Do you know the warning signs of employee turnover? According to data from the Bureau of Labor Statistics from January 2024, an employee’s median tenure with their company is 3.9 years. Employee turnover describes any situation where an employee ends their tenure for one reason or another.
Some turnover is voluntary, meaning employees choose to leave for retirement, to pursue other opportunities, and for other reasons. Conversely, turnover is considered involuntary when it’s the organization that cuts ties with an employee.
Both types of employee turnover have a massive impact on your organization. A high turnover rate and low employee tenure mean you’re not building up institutional knowledge over time, making important projects needlessly complicated. Productivity decreases as you’re constantly training new hires. Your hiring budget is stretched to the limit, making every hiring (and firing) decision a high-stakes affair.
Proactive employee retention initiatives target the various causes behind employee turnover, both voluntary and involuntary. These initiatives increase employee morale across your organization, identify and reverse performance issues as they come up, and create career development opportunities.
A focus on employee retention depends on knowing, identifying, and responding to the warning signs of employee turnover. Some are red flags, like increased absenteeism or missed deadlines, while others are more subtle, like job-seeking behavior and decreased engagement.
By learning to identify these factors and how to respond to them, you can reduce employee turnover, build institutional knowledge, and keep more of your workforce for longer.
Key takeaways:
Employee turnover has a steep cost and wide-ranging impacts for your organization.
Common warning signs of employee turnover include decreased engagement, declining performance, and increased absenteeism.
Organizations can reduce turnover by offering competitive compensation, career growth opportunities, and a positive company culture.
Improving employee happiness with a supportive environment and strong team bonds reduces turnover.
The impact and cost of employee turnover
The impact of employee turnover goes beyond just having to say goodbye to a beloved employee or scrambling to save a project after a key contributor leaves. You’ll see a high turnover rate affect everything from your hiring budget to productivity, team morale, and even company culture.
Hiring and onboarding expenses
If you constantly need to replace employees, your hiring and onboarding expenses will skyrocket. Just replacing a departing employee can cost between 50% and 200% of that employee’s salary, according to Gallup.
Onboarding their replacement also costs your organization valuable time and productivity. And the higher up the org chart the role you’re hiring for is, the more expensive and time-consuming the recruitment process will be. High turnover means you’re going through this process repeatedly, with decreasing returns as new employees stay for less time than the people they’re replacing.
Lost productivity
With high turnover, projects screech to a halt when key members leave and the rest of the team has to adapt. Every project becomes a constant game of hurry up and wait. Teams try to pack in as much work as possible in each week, watchful for the next departure, and then get stuck until their leaders replace that person.
Expand that to an entire organization and the loss of productivity becomes staggering.
Brain drain
Institutional knowledge is the skills, insights, and expertise your workforce has. That includes employees who know everything about your products and leaders who’ve helped navigate the organization through difficult challenges. This body of knowledge is a massive competitive advantage, and turnover is its worst enemy.
High turnover leads to brain drain, where many of your experts leave in a short period of time. Before long, it seems like no one knows how certain processes work or how to fix tenacious problems you once breezed through.
Low team morale
Few things affect your team’s morale as much as high turnover. Not being able to work with the same team for more than a few months at a time, watching important projects grind to a halt every time someone quits, and even dealing with a new manager every quarter can drain morale.
Consistently low morale can even make employee turnover worse as employees start looking for other opportunities.
Struggling company culture
Building a strong, positive company culture is already hard enough. If you’re dealing with a constant rotation of people leaving and being replaced, you hardly have what you need to build that culture. You have to constantly reeducate employees, and you’ll struggle to find the champions you need to promote that culture.
The warning signs of employee turnover
Decreased engagement
Employee engagement represents how aligned an employee is with your mission, how excited they are about their day-to-day work, and how much they enjoy working with their team. If you notice any of these characteristics slipping, you might be dealing with someone looking to move on.
Declining performance and missed deadlines
As people become frustrated and disengaged, they care less about their performance. They’ll miss deadlines and just shrug when you bring it up. If an employee regularly misses their deadlines and their productivity is on a steady decline, you might want to schedule a meeting with them.
Increased absenteeism
Employees on their way out are more likely to start missing shifts, show up late without explanation, or call in sick. Similarly, a sharp increase in requests for time off can potentially be a signal to watch out for. Of course, you could be dealing with an employee trying to build a healthier work-life balance or dealing with personal issues that keep them away from work. Open communication with that employee is essential for knowing what you’re dealing with.
Withdrawal from team activities and social interactions
Not all employees actively engage in social interactions with other team members or participate enthusiastically in team activities. But if the social butterfly on your team starts to pull back, check out of those activities, or avoid speaking up in meetings, that’s a sure sign they’re looking for a job elsewhere.
Job-seeking behavior
You might not always catch an employee sending resumes on their lunch break, but maybe you’ll notice they’ve updated their long-dormant LinkedIn profile or they’re attending more networking events. Top performers might regularly look for other opportunities before negotiating for a raise, but a sudden increase in this kind of behavior is a warning sign.
Negative attitude or prolonged dissatisfaction
There’s a difference between constructive, justified criticism and a consistently negative attitude. If you have an employee who never seems satisfied with anything leaders come up with or the work they’re given, they’re more likely to be on the way out.
How to reduce employee turnover
Some employee turnover is unavoidable, especially if you find out an employee isn’t a fit for their team or your organization. But reducing both voluntary and involuntary turnover comes down to a few initiatives every organization can implement.
Offer competitive compensation packages
Competitive compensation is essential for attracting and retaining top talent. Salaries need to be competitive (especially for top performers), and you need strong benefits to keep people around.
Provide more opportunities for career development
Few employees are satisfied with doing the same job day in, day out, without any potential for career advancement. While you don’t necessarily need to guarantee regular promotions for everyone, helping employees build up their skills and know how they can grow with your organization is essential.
Create a positive company culture
Your company culture is one of your greatest assets when it comes to retaining employees. Build a culture that makes employees feel supported, encourages them to be collaborative, and promotes transparency from leadership.
Make employee feedback and engagement surveys a priority
Employee feedback loops allow leaders and managers to get regular feedback from employees beyond the typical performance review. They also give employees the feedback they need to ensure they’re always moving in the right direction. Engagement surveys, on the other hand, give you a consistent sense of how engaged employees are.
How to improve employee retention
Proactively putting practices in place that improve employee retention doesn’t just help reduce turnover. It protects your company’s institutional knowledge, reduces recruitment and onboarding costs, and keeps productivity constant.
Strengthen relationships with leadership and management
Leaders shouldn’t lead at arm’s length, and managers should avoid micromanaging their teams. Encouraging transparency in how your leaders work and building relationships between managers and their teams make employees feel respected and valued.
Recognize and reward employee contributions
Your employee’s contributions shouldn’t go unseen. Building a culture of recognizing small wins and celebrating big wins will foster stronger bonds between coworkers, create goals employees can shoot for, and make everyone feel like they’re on the same team
Prioritize work-life balance and flexible work arrangements
Healthy work-life balance keeps employees engaged and motivated, and flexible work arrangements are a big part of that. Whether you can support fully remote employees or provide a remote day or two each week, showing flexibility can accommodate more work styles.
Employee retention is an essential pursuit for your HR team and your organization. It brings down costs for hiring, onboarding, and recruitment. It allows you to build up leadership from within, leveraging institutional knowledge at the highest levels of your org chart.
Strategies for improving employee happiness
Happy employees are engaged employees, and they’re more likely to stick around. If you’re serious about lowering your turnover rate, here are some strategies to consider.
Build a supportive work environment
A work environment that supports employees in all things makes employees happier to show up to the office. Leaders who understand what matters to their employees, managers who have their team’s backs, and coworkers who watch out for each other are all hallmarks of a supportive work environment.
Encourage team bonding and social connections
Bonds between coworkers don’t happen in a vacuum. Giving teams plenty of opportunities to bond by inviting them to collaborate on more projects or planning team activities empowers your employees to build more connections and a more cohesive work environment.
Provide mental health and wellness programs
Mental health is an important part of wellness and happiness. Your organization should show that it understands this. This can mean providing mental health resources at your workplace or making them part of your benefits package. A wellness program, on the other hand, gives employees resources to handle their wellness needs as they see fit. This promotes trust and makes them feel valued.
Happy employees are more satisfied with their day-to-day work, which helps keep them productive. They’ll be more likely to stay with your organization longer if you actively show them how valuable their happiness is to you.
Prevent turnover with the right strategy
High employee turnover can have a grave impact on your organization. Decreased employee engagement, declining performance, and increased absenteeism are all warning signs of an employee potentially leaving, but they’re rarely the main cause. Employees leave for many reasons, sometimes just because they find a new opportunity, and sometimes because they feel like they’ve been disrespected or they have no future at your organization.
Quickly detecting and addressing the warning signs of employee turnover with proactive employee engagement initiatives helps employees feel supported. This can keep productivity trending upwards, keep important projects on track, and protect your institutional knowledge.
Want to know what you can do to be more proactive about employee retention? Check out our retention roadmap.