Employee turnover is one of the most significant issues in the corporate industry and has become a topic of discussion on a global level over the years. Several studies on this topic have stated that around 44% of new employees have doubts in the first week of their jobs.
Thus, it becomes essential to pay close attention to the new hires and ensure they feel welcome in the new space. So, here we have created a guide that will help you understand what exactly employee retention is, the types of employee turnover, and how the best PEO for startup can help you.
An Overview of Employee Turnover
Employee turnover is all about what happens when employees leave. It could happen due to their wish or if they are asked to leave due to their ill performance, organizational changes, etc. Hiring is quite expensive, and employee turnover can affect the overall budget as well as payroll management of an organization. Thus, it is considered one of the business’s negatives.
Types of Employee Turnover
There is no one type that can define employee turnover. So, let’s take a look at the different types of employee turnovers to understand the concept properly:
Voluntary Employee Turnover:
Voluntary employee turnover occurs when employees choose to leave the organization willingly. This may be due to personal reasons, a better job opportunity, or dissatisfaction with their current role. While voluntary turnover can bring fresh perspectives and talent to a company, it also poses challenges regarding knowledge loss and the need for recruitment.
Involuntary Employee Turnover:
Involuntary employee turnover, on the other hand, is beyond an employee’s control. Termination may result from performance issues, violations of company policies, or restructuring. Handling involuntary turnover delicately is essential to maintaining a positive workplace culture and preventing morale decline among the remaining staff.
Retirement:
Retirement turnover is a natural transition when employees reach the end of their professional careers. Organizations often need more knowledge and experience when long-serving employees retire. Companies can address this by implementing effective knowledge transfer programs and succession planning.
Functional Employee Turnover:
Functional employee turnover occurs when an employee leaves a specific department or function within the organization. This type of turnover can impact team dynamics and workflow but might be necessary for organizational restructuring or personal career growth.
Internal Transfer:
Internal transfer involves employees moving within the same organization but transitioning to a different role, department, or location. This can be a positive form of turnover, promoting employee development and retaining institutional knowledge while allowing skill diversification.
Causes of Employee Turnover
If your company is facing higher than desired turnover, there are multiple factors worth examining:
Poor Hiring Practices
Poor hiring practices manifest when many employees depart within the initial six months, often moving to similar roles elsewhere. This turnover indicates a retention issue, signaling potential flaws within the hiring process.
Less Engagement
Employee engagement refers to the personal dedication individuals put into their job roles. Engaged employees are actively involved, committed, and take pride in their company. Research by Bersin reveals that companies with highly engaged teams experienced a 31% decrease in employee turnover. Factors such as the significance of one’s work, growth prospects, support from leadership, and resource accessibility contribute significantly to fostering engagement.
Moreover, there’s a strong correlation between empathy and engagement. In fact, the Forbes report 2019 highlighted that 96% of employees consider demonstrating empathy a crucial factor in enhancing employee retention.
Excessive Workload on Star Performers
Putting excessive workloads on top-performing employees is a common practice, often seen as a way to reward them. However, if this workload persists for too long, it can result in burnout and eventual turnover.
Studies have shown a direct link between an overwhelming workload and increased turnover. Therefore, companies must balance providing challenging tasks to high performers and avoiding overburdening them with excessive responsibilities.
Conclusion: Ways to Lessen Employee Turnover
Employee turnover can be a expensive and disruptive force for any startup. This guide has laid out the key concepts you need to understand, from different types of turnover to common causes. Now, let’s summarize the actionable takeaways for minimizing this challenge in 2024, especially with the help of the best PEO for startup:
Prioritize careful hiring: Invest in a thorough and personalized recruitment process to find the right fit for your culture and roles. Consider partnering with the best PEO for startups to leverage their expertise in talent acquisition and onboarding.
Foster engagement and empathy: Create a work environment where employees feel valued, connected, and heard. Empower them with a meaningful workload, growth opportunities, and supportive leadership. Many PEO’s offer HR outsourcing services and employee engagement programs to assist companies in cultivating positive work cultures.
Recognize and reward achievements: Implement effective recognition programs to celebrate individual and team successes. Go beyond performance-based rewards and consider acknowledging personal milestones or contributions to culture. The best PEOs for startups can help design and implement customized recognition programs tailored to your company’s needs.