Employee Retention Rates21 February 2018
There is no doubt that high turnover of staff can impact on any type of business. It can make providing a sustained, quality service difficult and have an adverse effect on company growth as well as that all-important bottom line. There are many factors that can lead to poor retention rates and it varies from industry to industry. Certain roles tend to attract more turnover and economic circumstances can also play a role.
In a number of industries there is a shortage of staff to fill certain roles which can make the impact of a lost employee more difficult and costly to deal with. According to the Recruitment and Employment Confederation, this has affected sectors such as IT, care working and engineering.
Businesses With Big Turnovers
You might be surprised to learn that the biggest growth industry in recent years, IT and technology, has one of the highest employee turnover rates. Construction and building also have a high turnover, along with the hospitality industry, catering and retail businesses.
The average turnover for UK industry is around 15% and those sectors that tend to have lower rates include the legal profession, education and the public sector.
The Cost of Retention for Businesses
One of the main issues that businesses face is the cost of replacing staff. According to the Chartered Institute of Personnel and Development, staff turnover has set businesses back some £4 billion per year in the UK. The estimated time to get a new, professionally qualified employee to full productivity is around 8 months. When you take into account the financial impact of replacing that employee and getting them up to speed with relevant training and experience, the average cost runs to just over £30,000 per individual.
Another problem for businesses is retaining top talent, especially those at management level and above. Not only does it take a lot of time, effort and money to attract the best in the business to a company but it has to work overtime to keep them. In the past, many employees saw themselves working for a particular company for life. Today, the opposite is true and 20% of employees expect to be changing jobs over the next 12 months.
Remuneration isn’t such a key factor that it was in the past either. Workers also want to be in a job that is worthwhile and challenging in a positive way or which delivers on their career expectations and future hopes.
Improving retention has become an important factor for many businesses over the last decade or so. Within each sector there are issues and hurdles that companies need to overcome, whether it’s a lack of people applying for posts or not having the right opportunities for existing employees which encourage them to stay. Understanding these factors and finding ways to address them is the challenge that many business owners face.
High Churn Reasons
The biggest cause of a high employee churn is the initial recruitment process. Not getting the right fit for the organisation can and will cause retention issues.
Another cause can be poor induction/training, where the employees first impressions of the company are formulated. A poor induction can create a false negative impression.
Lack of career progression, benefits, poor people management, flexibility and job satisfaction are all major contributors to poor retention rates.
Should you be experiencing difficulties with employee retention, it’s worthwhile having a chat with us at solved hr as we can look at these reasons and offer a strategic solution to improve employee churn.