Staff turnover has long been one of the main monitored HR indicators. At the beginning of 2021, its importance increased further – monitoring, analysis, and prediction of staff turnover have become a priority for many of our clients.
What is staff turnover and what are the causes?
Staff turnover is the turnover of employees at a company. Its rate is stated in % as the ratio of terminated employment (employment contracts), to the average number of staff per time unit (usually a year). It can be voluntary (intentional), comprising employees who decided to leave, or involuntary (unintentional), comprising employees dismissed by the employer.
In general, a certain staff turnover rate is unavoidable, natural, and should not be considered as a negative phenomenon. Its level is affected by various factors, e.g. company size and the environment, sector and region in which the company operates, and macroeconomic indicators, such as unemployment. In our experience, the natural staff turnover rate is a very strong, but not always relevant argument for being satisfied with the given situation.
Can we influence staff turnover?
The natural staff turnover rate is low and is often caused by factors we cannot influence without collecting and analysing data about the company. The lack of relevant data and insights to identify room for improvement supports the perception that a staff turnover rate under 10% - 12% is completely ok. This is true if it is lower than the market average. However, what is good can always be improved. With the correct approach, we can gain a competitive advantage in the long run. Staff turnover does not occur by itself from nothing but is a consequence of how a company works during the whole employee life cycle. It is the result of processes that begin before new employees join the company and do not end when they leave.
Carrying out the above processes has an impact on an employee’s decision to start thinking of working at a particular company, become a physical part of it, perform at (or even above) the required level, and stay with the firm for a long time, in some cases until retirement and, as an alumni, share experiences with the younger generation via mentoring and coaching.
How can we manage staff turnover?
Staff turnover is the consequence of several activities at a company and depends on the quality level at which they are performed. Every company is specific and changes as time goes by. This has a direct impact on the employee life cycle. If we are able to collect, analyse, and evaluate data in individual phases of an employee’s life cycle at the firm, we can assess the quality of processes performed and also identify the reasons that cause an employee’s dissatisfaction and ultimately lead them to quitting the company.
This is a broad topic, so we have decided to discuss each phase in more detail in a separate article in the PwC series “Staff turnover is a consequence of how a company works”. We will address the causes, consequences, and above all the data that will help you manage staff turnover to minimize its rate in the long run.
What topics will we address in the series?
Our team’s goal is to help clients make strategic decisions based on relevant data in HR management. We work with data on a daily basis and believe that our series of articles will provide added value to readers.
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