Employee turnover in the company - why are they leaving?

Employee rotation and the lack of competent staff mean enormous problems for the company and constitute one of the most important business risk factors. Human capital is also an important element building a competitive advantage. Deficiencies in this area mean problems with providing customers and partners with products or services of appropriate quality. Meanwhile, it turns out that it is difficult to recruit employees, even more difficult to train, and the most difficult - to keep the best. What to do about it? Find out in the article below. 

In Poland for several years employee turnover rates are the highest compared to other European Union countries. In 2017, our country, with the result of 27%, was in first place in this respect. The data of the Labor Market Monitor from 2019 shows that employee turnover in Poland averaged 22%. These results suggest that the human factor is not treated as particularly important or unique in Poland. And regardless of the reasons, rotation always generates some losses - financial, branding, etc.  

What is employee rotation? Definition

Employee turnover is a term that refers to people who leave the company for various reasons. The turnover rate tells more about the company than the employee. High turnover usually means that working conditions are not optimal, that wages are below expectations, or that employees are not well trained. In turn, a low turnover rate indicates a work environment in which employees feel appreciated, work as a team, see opportunities for development and promotion for themselves. Low employee turnover means, in simple terms, that people are satisfied with their work in employment. 

On the one hand, employee turnover is a painful process of losing some of the best talent in the company. On the other hand, replacing weak employees can bring positive results. So this whole process has both pros and cons. It also has a fair effect on employer branding and perceiving the company as an attractive or undesirable employer. 

The company should take care of the maintenance of its employees. Their job satisfaction has a significant impact on company image as an employer. However, it is impossible to avoid, especially in the modern world, the situation of employee turnover. The definition around this concept focuses on the percentage of employees who leave the enterprise within a certain period of time, expressed as a percentage of the total number of employees. The indicator is usually measured on an annual basis. This includes employees who have been laid off, left the company on their own, retired, relocated or even died.

However, in order to calculate the ratio, it does not matter what the reason for the loss of an employee is - his absence affects the efficiency of the organization. This is not necessarily a negative phenomenon - we can get new, more experienced employees. However, it must be remembered that it has a significant impact on the pace of work. Large corporations as well as smaller enterprises should calculate the employee turnover rate to be able to predict its impact on work performance as well as team morale.

Reasons for employee rotation 

It is said that the only thing that is constant in the world is change. Constant change, however, can be detrimental to any business. Staff turnover is a changewhich directly affects financial results - usually in minus. There are basically four types of movements in employee turnover. The first is voluntary employee rotation (attrition). This type of rotation occurs when the employee chooses voluntarily leave the company without any interference from third parties. When an employee is fired or, for various reasons, asked to leave the company, we are dealing with involuntary rotation. 

Rotation employees can also be desirable. It occurs when a company is firing or losing lower-performing workers and replacing them with new, potentially better-positioned workers. The opposite is the case with unwanted rotation. This occurs when a company loses its best employees. Those that are difficult to replace. 

Reasons for employees leaving the company 

Just as human motivations differ, so do the causes of employee rotation. One of them is the proposal of a higher salary in another company. A 2019 study by Antal shows that for 68% respondents, this reason persuades to change jobs. Even those employees who work for the company for a long time and identify with its values, if given better financial opportunities, may consider moving elsewhere.

Another reason for leaving your job? Employees quit because they don't feel committed enough. Perhaps they are looking for greater challenges, their ideas are underestimated or they lack training and development activities. High-performance employees must be constantly involved in the workplace and have the opportunity to develop. Staff turnover can decrease if you take the time to meet employees to understand their career path and what they value most in their roles. According to the Antal report more attractive development opportunities Careers are a good argument for 52% employees to change employers.  

Employees often leave their jobs voluntarily due to bad relationships within the company. In general, when work relationships are positive, employees are more enthusiastic about doing their job better and staying engaged. Bad management in the organization is the reason why 27% employees leave. Organizations that have a positive and strong work culture outperform those that don't. Work culture is much more than interesting projects, office party or "fruit Thursdays". It is a combination of many things that make employees feel and know that they are appreciated and valued.

Uncultured organizations tend to have high labor turnover. Companies in which the problem is a problem can also expect problems with the departure of employees work-life balance. Achieving a healthy work-life balance is essential for many employees. As many as 1/6 decide to change jobs, if it is not possible in the current company. 

Rotation of employees in positions - how to deal with it? 

Salaries are a key element, but not the only one. Firms should pay close attention to what competitors are offering and what hiring trends are visible in the market. To help employees really appreciate their salary, it's a good idea to provide them with a written summary at the end of the year, including salary costs and any additional fees the company provides them. 

If the high employee turnover is due to a lack of commitment, the company it can remedy this in many ways. It is also important that managers and senior management are committed to providing employees with opportunities for personal development and participation in the company's development. It is worth having management trained in crisis management. After all, too much rotation of employees can lead to a conflict, which will turn into a situation in which crisis management proves necessary.   

The percentage of employee turnover can also be reduced thanks to better employee management. Policies and procedures, internal communicationshould suit not only the company as a profit-oriented organization, but also employees. Everyone must know the possible path of development. Clearly delineated and indicating their goals, achievements and development. Lack of a development plan can lower employee morale and create a feeling that their efforts will not be recognized and rewarded. Such employees leave companies sooner rather than later. Fortunately, by following the advice above, even high employee turnover can be remedied.  

Employee rotation in Poland

For several years, Poland has been at the forefront of the European Union with a high employee turnover rate. The highest rate is recorded among young people (18-29 years of age). Why? People who take their first steps on the labor market dream of their own businesses or positions that will give them a chance for development, and at the same time provide a bit of freedom. In addition, they consider factors such as a friendly, relaxed atmosphere in the workplace, good relations in the team and positive relations with the management - young people want to feel good at work.

Let's take a look at the results of the 38th edition of the Labor Market Monitor survey, which covered the fourth quarter of 2019. The study, which involved over 1,000 respondents aged 18 to 64, shows that the employee turnover amounted to 20% - where the most (as much as 35%) concerned young people, which confirms previous data. The highest employee turnover rate was recorded in such sectors as: trade and repair of vehicles (each 29%), services (24%), transport and logistics, construction, hotel and catering (each 22%), as well as health care and social assistance (20%).

The most common reasons for changing jobs were: the desire for professional development, higher salary or a more favorable form of employment with a new employer, dissatisfaction with the previous employer. The duration of looking for a job was usually from 1 to 3 months - less often longer or shorter. The vast majority of people declare that they are looking for offers or are not looking for a job at all (after 45%). 10% is actively looking for a new job.

And what does it look like in 2020? The coronavirus pandemic has clearly had an impact on the labor market in Poland. Companies faced new challenges, they had to redefine employer branding so as to provide employees with appropriate working conditions tailored to the current situation.

According to the data of the Labor Market Monitor survey, in the first quarter of 2020, employees' fears of losing their job increased - 26%, which is a result of as much as 17% higher than that of the previous measurement. The analysis shows that people working on fixed-term contracts, mandate contracts, specific specific contracts, as well as those employed in trade, hotel and catering were the most afraid of this. The turnover rate was as high as 23% - the most common were engineers, unskilled workers, drivers and salespeople / cashiers. In the second quarter of 2020, the turnover ratio fell to 18%.

How to calculate the employee turnover rate?

High employee turnover in the company is associated with a high risk for the proper functioning, development and image of the company. It can lead to many negative consequences that cannot be fixed quickly. Therefore, it is worth constantly monitoring the level of fluctuation and, if necessary, introducing changes that will stop its development. Tall employee retention is a desirable phenomenon for every enterprise. The employer does not have to carry out subsequent, costly recruitments (saves time and money). The company has a guarantee that investing in the current staff will pay off, and thus achieve better results on the market. In addition, it gains prestige - it is considered an attractive employer who cares about the interests of its employees. Regular research and rotation analysis is a recipe for success.

The overall annual rotation factor can be calculated from the formula:

Rotation ratio = X: Y * 100

X is the number of people who have left the job and Y is the average number of employees.

Example:

Rotation ratio = 31: 400 * 100 = 7.75

The obtained ratio can be compared with the rotation ratio in the industry in a given period. If the company's result is higher, it is likely that the company offers weaker employment conditions than the competition or is facing some other staffing problems. Employee turnover is also worth measuring on a quarterly basis. This will allow you to solve problems on a regular basis.

And what indicators define the measurability of the rotation ratio?

1. employment - the ratio of the sum of all terminated contracts in a specific time period to the sum of all employees at the same time.
2. resignation - the ratio of employees who terminated the contract on their own to employees.
3. promotions - the ratio of the number of promotions to the number of employees.
4. recruitment efficiency - the ratio of the number of employees to the sum of people in all positions.
5. layoffs - the ratio of the number of dismissed people to the number of employees.
6. the percentage of return to work - the ratio of the number of people who returned to work to the number of employees.

The more indicators we use, the more accurate data we will receive and the more effective solutions we will implement.

Analysis of the phenomenon of employee rotation in the company

The key to reducing employee turnover is to build a strong one employer brand. Strengthening employer branding will translate into an increase in the satisfaction of current employees with their work, and thus will make the company more attractive to potential candidates - because satisfied employees are the best showcase of each enterprise. Such action may facilitate finding outstanding employees who will bring a lot of good to the company and will clearly contribute to its development. However, before taking any steps, you should thoroughly investigate the phenomenon of employee turnover in your company.

The first step is to calculate the rotation ratio. The data can be supplemented with the results of other factors - e.g. employment rate, resignation or layoffs. This will allow to outline the situation in the company in detail, which will be the basis for further research.

In a turnover analysis, it is important to know who the employees who quit, when and why they left.

• Who's gone

When employees who have failed in their positions or have shown poor motivation to work leave the company, we can consider the situation as beneficial for the company. Newly hired people may turn out to be better – more motivated, productive, better qualified. Be strong at this point employer branding and build a positive image of the employer to attract the best candidates with the offer. This is particularly important in the case of activity on the employee market (where there are more vacancies than candidates). High competitiveness requires a better, more professional approach to recruitment.

 

A big problem for the company is the situation when the best employees quit their jobs. The solution is a detailed analysis of internal employer branding and immediate implementation of corrective actions that will lower the rotation rate.

• When are they leaving?

At this point, it is important to check at what stage employees leave the company. If this happens a moment after they join the team, the reason can be found in the recruitment processes. The problem may be high promises that do not correspond to reality, a higher scope of duties than declared at the beginning, etc. It is worth taking a closer look at the entire recruitment process and ensuring the appropriate preparation of the HR department.

If long-term employees quit their jobs, it may mean that the company does not give them a chance for further development. In this case, you should consider whether we are able to offer more employees.

• Why are they leaving?

It is a good idea to conduct an exit interview with each employee who resigns from work voluntarily. The interview will allow you to find out the reasons for the employee's departure and his suggestions on preventing further resignations.

Once the reasons for rotation are known, appropriate corrective actions should be implemented. These include:

• improving employment conditions,
• improvement of the incentive system,
• taking care of the atmosphere at work, relations between employees and between employees and superiors,
• adapting the benefit system to the needs of employees,
• providing employees with development opportunities (training budget) and promotion.

High employee turnover = a big problem for the company 

For most people, employment is not just about earning money. Work is a factor that determines their identity. It is also a factor in determining social status. The vision of changing the workplace, like any change, is usually associated with doubts and fears. Even if the current working conditions are not perfect, the employees also have a sense of security and stability while having some kind of job security. If the company does not pay much attention to it, it often leads to employee discomfort, which manifests itself in the implementation of tasks without much commitment. Meanwhile, as research shows, the employee involved gives more effort than the uninvolved 57%. Moreover, the increase in engagement by 10% causes the 6% to increase the workload. All of this ultimately translates into increased 2% results.  

It is worth bearing in mind that while satisfaction does not have to be directly correlated with performance, dissatisfaction is a potential threat to the functioning of the company. High employee turnover proves that there is little chance of mutual satisfaction, which results in lower interest in the company among potential new employees. It turns out that in practice entrepreneurs most often limit their analyzes to financial results. They do not go deeper into the factors that determine the results obtained. And yet financial results do not just happen. Implementation of tools that enable efficient management of own human capitalshould be a priority task for many companies. Even more so, the cost of rotation for one job is on average from 93% to even 200% annual salary. 

PR agency