April 28, 2023
Staff turnover is often looked upon as a sign of success within a company. High staff turnover is seen as a negative, as it means that you are struggling with staff retention, while low staff turnover is praised as a positive, because it means your staff are happy and stick around for longer.
But this doesn’t really show us the full picture, and there’s a lot more to staff turnover than a “good” or “bad” categorisation. There are instances when high staff turnover is not only expected, but also good for business. And while low staff turnover might indicate good staff loyalty and a healthy work environment, there are negatives from a business perspective.
In this article, we’ll explore the pros and cons of your staff turnover rate to discover if there is a strong business case for embracing a higher staff turnover rate as a positive sign.
Staff turnover rate is simply a measure of how many employees leave a company in a given period. To calculate your staff turnover rate, multiply the number of leavers over a given period by 100 and then divide this by the average total number of employees over this time.
So if you have 4 people leave your company in a year, and you employed an average of 50 people during this time, you would have an employee turnover of 8%.
The average staff turnover rate in the UK is currently 15%, but this is an incredibly limited statistic that doesn’t tell us much about the bigger picture.
Some industries will naturally have a higher staff turnover than others. For example, if your company is reliant on a student or seasonal workforce, you can expect to have a high staff turnover.
Rather than being seen as a negative and something that should be kept as low as possible, it would be healthier to see staff turnover as a potential for growth and development. Here are just some of the reasons you should rethink your stance that high turnover is bad and low turnover is good.
If you have low staff turnover, you’ll benefit from things like added insight and more investment from your employees, but there is a chance they could soon become overpaid for their work.
When an employee stays with the same company for a long time, they will come to expect periodic pay increases. If they receive a 5% pay rise every year for 5 years, this could lead you to paying them a lot more than you would pay a new starter with 5 years of experience in the same role.
While increased responsibility and investment in the company should be rewarded, there is the risk that pay increases will outpace their contribution to the company. Worse, the employee could become complacent in their role and expect pay rises as standard.
If your staff are comfortable and complacent, they might be stifling innovation in your company. High staff turnover will bring in new ideas and fresh perspectives. You could even benefit from some insight by hiring those who have worked for your competitors.
There is the risk in a company with low staff turnover that you could hang on to employees that aren’t invested or engaged. Bringing in new team members at different levels of the organisation will offer learning opportunities for everyone involved, allowing your teams to challenge each other and grow together. This can only be achieved if you are continually bringing in fresh talent.
Not everyone approaches a job like it’s going to be a career for life. A higher staff turnover can give potential employees the confidence to approach it like a stepping stone, rather than pretending they will be invested until their retirement.
While we’d all like to think that employees will rise through the ranks and be promoted internally, there is also a benefit to be found in giving employees the freedom to get what they need from a role and then move on.
While high staff turnover is often seen as a negative for job seekers, you can reframe this as a positive if your employees go on to exciting new opportunities.
There are obvious situations where a high staff turnover is something that you would want to avoid. For example, if employees are leaving because they are unhappy or feeling unsupported in their roles, then this is a sign that something needs to change. But there is a case for allowing higher staff turnover rates if it helps to spark creativity and innovation.
Instead of focusing on the staff that are leaving, attention should be firmly on the opportunity to replace them with talented individuals that bring a fresh perspective. This can also help to keep staff costs from spiralling by not feeling pressured to offer annual pay rises. Once you have a tried and tested recruitment and onboarding method in place, you should have no trouble attracting fresh talent at all levels of your organisation.Back to Blog