High Turnover Rates: 5 Common Causes and Solutions

According to a Nectar survey, 46% of employees plan to look for new jobs within the next three months, highlighting a critical challenge for organizations: High turnover. Frequent departures lead to higher hiring costs, lower productivity, and customer satisfaction.

But what’s driving employees to leave, and how can organizations turn things around? 

In this article, we’ll uncover the main causes of high employee turnover, its impact, and actionable strategies to help you retain your team and minimize costly disruptions.

Key Takeaways:

• High staff turnover affects various industries, such as hospitality, construction, and call centers, where rates far exceed the healthy benchmark of 10%. 
• High turnover rates are often caused by poor onboarding, lack of career growth, high stress, inflexible schedules, and negative workplace cultures, which leave employees feeling unmotivated and cause them to resign.
• Strategies to reduce turnover involve effective onboarding, offering professional development opportunities, creating a positive work environment, ensuring competitive benefits, and leveraging technology to improve efficiency and job satisfaction.

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What’s a High Employee Turnover Rate?

A turnover rate refers to the percentage of employees leaving a company within a specific period. Some industries face the highest average turnover rates,  such as leisure and hospitality (79%), and construction (54%). Even sectors like education and health services (39%) and call centers (30-45%) experience rates far above the considered healthy benchmark of less than 10%.

The cost of replacing an employee can range from half to twice their annual salary—for example, replacing an employee earning $40,000 annually could cost up to $80,000. This includes expenses for recruitment process, training, and lost productivity during the onboarding process.

High turnover doesn’t just strain budgets—it disrupts workflows, lowers team members morale, and impacts productivity, customer satisfaction, and overall efficiency. Understanding these consequences is vital to effectively addressing voluntary turnover and mitigating its negative impact on business operations.

What’s the Impact of a High Employee Turnover Rate?

During a new employee’s 90-day adaptation period, productivity is lower as they learn processes, tools, and responsibilities. But what is the real impact of a high turnover rate?

Here are the main consequences of high staff turnover rates:

• Increased operational costs: Replacing employees involves recruitment, training, and onboarding expenses. Estimates suggest these costs can range from 30% to 200% of the departing employee’s salary. 
• Reduced productivity: Frequent turnover disrupts workflow continuity, leading to decreased efficiency as new employees require time to reach full productivity. This period of adjustment can hinder overall organizational performance.
  
• Lower employee morale: A revolving door of staff can demoralize remaining employees, increasing stress and potentially leading to further voluntary turnover. This cycle can create a challenging work environment and affect team cohesion.
  
• Decreased customer satisfaction: High turnover can result in inconsistent service quality, as new employees may lack the experience and knowledge of their predecessors. This inconsistency can negatively impact customer relationships and satisfaction.
  
• Loss of institutional knowledge: Departing employees take with them valuable experience and insights, leading to a knowledge gap that can affect decision-making and operational efficiency.

5 Causes of High Employee Turnover Rates

#1 Flawed Hiring and Onboarding Processes

Up to 20% of employee turnover takes place within the first 45 days of employment, highlighting the critical importance of a strong hiring and onboarding process.

On the one hand, If the recruitment stage fails to properly evaluate a candidate’s skills or alignment with the role and company culture, the candidate may be hired without being a good fit.

For example, hiring a customer service representative without patience or strong communication skills can lead to challenging customer interactions and increased frustration. This can result in employee and customer dissatisfaction, creating stress and reducing job satisfaction. Over time, the employee may feel overwhelmed and decide to leave, often within a short period. 

On the other hand, a poorly structured onboarding process can leave new employees feeling lost and unsupported. Mistakes are more likely when tasks or tools are unclear, and frustration builds. Moreover, if the company doesn’t try to integrate the employees and make them feel valued, they may quickly feel insignificant and start looking for other opportunities.

For example, imagine a new hire in a sales role struggling because no one took the time to explain the software properly, or they felt unwelcome on their first day. After weeks of feeling inefficient and disconnected, they decide to resign.

#2 Lack of Career Advancement Opportunities 

94% employees said they would stay at the company longer if it invests in their careers. Employees are more likely to stay with a company when they see opportunities for growth and development. However, when career advancement paths are unclear or unavailable, they often feel stuck and unmotivated, leading to higher turnover.

For example, when an employee consistently performs well but receives no promotions or recognition, it increases the likelihood that the employee leaves for a company that values their potential.

In addition, a lack of training and development programs contributes to this issue. These resources are necessary for employees to feel noticed and able to progress. 

#3 High Levels of Job-Related Stress 

Stress accounts for 40% of job turnover, making it a leading cause of employee departures.

Constant stress leaves employees feeling dissatisfied and unmotivated, pushing them to seek jobs where they feel happier and more valued. For instance, an employee consistently working overtime due to understaffing may feel overworked and exploited, prompting them to look for better conditions elsewhere.

Additionally, burnout is a critical issue. It happens when chronic stress leads to physical, emotional, and mental exhaustion, making the job feel unsustainable. Employees experiencing burnout often leave because they feel unable to continue under such overwhelming circumstances.

#4 Bad Work Culture

The Society for Human Resource Management (SHRM) reported that toxic workplace cultures have cost U.S. employers $223 billion over five years due to increased turnover.

A negative workplace culture—characterized by toxic behaviors such as harassment, favoritism, or lack of respect—can harm employees’ mental and emotional well-being. As a result, employees often feel uncomfortable or unprotected and choose to leave for a healthier work environment.

Imagine a supervisor who constantly criticizes their team aggressively. Employees lose confidence, feel demotivated, and eventually resign.

Similarly, when employee achievements are ignored and positive feedback is lacking, workers may feel their efforts should be more valued. This leads them to seek opportunities where they are more appreciated. For instance, a good employee who consistently exceeds expectations but is never recognized might become discouraged and leave the organization.

#5 Limited Flexibility in Work Schedules

81% of employees say they would be more loyal to their employer if they had flexible work options.

Flexible work schedules directly impact employee turnover by influencing satisfaction, work-life balance, and commitment to the company. Rigid schedules can make it difficult for employees to manage personal needs, such as medical appointments, childcare, or family commitments. Employees may seek jobs with better flexibility when their personal lives are disrupted.

For instance, a parent who cannot attend school events due to strict work hours might leave to find a job with more adaptable scheduling.

Additionally, employees value the freedom to organize their time and work when they are most productive. With flexibility, they often feel more relaxed and motivated. For example, an employee who prefers working early mornings may become frustrated if forced to adhere to rigid hours.

6 Retention Strategies for Improving Employee Satisfaction 

#1 Implement Effective Onboarding and Training Programs

Proper selection minimizes the risk of mismatches between the employee and the role, one of the main causes of early resignations. In fact, screening valuable candidates can reduce turnover rates by up to 20%. 

Additionally, a well-structured onboarding program speeds up the adaptation process, helping employees integrate quickly and become more productive.

QUICK TIPS

• Advertise your job widely: Post your call center job on LinkedIn, Indeed, and even community bulletin boards. This way, you’ll reach a mix of experienced agents and candidates who might not typically use the same platforms.
• Look for strong communication skills: Ask the candidate to explain a complex topic, like how to reset a router, in simple terms. If they can break it down in a way anyone can understand, they show a key skill needed for the role.
• Use scenario-based questions: Ask candidates how they would handle challenging situations to understand their problem-solving and decision-making skills, such as “What would you do if a customer is upset and demanding a refund you’re not authorized to approve?”.
• Try role-playing activities: Simulate real-life scenarios to test a candidate’s skills. You might pretend to be a frustrated customer and see how the candidate responds. If they listen carefully, stay calm, and offer clear solutions, they demonstrate the skills needed to succeed in a call center environment.

#2 Tailor Structured Career Paths

Organizations that invest in employee career development experience a 34% higher employee retention rate compared to those that do not. Tailored career paths provide employees with clear growth opportunities, reducing the likelihood of dissatisfaction and disengagement, which are common drivers of turnover.

Additionally, structured development plans show employees that the company values their long-term potential, fostering loyalty and encouraging them to stay committed to the organization.

QUICK TIPS

• Create personalized development plans: Set specific goals, like improving task completion speed, and track progress in regular check-ins.
• Foster a culture of learning: Encourage employees to share expertise in short team sessions with incentives for participation.
• Provide clear career advancement opportunities: Implement skill certifications tied to promotions or more complex responsibilities.
• Measure impact and adjust strategies: Use surveys after training to gather feedback and track key KPIs for improvement.

#3 Create a Positive Work Environment

A positive employee experience makes staff 16 times more engaged than those with a negative one. A positive environment reduces stress and boosts motivation, leading to better performance. As a result, employees become more productive and focused on achieving company goals.

QUICK TIPS

• Create a culture of respect: Promote inclusivity, active listening, and fair treatment among employees and leaders to encourage mutual respect at all levels.
• Celebrate team successes: Acknowledge team milestones with small celebrations, such as team lunches, thank-you notes, or employee recognition boards.
• Promote team bonding activities: Organize fun, low-pressure events such as game days, coffee chats, or volunteering initiatives to strengthen relationships.
• Provide mental health resources: Offer wellness programs, access to counseling services, or mental health awareness initiatives to support employees’ well-being.

#4 Leverage Technology to Optimize Efficiency

72% of companies that use AI extensively report high organizational productivity. Technology simplifies tasks, reduces administrative work, and gives employees easy access to resources. This makes them feel valued and helps them work more efficiently.

QUICK TIPS

• Automate repetitive tasks: Use tools like Zapier to handle routine tasks, freeing employees to focus on meaningful work.
• Implement real-time feedback systems: Use platforms like Officevibe to collect and act on employee feedback regularly, addressing issues early.
• Enhance collaboration: Some business calling software, like CoudTalk, include the 3-Way Calling feature. This feature allows you to seamlessly add a third party to ongoing calls to solve issues in real time.
• Offer learning opportunities: Provide access to online platforms like Udemy, allowing employees to grow their skills on their own schedule.

#5 Conduct Exit Surveys

Organizations that actively seek employee feedback through exit surveys can improve employee retention rates by 14%.  They help identify turnover-related patterns and support the implementation of specific solutions to prevent other employees from experiencing the same frustrations.

QUICK TIPS

• Create a comfortable environment: Conduct exit interviews in a private, relaxed setting to encourage honest feedback. A trusting atmosphere helps departing employees share their reasons for leaving openly.
• Use open-ended questions: Ask questions like “What prompted your decision to leave?” to gather detailed insights. Open-ended questions provide a deeper understanding of their experience.
• Analyze feedback for patterns: Review multiple exit interviews to identify recurring issues, such as inadequate training or lack of recognition, highlighting systemic areas to address.
• Act on feedback: Show that feedback matters by implementing changes, such as improving training programs or enhancing management practices.

#6 Offer Competitive Compensation and Benefits

A Harvard University study revealed that a $1 per hour pay increase among warehouse workers resulted in a 2.8% increase in retention. Employees who receive fair and market-aligned compensation have fewer incentives to seek opportunities elsewhere. Additionally, a competitive salary boosts motivation to achieve work goals and excel in their performance.

QUICK TIPS

• Review and benchmark salaries: Regularly compare your compensation packages with industry standards to ensure they remain competitive and fair.
• Offer personalized benefits: Provide flexible options, such as health plans, childcare assistance, or wellness programs, tailored to employee needs.
• Incentivize performance: Implement bonuses or profit-sharing programs to reward exceptional contributions and align employee efforts with company success.
• Communicate clearly: Be transparent about how salaries and benefits are determined to build trust and ensure employees feel valued.

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Turn a High Turnover Rate into Retention Success

High employee turnover can disrupt your organization’s productivity, morale, and bottom line, but it’s a challenge you can overcome with the right strategies. By addressing common causes like poor onboarding, lack of growth opportunities, and workplace culture, you can create an environment where employees feel valued and motivated to stay.

For example, one warehouse reduced turnover from 56% to just 3% in one quarter by focusing on hiring process and better engagement.

Are you thinking about offering your team the flexibility to work remotely? CloudTalk makes it easy with seamless call quality, AI-powered tools, and real-time coaching features. Give your team the freedom to work from anywhere while staying connected and productive.

Sources

• 13 Employee Turnover And Retention Statistics For 2024