As the economy continues to improve and employers step up their hiring efforts, one metric to keep an eye on is turnover.
High voluntary turnover, especially when coupled with a decrease in involuntary turnover, can be an opportunity for employers or a curse. When employees leave their jobs willingly, organizations have the chance to gain or lose talent.
According to data from Equifax Workforce Solutions, the number of employees leaving for new opportunities is on the rise. Voluntary turnover as a percentage of total turnover rose from 56.3 percent in 2012 to 59.8 percent in 2013 – an increase of 3.5 percentage points in just one year.
In addition, the data shows a decrease of 3.5 percentage points in the percent of employees that were let go for lack of work. This shift in distribution of involuntary to voluntary turnover is an encouraging sign of economic growth.
According to the data, the sheer number of employees who separated from their jobs, either voluntarily or involuntarily in 2013, accounted for more than 48 million individuals. Even more intriguing is that many of those employees didn’t stay with the employer for long, with nearly 40 percent having been at the job for less than six (6) months.
How can this fast turnover be explained?
One reason for the voluntary separations is that many employees feel they can always find another position if they feel it is not the right fit. Other factors influencing an employee’s decision to leave can include compensation, health care benefits, working hours and the company’s work culture.
And no matter how long an employee’s tenure, the costs of replacing them can be astronomical.
Although the costs have been reported as being between 15 and 21 percent of the employee’s salary, the real impact can be much higher. Just consider the numerous additional hidden costs and the impact of turnover becomes even more striking:
Given this volatile landscape, it is crucial that employers understand the reasons for this rising voluntary turnover so that they can adequately address the issues by adapting current workforce strategies to retain their talent, improve retention and lead to greater business growth.
As voluntary turnover continues to be a challenge, it is important to note that the trend has been playing out differently across various regions and industries. While the national turnover rate in 2013 was 43 percent, it was significantly higher in a number of states.
Voluntary turnover also varies from industry to industry. Not surprisingly, the retail industry, which is known to have high turnover, boasted the highest turnover rate of all — specifically within clothing and clothing accessory stores. Nearly 76 percent of turnover for this subsector was voluntary, which was 15.9 percentage points above the national average.
Employers can also gain useful insight by digging deeper into the reasons behind voluntary turnover within their industry.
For example, 19.5 percent of all voluntary turnover within the real estate industry was attributed to employee dissatisfaction, while 24.2 percent of employees in the computer and electronic manufacturing industry left their jobs for another opportunity in 2013.
The current trend of increasing voluntary turnover can be viewed by employers in one of two ways – a blessing or a curse.
Will employers take advantage of qualified workers pursuing better job opportunities to grow their pool of talent? Or will employers struggle to stay competitive and lose valued employees in the process?
Armed with accurate information regarding when and why turnover occurs, companies can develop informed strategies and make the necessary changes to retain top performers and protect themselves from the repercussions of a dissatisfied workforce such as low productivity and a decline in customer satisfaction.
