In today’s competitive world, where resources are scarce, Good employees are hard to find and it is even very harder to keep them.
An employer generally recruits, hire and train employees as per the requirements of the job which lead them to bear a lot of cost and time but when an employee quits the job, it breakdown the workflow and incurred additional cost and time of having to train a replacement.

Hence it has become very important to make employees retain for a longer period of time to maximize productivity.

According to the Bureau of Labor Statistics (BLS), 3.5 million people—or 2.3 percent of the total workforce—left their jobs voluntarily in October, the most recent month for which data exists.

By 2023, voluntary employee turnover may rise nearly by 30%.

Thus, Employee turnover is a major concern for businesses of all sizes. But what does employee turnover really mean and how can we control it? 

Employee turnover

Employee turnover is simply a rate of employee leaving a job at a particular period of time and are replaced by new ones.

It typically doesn’t include employees who are promoted, transferred, or have retired. The lower the rate, the better will be for organizations.

According to the U.S. Bureau of Statistics, the annual turnover rate in the U.S is about 12% to 15 %.( approx).

Employee turnover may have a much negative impact but if certain employees leave, new ones are joining in. However, it affects the pace of work to a certain range.

Calculating employee turnover:

You can calculate monthly or yearly. To calculate employee turnover employer needs to find three things:

  • Active employees at the initiation of the month
  • Active employees at the closing of the month
  • Employees who left during the particular month

You can simply calculate by dividing the numbers of employees left the organization at the end of the month by the average of the number of employees at the beginning and the end of the month and multiply it by a hundred.

For example: If you have 10 employees at the start of the month and 12 at the end of the month and 5 employees left during that month, your monthly turnover rate would be :

Monthly Turnover rate percentage = 5/ (10+12)/2 X100 = 45%

How employee turnover affect small businesses?

A small business needs to run smoothly and efficiently. But when employees abruptly quit, the job that is an employee is responsible for performing ends up not being done.

If your business is also suffering from consistent employee turnover then it can affect your business in many ways:

  • It can interrupt the budget of the business as the cost of replacing employees goes very high.
  • It reduces the productivity of the manpower resources as new employees would need some time to cope with the new environment.
  • It leads to result in the loss of experienced employees and workers working for the years

When an employee quits it’s often unexpected. But there are specific behaviors of employees that state that your employee will drop the job. Hence there are many special signs of behavior to watch for to prevent employee turnover.

Signs that your experienced employee is ready to quit the job:

  • Sign of decline in productivity.
  • Sign of less participation in decision making
  • Sign of less involvement in formal and informal groups.
  • Sign of frequent absenteeism.
  • Sign of doing the least amount of work.
  • Sign of least efforts in building relationships with managers.

Reasons for quitting jobs

When an employee chooses to leave, it might be due to various reasons though it differs from person to person as per their needs and behavior.

According to a Gallup survey report, the main reasons for employees’ turnover are as follows:

  • Manager influence leads to 75% of voluntary turnover
  • Career advancement leads to 32% of employee turnover
  • Remunerations and benefits lead to 22% of turnover
  • Unsuitable recruitment and selection leads to 20.2% of employee turnover
  • Flexibility and job security leads to 9% of employee turnover

Here are some other common reasons due to which employee generally quits their jobs and what measures should the employer takes in fixing them:

  1. Overburden to employees: When employees overwork, it often leads to a high-stress level which creates the feeling of job dissatisfaction.

The fix: Try to distribute work evenly and keep communicating with employees directly to make them feel motivated.

  1. Inequality in the working environment: Company should not follow the favoritism approach. When employers or leaders treat employees differently, this may suffer other employees with lots of frustration and insecurity and make them feel discriminated against.

The fix: Make a priority to treat all employees equally and create equal opportunities for employees to retain them.

  1. Salary hike: Everyone works for their bread & butter. if your business gives a miserable salary and never hesitate to hike it then you might not face frequent employee turnover.

The fix: Since it costs a lot of money to replace employees, if you give them some monetary rewards and benefits other than salary (fringe benefits, incentives) then it might affect your employee turnover.

  1. Dealing with work-life balance: Striking a balance between your personal life and work-life can be a daunting task. Employees feel that companies that offer an effective work-life balance, are the ones worth investing their efforts in.

The fix: If you’re a manager, and you tend to be an overachiever encourage your staff to take breaks, and also offer a flexible work schedule. 

Here are some tips for improving employee turnover.

  1. Hiring candidates carefully, not just to focus if they have the right skills, but also that they fit well with the company culture, managers, and other employees.
  2. Always encourage employee creativity when necessary with benefits, flexible work schedules, and bonus structures.
  3. Recognition and praise are a cost-effective way to maintain a happy and productive working culture.
  4. Setting the right compensation and benefits.
  5. Paying attention to employees’ personal needs and offer more flexibility.
  6. making sure your employees are personally committed to the goals of the organization.
  7. Ensuring talented employees feel they are playing a suitably significant role in reaching those goals.
  8. Creating a satisfying workplace.
  9. Praising after a project.

Employee turnover has become a major concern for a small business. . But if your business is more than one employee, you are likely to deal with employee turnover. It’s a human tendency to change according to the situation. Sometimes employees get annoyed in delivering their best outcome by balancing professional and personal life which impulse them to quit the job.

Though employee turnover cannot be completely removed but can reduce it to some extent. To get started, seek feedback from your employees. You can get honest feedback in real-time. This will help you identify the common causes of turnover your organization struggles with so you can make an action plan to address them because it is less expensive to retain the employees than to recruit and place new ones. Therefore, every organization should take all necessary measures to fill employee vacancies and develop retention strategies to prevent further employees from leaving. If you want to keep skilled employees, their work needs to provide them with meaning – a sense they are doing something important.


  • Chowdhury Abdullah Al Mamun and Md. Nazmul Hasan (2017). Factors affecting employee turnover and sound retention strategies in business organization: a conceptual view. Problems and Perspectives in Management, 15(1), 63-71. doi:10.21511/ppm.15(1).2017.06
  • Society for Human Resource Management
  • National Human Resources Association




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