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Navigating Employee Attrition: Strategies from Leading Companies

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Churn, fluctuation, fluctuation - whatever terms you use, they all have one thing in common: the departure of employees. This type of change is inevitable in business, but when too many employees leave at the same time, it can be costly and disruptive.

Employee turnover is not something we need to eradicate; Departures also pave the way for new talent and ideas. However, by understanding the reasons for employee turnover, knowing who you are losing and how regularly, you can make the right decisions to support your employees and your business. This article examines how top companies like Statista, Google, and Spotify handle turnover and how you can incorporate a recognition program into your employee retention strategies.

What is employee turnover?

Employee turnover occurs when the number of employees in a company gradually decreases because they leave more quickly than they are hired. This can happen for various reasons, such as: by termination, retirement, layoff or layoffs. Turnover is a natural part of any company; it is impossible to keep all employees forever. However, excessive fluctuation can be problematic for companies.

A recent study by shows which companies want to leave employees and which don't:

  • HSBC Bank USA and Neutrogena have the longest average tenure of 10.2 years.
  • Coinbase, Avelo Airlines and Popeyes have the shortest average tenure of just 0.8 years.

Types of employee turnover

There are common reasons people leave a company that can have different effects on remaining employees:


According to Pew Research, 50.3% of U.S. adults ages 55 and older have dropped out of the workforce, and that number will continue to rise as more people reach retirement age. Although retirement is expected, it can create a knowledge gap, especially if the departing employee has worked at the company for many years.

Long-term illness

6 in 10 U.S. adults have one chronic illness, and 4 in 10 have two or more. Employees who suffer from cancer, heart disease, diabetes or other illnesses may be required to take extended periods of leave from work and, in some cases, may even be required to leave the company altogether due to their illness.

Involuntary turnover

Some employees have to leave the company for reasons not of their own making, e.g. Layoffs, layoffs due to performance issues, a company-wide restructuring, or a merger or acquisition. This type of turnover can cause shock and stress among your current employees and can even impact your employer brand, so it needs to be managed carefully.

Voluntary turnover

When employees leave the company for personal reasons, it may be that they have found a better job opportunity, need to move to a different location, or are dissatisfied with their current role or company culture.

Internal fluctuation

As a company evolves, some functions or entire departments may become redundant as they are replaced by automation or other disruptive technologies. Another cause of high internal mobility is the desire of team members to leave a particular department, which could indicate poor leadership. Finally, an employee may have just been promoted, leaving their old role behind to be reassigned.

What is the difference between positive and negative fluctuation?

It's easy to believe that all turnover is bad, especially financially. We know that filling open positions can be expensive - SHRM's benchmarking data shows the average cost per hire is $4,700, with some estimates putting it at three to four times a person's annual salary. However, these numbers don't tell the whole story, so it's important to know the difference between positive and negative fluctuation.

Positive fluctuation is when a team, a manager or the entire company breathes a collective sigh of relief because their faces have changed. Not every departing team member will have made a positive contribution to the company:

  • Some do not adhere to policies and procedures.
  • Some have a negative influence on their colleagues
  • Others may not have the necessary skills to perform their role adequately.‍

Negative turnover is the type of turnover you want to avoid. When a company's best talent leaves, their departure has a ripple effect that can impact multiple teams. The effects of negative turnover include:

  • Lowering employee morale and engagement, particularly if the departing employee was highly respected or highly qualified.
  • An increased workload for remaining employees, who may need to help out until you find a replacement.
  • The loss of institutional knowledge and skills that are difficult to replace.
  • A financial hit due to the cost of hiring or training a new employee.

In these cases, it is important to understand why your experienced employees are leaving the company and whether you can take steps to retain them.

How to Calculate Employee Turnover Rate

Employee turnover is a valuable metric you can track to understand talent churn. Here is a simple formula you can use:

The number of employees who left the company and whose vacancies remained unfilled within a certain period / total number of employees at the beginning of the period = turnover rate.

Most companies prefer to track turnover over a full year, but quarterly or monthly calculations can also be helpful. Monthly tracking allows you to spot trends and take corrective action before things get out of hand. In contrast, annual tracking provides a more comprehensive understanding of the health of your business.

Employee Turnover Versus Turnover: What's the Difference?

Employee turnover and attrition are two metrics used interchangeably to describe a company's attrition rates. However, there are some important differences between the two metrics.

Employee turnover refers to the natural and gradual decline in a company's workforce through retirement, termination, or other reasons. What is crucial is that the key figure describes positions that will not be filled again. In some cases, turnover is the goal. For example, in mergers and acquisitions, it may be necessary to reduce the total number of employees to eliminate redundancies, reduce labor costs, and increase efficiency.

Employee turnover refers to the number or percentage of employees who leave a company within a given period of time and are replaced by new hires. Some companies or industries have incredibly high turnover rates, but are not as affected by turnover if they can hire new employees at the same rate.

11 Tips to Reduce Turnover and Employee Turnover

It's interesting to look at companies in the same industry and compare their turnover rates. Why are Tesla employees 3.8 times more likely to quit than Ford and JetBlue more than twice as likely to quit as Southwest Airlines? While we can't speak specifically for the employees of these companies, most employees don't leave a company behind. Instead, they leave bosses and toxic company cultures.

With that in mind, you should check out the 11 best strategies for retaining employees and reducing turnover and churn:

1.Recognize your employees for their contributions

Employees who bring their skills, energy and commitment to a company deserve praise for their contributions. But all too often, recognition falls by the wayside, is integrated into the annual performance review or forgotten entirely.

Employees can then feel undervalued or underappreciated, leading to lower motivation and loyalty. To avoid this, celebrate successes big and small and make recognition an integral part of your company culture.

And when you cultivate this encouraging, supportive company culture, the employee retention results are fantastic. IceHrm's employee recognition survey of 800 full-time employees found that a whopping 93.5% of employees would stay with a company for five years if the company culture was good.

2.Give your employees a voice

Another way to respect your employees is to let them speak up and give them the opportunity to express their concerns and ideas. Open communication with employees promotes transparency and a loyal partnership between employees and managers. It also gives your employees' feedback a voice so it can be heard by those who have the power to make a difference.

We spoke to Amancay Moreels Scotto, change management expert at Human-O-S. She is a big proponent of giving employees the opportunity to express themselves, which strengthens the bond between workers and their managers.

3.Create an environment of trust

In parallel to the open communication strategy, an environment must be created in which employees feel psychologically safe to express their opinions without fear of consequences. This all boils down to the idea of trust, which should go both ways.

Amancay Moreels Scotto believes that trust is a human quality that gives us a sense of belonging and security.

4.Understand how DEIB impacts turnover

Employees will only stay with a company if they feel included and have a sense of belonging. Although many companies track overall turnover, they fail to drill deeper into the data to understand how and why different groups of employees leave the company.

Google's Stay and Thrive team is a shining example of how the company keeps an eye on its attrition data and then develops programs to retain Googlers, including:

  • Creating safe spaces for Asian+ Googlers affected by violence against their communities.
  • Increased support for working parents, especially mothers, for parental leave and healthcare.
  • Creating new opportunities for Googlers to mentor each other, including executive coaching for Black employees.
  • Advancing gender equality in the tech industry by creating new resources for mentorships, skills training, and more.

5.Evaluate your overall compensation package

Even if your company has a fantastic culture and great colleagues, if you can't offer a competitive compensation package, your employees will likely find another company. For example, SHRM data shows that 61% of Generation Z employees would leave a job to receive better mental health support.

According to data from the Bureau of Labor Statistics, when designing your compensation package, you should keep in mind that your employees' salary accounts for 62-69% of total compensation. The rest goes to social benefits, which you should plan carefully.

You could offer your employees endless perks and benefits, but you probably won't be able to afford all of them. Instead, it's important to focus on the key benefits you can use to attract and retain talent. This is the conclusion Gaby Israel Grinberg came to when assessing the performance mix at Proofpoint Marketing: “We should do fewer things, but do the big things really, really well.”

If you're not sure where to start, try comparing your service offerings to those of your competitors in your industry to find out how competitive you are.

6.Accept flexible working

Not all perks and benefits come at a price. For many employees, the ability to work from home or choose flexible working hours can be the deciding factor in them staying with your company long-term.

Spotify has achieved excellent results with this initiative. The company introduced a “work from anywhere” policy in February 2021. Eighteen months later, 2% of the company's employees have relocated to another country while continuing to work for Spotify. And nearly twice as many have moved jobs within the United States.

7.Set up a collaborative workspace

For employees who prefer or are forced to work within the company, the promise of luxurious accommodations can be a powerful retention tool. Crucially, these new workplaces are designed to encourage collaboration, so your employees can thrive both individually and as part of a team.

On the Punk CX podcast, Jose Herrera, co-founder and CEO of Hire Horatio, shares how the company's impressive office space contributes to its low turnover rate of just 5%.

8.Commit to employee development

Another way to retain your employees is to provide them with ongoing training. LinkedIn reports that 94% of employees would stay with a company longer if the company invested in training and development. Employees who continually develop within their tasks have more professional development opportunities and are more likely to stay with the company long-term.

9.Invest in your leaders

We have all experienced bad leaders throughout our careers. Those who do not pay attention to us have double standards or are unsympathetic to our needs. These types of managers can be the main reason employees want to leave the company. Therefore, it is important to invest in the development of your leadership team if you want to reduce turnover.

Management training can take many forms, e.g. through peer mentoring from other managers and by improving communication and interpersonal skills. Leadership development programs also play a critical role, according to Bernstein analyst Toni Sacconaghi, who used 2019 data to examine the impact of certain CEOs on the executives who report to them. At the time, the average turnover rate at this level in Silicon Valley was 9%. However, this increased to 44% when executives reported to CEO Elon Musk at Tesla and to 22% at Lyft.

10.Keep the human element

As technology advances, it is tempting to reduce operational costs by automating processes, thereby eliminating the need for manual workers. Although this type of turnover may seem like a byproduct of progress as companies adopt more and more AI tools, we must be careful not to dehumanize the workplace. Employees who feel like they are just another cog in the machine are less likely to stay with a company than those who work in an environment that emphasizes human interaction and support. Jose Herrera explains how his company balances technology and humanity for the benefit of its employees and customers.

11.Conduct stay and exit interviews

Although we value regular, open and honest conversations with our employees, less frequent retention and exit interviews are also important to understand employee turnover.

  • Retention interviews help you identify underlying issues so you can address them before they become a reason for an employee to leave your company.
  • Exit interviews are also worth your time because they provide insight into what went wrong and how you can develop strategies to reduce turnover in the future.

‍Elevate your retention game with IceHrm. Learn from industry leaders, implement effective strategies, and cultivate a loyal, motivated team!

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