Rising turnover rates and employee retention
November 4th 2023 | Posted by Phil Scott
Globally, turnover rates will reach 41.4% this year, according to a study by Remote.
In the UK, the rate will be lower at 35.6%; a figure that reflects the average turnover in the country in recent years. Unsurprisingly, entry level roles experience the highest turnover rates as employees seek to progress their careers and increase their salaries.
While salary is certainly a cause of turnover across the board, other factors have a big impact, including flexible working. According to the Remote study, businesses that have hybrid working in place have the lowest turnover rates on average. Looking forward, high turnover seems set to continue, and HR teams will be central to helping organisations retain talent and avoid costly recruitment.
Turnover rates predicted to continue rising.
In the UK, turnover rates have increased by 7.7% in the last four years. The highest rate is in accommodation and food services. According to industry experts, this upward trend is likely to continue. This situation is something that businesses need to be aware of in order to ensure they have a high performing workforce in place enabling them to remain competitive.
Why turnover is important to businesses
In a climate where turnover rates are high, businesses must be aware of their staff turnover. Having this data allows them to understand trends and take action to improve retention where necessary. HR managers and their teams take the lead in this area, and ensure the business is doing all it can to retain top professionals.
This work is especially important given the environment businesses are operating in. We have an ageing population, a growth in early retirement, and high long term sickness figures. These circumstances have combined to create a competitive jobs market where attracting top talent is difficult. Add to this situation the fact that it takes an average of 40 days to recruit, and costs around £7,729, and it’s clear just how essential effective retention is.
Hybrid roles make employee retention easier
As we have emerged from the home working days of the pandemic, hybrid roles have become the way forward. These roles have lower turnover rates on average. This is not surprising when you look at the results of Envoy’s UK Return to the Workplace Report. Highlights of the report include:
- 57% of the workforce prefer hybrid working.
- 24% of those likely to look for a new role would do so due to a lack of flexible working.
- 38% of people would look for a new role if their employer did not have flexible or hybrid working policies in place.
Hybrid working is not the only factor that aids retention. Salary remains a factor, especially for younger employees. For businesses unable to increase salaries significantly, HR managers advise the senior team on other methods of retention such as potential for progression, learning and development opportunities, and employee well-being programmes. Top HR professionals recognise that the most effective way to guard against high turnover and improve retention is to combine these measures with flexible and hybrid working practices.