leave.”
Myth#8. Managers have no control over employee turnover.
No, it’s far from being true that managers can’t influence employee turnover. In fact, managers play a critical role in reducing turnover. Frequent, short interactions between managers and employees can provide an informal platform for sharing concerns. They can recognize potential turnover triggers early and address issues before they lead to resignation.
Jonathan Feniak, General Counsel at LLC Attorney, says that managers have the power to create a positive work environment, recognize achievements, and provide development opportunities. He adds: “Knowing employee needs and concerns and addressing these, managers can make a real impact on turnover rates.”
Capitalizing Employee Turnover for Your Business
Employee turnover is something that most companies or organizations try to avoid. It’s deemed a negative business occurrence, knowing that it requires time, money, and effort to replace people and hire new ones.
On the other side of the spectrum, employee turnover is inevitable and necessary for your business to get the best talent and build a robust workforce. Hence, consider the valuable information discussed above concerning turnover misconceptions.
Strike a balance between people leaving your company and new employees getting hired. Most importantly, calculate your turnover rate each year and find ways to manage your people well. Ultimately, it all boils down to making sound business decisions.
