Turnover is a powerful indicator of the health of a company. Low turnover stems from good hiring, supportive onboarding, and the right investment in your employees and company culture. High turnover, on the other hand, can reveal a lot more about your company than how many people are leaving.  

Here are four questions HR needs to answer to properly evaluate, monitor, and address your company’s turnover rate. 

1. What’s my company’s magic number?

Every industry and every organization has its own benchmarks for employee turnover. 17% turnover is high for a tech company but low for the hospitality industry. To find your company’s magic number, start with the industry standard. 

Another thing to keep in mind is that not all turnover is bad. Distinguish between ‘functional’ turnover, employees who are “calling it in” or jobs that have become redundant, and ‘dysfunctional’ turnover which is when your top performers or those who are hard to replace walk out the door. Dysfunctional turnover will hurt your organization. When a company’s top performers leave, it creates a gap that can take a lot of time and money to fill. A healthy employee turnover rate allows your business to operate without any hiccups and presents you with opportunities to bring in fresh talent. 

Establish a healthy turnover rate for your company and keep your eye on it. For your top performers, aim for a turnover rate that’s as close to zero as possible. 

2. Why are employees leaving?

Employee turnover is a standard part of doing business in today’s talent-driven job market. The assumption that people quit their jobs because they’re unhappy misses the bigger picture. When someone leaves your organization, make sure you know why. An effective exit interview can reveal what is and isn’t working in your organization.

When conducting the interview, leave questions open-ended because the more information you get, the better. If you notice any trends behind the reasons people are quitting, take steps to fix them. Don’t be blind to what people on their way out are telling you. They’ll often give you the truth because they have nothing to fear. Prepare for the interview by looking through the employee’s history at the company, performance reviews, and any notes from team members or coworkers. A little research can help you ask more pointed questions about the employee’s reasons for leaving and facilitate a more open conversation. Take heed and open your eyes to any problems and address them before you have a line of people handing in their notice for similar reasons. 

3. Who owns my company’s turnover? 

HR can’t solve turnover alone. Managers play a critical role in empowering employees and creating a positive work culture. An eye-opening study found that at least 75% of the reasons for voluntary turnover relate to things that managers have control over. Managers must take an active role in stemming the flow of turnover, especially when top performers leave. The role of an HR leader is to take managers from good to great. Give them the tools they need—whether it’s workshops, training, coaching, or extra reading material—to become more empathetic, supportive managers.

4. What are we doing to reduce turnover?

Early intervention is the best method for keeping turnover rates in check. Monitor turnover rates regularly, even if the company’s profits are soaring and there’s a line of people who can’t wait to get in. If turnover becomes higher than average, even by a small margin, it’s not time to panic, but it is time to take notice. Toxic cultures can develop in the most well-intentioned companies, and a bump in turnover rate can be a sign of something brewing. Never stop analyzing how you’re doing things, making changes to your work processes, and bringing in new ideas to improve the company culture and create a better workplace for all employees.

Investing in your employees is an ongoing effort

One significant change in our working world is that more and more companies are competing primarily on talent. With software shrinking the world and speeding up the pace of business, companies will either thrive or die based on their ability to hire and keep the most creative people.

While no retention strategy is perfect, you can make dramatic improvements by understanding the underlying issues driving your best people to leave. Knowing what motivates–and demotivates–your employees is a big step in the right direction.


Employee turnover: Four questions HR needs to answer - PHOTO-2021-01-09-22-08-30-e1613468247172.jpg

From Annie Lubin

Annie grew up in Brooklyn, New York. On a Saturday afternoon, you'll likely find her curled up with her cats reading a magazine profile about ordinary people doing extraordinary things.