Every company will have some degree of employees coming and going; that level of change isn’t necessarily a bad thing. However, if positions are changing too much, it can badly hurt the company’s bottom line. A high employee turnover rate can cost any business time, money, opportunities, and the morale of its employees.

How can you tell if you have a high employee turnover rate? You can calculate your rate by dividing the total number of employees by the number of employees who left, usually over the rate of a year. For example, if you have 100 employees at the start of the year and 20 of them leave, even if they are replaced, your turnover rate would be 20%. However, a “high” employee turnover rate is relative to your industry: the average turnover rate across the board in 2013 was 8.6%, but the food and beverage, marketing, shipping, human resources, and insurance industries all had an average turnover rate higher than that.

Why do I have a high turnover rate?

A high turnover rate means one thing: your employees are not satisfied, and they could be more satisfied somewhere else. Your employees’ unhappiness could be caused by a number of factors:

  1. You aren’t paying them enough and someone else is offering them more.
  2. They do not feel valued.
  3. They do not feel challenged.
  4. There is no opportunity for them to grow within your company.
  5. They have a bad relationship with their supervisors, managers, or other leaders in the company.

How is my high turnover rate affecting my business?

Your business could be excelling in all other areas, but a high turnover rate should still be a giant red flag that something is wrong.

First, any employee turnover is going to cost you money. Signing, training, and waiting for a new hire to get up to the same productivity level as the former employee costs time and money. Paying your human resources department or a recruiter for their time and services while finding and interviewing applicants also costs you money. Employee morale goes down when they have to cover the hole your former employee leaves and you may lose opportunities to gain new clients and make more revenue during that time – all of which costs you money.

Second, a high employee turnover rate means your employees aren’t happy, which decreases their general productivity. Unhappy employees also like to share their discontent on social media: Forbes reported that 16% of employees have shared criticism or negative complaints about their employers online. That kind of negative attention can hurt a company’s reputation and its ability to continue hiring competent employees.

How do I lower my turnover rate?

The most effective strategy for raising company retention is by increasing salaries. In a 2013 survey, 63% of employers actively tried to retain their staff, and 67% of that number reported that “increasing salary” was their most effective method. However, if increasing salaries isn’t within your budget, you can increase benefits, paid-time-off, and your bonus structure. Your human resources department should research the market salaries before hiring new employees, then continue to keep up with what your competition is paying their employees.

Increasing monetary incentives isn’t the only way you can keep an employee happy under your employment. Paying attention to the needs of your employees can go a long way. Examples of this might be providing day care or allowing employees to telecommute. You also want to keep your employees engaged by creating a social environment and by rewarding them for their work. A little praise for good work can be extremely helpful in boosting an employee’s morale.

Employees also like to feel that they can progress. Foster an environment that encourages learning and growth. You can do this by promoting from inside your current pool of employees; by shouldering the cost of classes, seminars, and other educational opportunities; and by having regular meetings with your employees to discuss their progress and goals.

For more information on improving the social atmosphere of your company, read “Why You Should Become Friends with Your Coworkers, Even Though You Have Enough Friends.” 


Reh, John F. “The High Cost Of High Employee Turnover.” http://management.about.com/od/money/a/The-High-Cost-Of-High-Employee-Turnover.htm. (15 April 2014).

Leahy, Jennifer. “4 Reasons For High Employee Turnover.” http://www.insperity.com/blog/4-reasons-for-high-employee-turnover/. (15 April 2014).

Higginbottom, Karen. “Social Media Ignites Employee Activism.” http://www.forbes.com/sites/karenhigginbottom/2014/04/14/social-media-ignites-employee-activism/. (15 April 2014).

“How to Reduce Employee Turnover.” http://guides.wsj.com/management/recruiting-hiring-and-firing/how-to-reduce-employee-turnover/. (15 April 2014).