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8 Causes of Employee Turnover (And How to Prevent It)

Causes of Employee Turnover

Employee turnover—the rate of losing and replacing talent—has always been an issue for companies, and the pandemic has only made it worse. This blog goes over the eight causes of employee turnover and how to improve retention.

According to a Microsoft survey, 41% of employees are looking to leave their jobs in 2021. One main reason is the pandemic has emphasized workers’ issues with their companies, causing employees to rethink their current employment.

Employee turnover is a costly problem for companies. The cost of replacing a single employee can range from one-half to two times the employee’s salary. For example, an employee making $50,000 can cost a company up to $100,000 to replace.

Companies can’t afford to replace workers constantly, so they must figure out the causes of employee turnover and develop actionable solutions that entice workers to stay.

In general, employees leave companies because they are unhappy and dissatisfied with the job. One way to resolve these issues is by implementing a total rewards philosophy through communication software. But first, let’s go over the eight causes of employee turnover.

Why Does Employee Turnover Happen? 8 Causes

#1. Poor Compensation

Money talks: 44% of employees would quit their current job for one that offers better pay. That’s not too surprising, considering one of the main reasons people work is to provide an income.

Employees also need fair pay. If they are underpaid, they will quickly jump ship when a better offer appears.

#2. Lack of Benefits

Employees also care about benefits, which include everything from health insurance to vacation days. Even working from home is a benefit, which has become more important to employees due to the pandemic.

A survey found that 42% of employees consider leaving their jobs due to a lack of benefits, and 55% already left for better benefits. What’s even more interesting is that only 48% of employees know all of their employer’s benefit offerings, which means more than half of employees are unaware of the perks available to them.

#3. Burnout

During the coronavirus pandemic, many employees worked from home for the first time. As a result of lockdowns and other factors, the line between work and home life blurred, leaving employees feeling like they were always on the clock.

People also worked long hours to prove their worth to employers, especially those who feared layoffs. As a result of overworking and poor work-life balance, employees burned out and resigned.

#4. Lack of Feedback or Recognition

Employees need to know they’re doing a good job and that their work is valued. If employees don’t get any feedback, they may think they aren’t performing well and look for work elsewhere.

Similarly, if an employee is doing a good job, they need to be recognized for their efforts, or they’ll stop caring and leave. Studies show 79% of employees quit their jobs because they didn’t feel appreciated.

#5. Lack of Purpose

The coronavirus has made many employees reflect on their purpose in life and at work. Nearly 50% of U.S.-based employees are reconsidering their job because of the pandemic, which means it’s vital for companies to provide their workers with a sense of purpose.

If employees lack ambition in their work, they become disengaged, bored and apathetic. At that point, it won’t be long before they leave for a more fulfilling job.

#6. No Room for Growth

Most workers want a career, not just a job. So, if their employer doesn’t offer room for growth, employees will eventually leave for an opportunity that does.

Research shows that 58% of workers feel that their companies don’t have enough growth opportunities to warrant staying long-term. So, companies need to find ways to help nurture their employees’ careers or risk losing them.

#7. Bad Management

People don’t quit their jobs—they quit their managers. That’s why companies must put competent managers in place to inspire their workers instead of driving them away.

Bad managers micromanage their employees, fail to provide helpful feedback, take sole credit for team accomplishments, and more. These actions (or inaction) make employees resent their managers, leading to detachment and eventually their resignation.

#8. Toxic Work Culture

Everyone should feel welcome and safe in the workplace. However, 25% of workers dread going to work due to toxic work culture.

If employees become bullied, harassed and made to feel like their opinions don’t matter, they will leave. It doesn’t matter how great the pay or the perks—nobody wants to work someplace where they don’t feel like they belong.

10 Ways to Retain Employees

Now that the causes of employee turnover are clear, how can employers prevent it? The key is keeping employees happy, satisfied and engaged.

Not only will happy employees be more likely to stay, but they will be 13% more productive. And higher productivity means better business results.

Here are 10 ways companies can keep employees content and involved:

  1. Pay employees what they are worth
  2. Give employees a way to review their benefits and other available rewards
  3. Encourage employees to unplug after work and during time off
  4. Give employees flexibility for where they work to improve work-life balance
  5. Recognize employees for their work—especially top performers—so they feel valued
  6. Provide frequent feedback so employees know where they stand
  7. Remind employees, especially Millennials, why their work matters
  8. Offer career development plans to help employees reach their goals
  9. Train managers, so they can provide proper support to their teams
  10. Implement a safe work environment so all employees feel welcome

The easiest way to make this all happen is for companies to implement total rewards programs. They communicate how employers care for their employees, which makes workers feel valued.

Total Rewards Programs

Employees have high expectations for rewards, which goes beyond compensation. They want to feel empowered and engaged with their work. Total rewards programs make that happen.

The best total rewards communication software gives employees:

  • The total value of compensation
  • A breakdown of employer-provided benefits
  • 401(k) and employee contributions
  • True visibility into benefits and incentives

Having this information in personalized statements gives employees instant insight into everything their employer has to offer. Plus, it makes employees feel happy that they have an employer who cares about their needs, making them more productive and more likely to stay with the company long-term.

Conclusion

There are many causes of employee turnover, but companies that focus on keeping their teams happy, satisfied and engaged will have a more productive workforce that stays longer.

Implementing a total rewards program that encompasses all the compensation and benefits available to employees is essential to retention. Workers need to know they’re valued and provided with perks that matter to them.

HRSoft offers REWARDview Software that empowers employers to provide their employees with a personalized rewards program. Contact us to learn more about this essential tool for employee retention.