Would your business thrive if you had to replace a third of your workforce this year? That’s a real possibility, with recent research suggesting that staff turnover rates in UK businesses could reach more than 35% [1].
Staff turnover refers to the number of employees who leave a business during a set period, usually a year. It is often expressed as a percentage of the total workforce. In this article, we will explain how to measure staff turnover, and what to do if a spike in staff churn causes problems for your business.
Why does a high staff turnover matter?
The first thing to note is that high staff turnover isn’t necessarily a problem. The definition of a high staff turnover rate will vary based on your business size, industry and location. However, it is important for companies to measure and track employee turnover over time, so that any unusual increase can be understood, and action taken to avoid potential problems like staff shortages or lower productivity.
A sudden increase in turnover or a rising pattern of turnover can create operational problems and unwelcome costs for businesses, says Mikaela Jubb, Director of Underdog Recruitment. This could include high recruitment and training costs and might indicate issues in the company that are causing people to want to leave. “It’s always cheaper to retain an employee rather than hire someone new, so turnover is an important measure to track,” she says.
At Integrity Cleaning, founder Luke Murfitt believes that low staff churn is critical to the company’s success, with turnover doubling in five years to more than £1 million. The cleaning industry is one that has often struggled with high staff turnover, due to factors such as low wages and limited progression opportunities. Many cleaning companies spend huge amounts on ongoing recruitment campaigns to find new staff.
Integrity Cleaning specialises in cleaning recently constructed buildings, a job that demands high standards and a reliable workforce. “If we keep staff turnover low then the operatives that we work with are more experienced, which means they are more efficient, and we can complete jobs more quickly,” says Murfitt. “That allows us to price for work competitively, but our customers also know that the quality of the work we provide is high, and so they are prepared to pay for that service.”
Reasons for a high staff turnover
High staff turnover can be caused by a range of issues, some specific to your company, while others are tied to more general social changes. For example, companies employing a high proportion of younger workers might find their turnover rate increases because Gen Z workers are more likely to ‘job hop’ than more mature employees [2].
The most common reasons for an increase in high staff turnover include:
- Poor work-life balance
- Dissatisfaction with pay or benefits
- Lack of career prospects
- Lack of feedback and recognition
Poor work-life balance
Our expectations of the workplace have transformed in recent years, and increased workplace flexibility is often the number one reason why people want to move jobs, says Jubb.
Poor salary or benefits package
In a period of inflation, the size of your employees’ pay packet matters even more, and high turnover could be a sign that your employees are seeking a higher salary elsewhere. SMEs can find it challenging to match the salaries and benefits offered by large corporates, says Jubb. “That can particularly be the case with more skilled, senior roles like engineers or consultants,” she says.
Poor career prospects
One of the most common reasons for high turnover can be that employees don’t see an opportunity to develop their careers in their current job. This could be because the company hasn't mapped out career paths across its different roles, is failing to offer training across the business, or there are simply a limited number of senior jobs available.
How to reduce staff turnover rate
If your staff turnover is increasing, then the key to reducing staff churn lies in understanding exactly why people are leaving the business. “Exit interviews are not utilised often enough but they are an excellent opportunity to understand what issues are causing your high turnover,” says Jubb.
Once you have identified the causes of the increased turnover, it will be much easier to take action to stop and reverse that trend.
Increased flexibility
If workers are leaving for better work-life balance, then you could look at adding flexibility in ways that suit the needs of your business. “Often smaller business owners worry that flexibility means part-time, and they’ll be short-handed, but it’s a conversation that you need to have because it’s increasingly important to the people you employ,” says Jubb. “It doesn’t need to be a big scary thing. It just needs to be tailored to the people you work with, who might want to just be able to do the school run or run their side hustle in the evenings.”
Focus on career progression
Not all employees want to climb the career ladder, but for those that do, it’s important to make their progression path clear. At interviews, rather than asking people where they see themselves in five years, consider asking what role they would like to be in, and how you can help them get there. “It’s also important to have open, regular communication that could be formal or informal,” adds Jubb. “Rather than only having exit interviews when people leave, have ‘stay’ interviews where you can ask people how you can provide a job that they want to stay for.”
Regardless of career ambitions, all staff should have the opportunity to develop themselves by accessing training. Integrity Cleaning supports all cleaners to complete training in areas such as GDPR and construction health and safety. Murfitt says this training helps staff to feel valued and improves the service for clients.
Better culture and benefits
Especially during times of economic volatility when pay raises are not feasible for businesses, you may be used to exploring alternative methods to offer additional benefits to your employees.
For example, the American Express® Business Platinum Card allows you to earn 1 Membership Rewards® point for every £1 spent¹, or double that every time you spend £10,000 in one month². These can be redeemed for a range of rewards including gift cards, travel and entertainment at home such as X-Box subscriptions. Gaming and entertainment subscriptions could be used to help incentivise your employees, or used as part of an employee of the month scheme. Membership Rewards points are a great way to reward your employees at no additional cost to your business.
“Having a great culture is an important way to reduce turnover, and it doesn’t have to be expensive,” adds Jubb. “It could be having an office pet or organising social events. One of my clients recently organised a whole company walk, followed by a wild swim, where people were paired up with team members they hadn’t worked with before.”
At Integrity Cleaning, Murfitt believes that paying a fair wage isn’t just the right thing to do for his workforce. It also helps to drive the company’s growth. “We pay up to 40% more than other local cleaning firms, which means people want to work for us, and they want to stay,” Murfitt explains. “Most companies take the approach of paying as little as they can get away with – I want to pay the most I can get away with.”
By paying higher wages, Integrity Cleaning can retain more experienced cleaners, which translates into more efficient cleaning and less time spent on recruitment and training.
1. Membership Rewards points are earned on every eligible full £1 spent and charged, per transaction. Terms and conditions apply. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Business Basic Card.
2. With the double Membership Rewards bonus, in any calendar month you will now receive 10,000 Membership Rewards bonus points once you have spent a cumulative £10,000 in that month. The Bonus Points will be transferred to your Membership Rewards account and can be viewed on your Card Account statement. You will continue to earn one Membership Rewards point on eligible purchases in excess of £10,000 for each pound you spend on your Card for the rest of that month.
Sources:
[1] Remote, How to reduce employee turnover with a strong talent retention strategy, 2023
[2] Huffington Post, Gen Z Are Quitting Jobs That Don't Align With Their Values, 2023
