The Truth About Employee TurnOver

We all have a story of an employee that we worked oh-so-hard to recruit. We spent hours emailing back and forth, on the phone, and in person.

And then finally, you reach your new employee’s much-anticipated start date. Maybe things got off on the right foot, or perhaps it was a slow start. Either way, it didn’t take long for your new star recruit to quit the company.

These stories are common, yet their a huge point of frustration and disappointment each and every time they happen, for each and every HR professional.

Employee Turnover Everywhere

Most growing companies spend time, resources, and money on employee turnover. They struggle to maintain talent and retain employees. Worse yet, most of these companies are not properly calculating the annual costs of such high employee turnover.

When you do run the numbers, you can clearly see the problems caused by this costly trend. The tech industry, which holds the enviable first place position for employee turnover, sees 15% employee turnover each year. This can be easily attributed to the high competition and demand for tech positions combined with the fierce talent war funded by large enterprises.

But even with money to throw at new recruits, large tech enterprises aren’t faring all that well in said talent wars. At Uber, the tech company with the highest employee turnover, the average employee stays with the ridesharing company for a mere 1.8 years, while file file-sharing Dropbox can count on keeping employees for 2.1 years.

And though big tech’s turnover woes may seem beneficial for small and medium-sized businesses, it actually spells trouble for them as well. Their limited resources mean that they simply can’t compete for talent, and a lost employee at a small company equates to a bigger chunk of lost overall company knowledge and productivity.

Calculating Your Annualy Turnover Cost? Better Start

But before you dive straight into creating a talent career development, there are a few parameters to measure and pain points to consider. And by supporting your KPIs with meaningful data and hard numbers, you’ll be able to make the right moves for every stage of your company.

First things first: are you actually calculating your annual employee turnover cost? And why is it important?

Understanding the numbers that drive employee turnover can shed light on the daily decisions we make. It can help justify what we do, mitigate inefficiencies, and help us steer clear of problems.

Let’s look at an example. Sheila is a began her role as a junior marketing analyst immediately following her graduation. Then, when one of the senior business analysts resigned, she found herself one of the company’s most important intersections — analyzing different aspects of the company’s product usage and ROI.

And though her new responsibilities entail more work and longer hours, they didn’t come with a salary raise. Finally, after months of wholly dedicating herself to her role, she met with her manager to ask for a raise that would reflect her greater contribution. During the meeting, she mentioned that she’s been approached by several companies offering more than a 50 percent increase in her current pay. Now, assuming that Sheila is performing above and beyond all expectations, what would you do?

In this situation, a clear calculation of the actual cost to replace Sheila would be the wisest approach. Then, you can decide on a salary increase that works best for both parties.

Things to take into consideration: 

  1. Salary of a potential replacement. How much would it cost in comparison to Sheila’s salary?
  2. Time to recruit a replacement. How many HR and business hours will be dedicated to the interview process?
  3. Cost of an unfilled position. What is the monthly loss of not having anyone in this position?


If you have a clearly defined answer to all of these questions, you’ll be able to better plan your workforce and react to situations like Sheila’s.


7 Signs That Your Employee is About to Quit

We know that employee satisfaction matters. In past posts, we’ve talked all about why happy employees make for a better organization, increasing employee engagement, and designing your onboarding program to keep employees around for the long haul.

But you can’t always make everyone 100 percent happy. Employees leave their employers every day. Maybe they spot a shiny new opportunity. Or perhaps they see a chance to upgrade their terms and compensation. Or possibly, they wanted to relocate.

Regardless of the reason, employees always seem to quit at the worst time — when the team’s other backend developer is about to give birth, after you’ve recruited two new junior employees on the team and expected your more senior employee to train them, or during Q4 when everyone’s out for the holidays and there’s no one around to handle new recruits.

A loss of an employee means a loss of knowledge, of a perfectly tuned skill set, and of course, of time and money spent recruiting and training employees. And financially speaking, those expenses really add up — employee turnover can cost somewhere between 30 to 50 percent of an employee’s annual salary. If you’re hiring a senior executive, multiple that number at least three-fold — you’re looking at 150 percent loss.

So, what can you do to anticipate employee turnover? Here are a few signs of troubled times ahead.

  • They’ve hit a personal milestone. Whether it’s a birthday, work anniversary, or class reunion, these mile markers of our time on earth often lead us to contemplate our own life. Likewise, employees are likely to reevaluate their career satisfaction during these reminders of times-gone-by.
  • They’re becoming more active on Linkedin. If your employee is gaining new connections by the day, liking all the posts on their feeds, or suddenly publishing long-form posts on LinkedIn, then keep an eye out — they may be ready to pounce on a new opportunity.
  • They didn’t get the raise or promotion they were expecting. Progress and rewards make employees feel that they’re work is worthwhile. On the other hand, stagnancy breeds boredom and contempt, leaving dedicated employees feeling disheartened and unappreciated.
  • Their work wife/husband is leaving the company. Having a friend at the workplace can make the experience. It can make work more enjoyable and meaningful. So, when that friend takes off, it can change the employee’s entire work experience and outlook on the company.
  • They’re taking more time off. Notice that one of your employees is suddenly taking way more time off than ever before? They very well could be interviewing with other companies on the DL.
  • They’re struggling to fulfill their professional goals. Perhaps the role is simply not right for them. If they’re giving maximum effort to fulfill the minimum requirements, they’re likely in above their head, an altogether frustrating experience.
  • They have a new manager. They say employees don’t leave companies… they leave managers. A new manager can spell change in an employee’s role, responsibility, and interpersonal connections.  


But what do you do when you notice that your employee is about to call it quits? It’s time for a friendly chat. Talk openly and honestly to understand their mindset and morale and ask what exactly you can do to improve their experience at your company. While it may be too late, you could just as easily catch them just in time to convince them to stay.