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When staff leave, this turnover can have a negative impact on your business. This is especially the case if those leaving either are key to its success and continuity or do so because they think you have treated them unfairly, which could result in tribunal claims.
Therefore, retaining staff and treating them fairly has benefits for your business. Continuity and stability become part of your business' culture, and staff feel they belong to the organisation and take pride in their work. Skills and competencies are maintained in key business areas and productivity is often increased.
Staff turnover is a business risk, but you can minimise the ways in which it affects your business through a structured staff management programme.
This guide will help you manage staff turnover by providing examples of what makes staff leave and a checklist of measures to help staff retention. There is also guidance on how to measure and benchmark turnover and how to improve the management of leavers.
Factors affecting staff turnover
Pay is rarely the only reason why people leave, although low pay levels are often a disincentive to stay. When you run a business, it is good to be aware of factors that commonly affect staff turnover rates, so that you can take steps to reduce them.
Consider how your business scores in the following areas.
Recruitment and induction
Making the right choiceÂ - are you getting the staff selection process right? Do you encourage staff to recommend friends and acquaintances for job vacancies?
InductionÂ - how do you welcome and orientate new staff? How do you let them know where things are and what they and their colleagues are supposed to do? See our guide onÂ getting new workers started.
Flexible working arrangementsÂ - do you recognise your employees' changing needs to achieve work-life balance?Â Use our interactive tool to investigate what kind of flexible working will best suit your employees and you.
Training and staff development
MotivationÂ - how supportive and encouraging is your business?
Organisational cultureÂ - what are you doing to promote an inclusive culture in which staff are aware of and committed to the business' aims?
Matching jobs to peopleÂ - are you making theÂ best use of skills, experience and competencies, and helping staff fulfil their aspirations?
Staff training and developmentÂ - are you investing in your staff by giving themÂ time and opportunities to learn new skills?
Formal appraisalsÂ - how often do you give your staff the opportunity to discuss their performance?
Effective grievance procedureÂ - do staff know how to register a grievance and are they making use of the procedure?Â
Team workingÂ - do you encourage common goals and discourage unhealthy individual rivalries?
Contracts, pay and working environment
ContractsÂ - do the terms and conditions of your contracts encourage staff loyalty?
Competitive pay rates and a fair, transparent pay systemÂ - are they in line with your industry?
Incentives and other staff benefitsÂ - are they relevant for your staff? Can staff choose the ones they need?
The office environmentÂ - is the physical office environment pleasant and well designed? Are noise, light and ventilation levels acceptable?
Monitoring staff turnover
Regular monitoring of staff turnover can show you why it is happening and enable you to control and forecast it.
Measuring and benchmarking turnover
You should measure your current staff turnover in percentage terms, following this simple two step process:
Add together the number of staff working at the beginning of the time period and the number of staff working at the end of the period and divide by two. This will give you yourÂ average number of staffÂ working within this time period - you will need this number for the next stage.
Work out the number of leavers over the time period, multiply by 100 and then divide by the average number of people working in that same period.
This formula will give you a percentage for your business, known as theÂ separation rate, that you can compare over time. You can also use this indicator to see how your business compares with averages in your industry. This is known as benchmarking.
To measure how experienced employees are being retained, you can calculate the stability indexÂ - number of workers with one year's service (or more), divided by number of workers one year ago, multiplied by 100 = Stability index percentage rate.
Patterns of employee turnover
The characteristic pattern of employee turnover is high for new starters, then decreasing. This pattern will vary in any single organisation and can be shown graphically. It is known as the 'survival curve' and can be extremely helpful in understanding the nature of employee turnover, but must always be used in conjunction with employee turnover rate.
To create the survival curve, you must plot the number of leavers against the period for which they were working.
Examining the causes of turnover
To make a meaningful assessment of your current business' position, try to identify the causes of turnover:
It is often effective to haveÂ consultationsÂ with individuals or groups of staff to root out any underlying problems and causes of dissatisfaction.
Exit interviewsÂ are carried out by many businesses and can reveal common reasons for people leaving, and highlight any emerging patterns. See our guide onÂ when an employee resigns.
Surveys of all staffÂ can often indicate general satisfaction levels, but remember to address any issues arising so that they know you take their views seriously.
Analyse your recruitment and selection proceduresÂ to see if you can identify expectations or potential problems earlier.Â Alternatively you may need to make the business' expectations clearer at the recruitment stage.
Get guidance on staff turnover and absence on the Acas websiteÂ - Opens in a new window.
The cost of staff turnover
There are a number of costs associated with staff leaving. The obvious ones are time and money, but there are also hidden costs.
The monetary and time costs of staff turnover
When a member of staff leaves, there may be costs associated with:
leaver administration tasks, eg exit interviews and payroll changes
covering a vacancy until it's filled, eg through the use of temporary staff or overtime payments
advertising for a replacement or using a recruitment agency
dealing with recruitment and selection tasks, eg checking applications, and organising and attending interviews
the induction and training of the successful applicant
The hidden costs of staff turnover
When a member of staff leaves, you may experience:
other staff expressing a wish to leave
higher levels of stress-related absence
interruptions to workflow and missed deadlines
a reduction in productivity or levels of customer service
a drop in staff morale, particularly if the leaver was popular and good at their job, and/or you need the remaining staff to take on the leaver's work
Rising employee turnover often develops into a 'vicious circle' as low morale causes more workers to leave, which in turn reduces the morale of those who remain, and so on.
Managing staff turnover
Reducing staff turnover helps to minimise the costs and negative impact of unwanted and unplanned resignations. You can help limit turnover via staff consultation, succession planning, performance management and staff incentivisation.
How to reduce staff turnover
A good recruitment and selection process can help reduce the turnover of new starters. But if your business suffers from the loss of long-term employees then you may need to look at wider issues such as organisational structure or management style. Factors that may contribute to higher turnover might include:
pay - is the rate fair or below your competitors
policies on equal opportunities, diversity and discrimination
Consulting staff and succession planning
You can be proactive about some things and prepared for others. Consider the following measures:
employee consultationÂ - consult regularly with staff about general morale and how satisfied they are with their work and working conditions - see our guide on how toinform and consult your employees
succession planningÂ - put together and regularly review your plans for covering and replacing leavers, and training and inducting new starters - see our guide ongetting new workers started
You canÂ read about how to comply with the Information and Consultation of Employees (ICE) regulations on the Acas websiteÂ - Opens in a new window.
People are likely to want to work for you if your business has a reputation for treating staff fairly and provides support, development and motivation. Ensure your staff receive regular feedback on their performance - see our guide on how toÂ use appraisals to manage performance.
It is important that your management are fully trained to deal with their own job and all management issues, such as proper disciplinary and grievance procedures. Managers will also need support for their decision making.
You canÂ read about front line managers on the Acas websiteÂ - Opens in a new window.
Employees must have personal objectives that fit in with your business and understand the importance of their contribution. Any employee personal development plan should first be approved by management.
Incentivising key staff
You may want to consider different incentives for retaining those staff with the key skills and attributes important to your business. These may include:
individual or team productivity bonuses
non-financial incentives, eg healthcare provision, flexible working
attractive pension arrangements
See our guide on how toÂ implement staff incentive schemes.
You could provide a reliable and fast system that allows employees to offer ideas for improvement at work and management response. It may also be necessary to carry out a stress audit.
You canÂ read about stress at work on the Acas websiteÂ - Opens in a new window.
Developing and maintaining skills
There is a strong business case for developing your staff as it will help ensure that your business runs smoothly and with consistently good results. You should also be able to reduce staff turnover by training your leaders to motivate staff.
Training and development
AlthoughÂ helping staff develop their existing skills and learn new ones can cost your business time and money, training and development is crucial to improving your business' performance and can actually help prevent excessive turnover.
This is especially the case if your staff see that what they are learning is relevant to them and the business, and they can readily put their new knowledge into practice.
It's important that your training and development policy is fair and clearly understood by your staff as early as possible in their employment. If they know that you will spend time training and developing them, they are more likely to continue working for you. See our guide on how toÂ set up employment policies for your business.
Training and development can be delivered by experienced workers through on-the-job training or from external sources such as training organisations or consultants. See our guide on how toÂ fit the training to your needs.
Leadership and people management
The culture in your business can influence retention of staff, and is often defined through leadership. You can foster leadership skills in your staff that will promote a culture they want to belong to.
People who feel good about their development and contribution to the business are likely to reflect this in the way they help drive the business forward, and develop other workers.
Finally, remember that good people management helps keep good staff. A poor relationship with a manager - who may be skilled in other areas - is one of the main reasons why workers decide to leave. Therefore, you may want to train your managers to coach and supervise other people.
Checklist: controlling staff turnover
Staff turnover canÂ help introduceÂ fresh ideas and skills into your business, but too high a level of turnover can damage its performance.
You will be better prepared for dealing with leavers if you understand why people leave, and if you structure a programme to manage staff effectively from the time they are recruited. Make sure you:
keepÂ recordsÂ of leavers
monitor yourÂ rate of turnoverÂ at regular intervals
benchmarkÂ your staff turnover
address issues facingÂ new joinersÂ andÂ long-term workers
analyse yourÂ business culture
refine yourÂ recruitmentÂ and selection process
review and benchmark yourÂ pay and benefitsÂ policy
assess yourÂ training, developmentÂ andÂ promotionÂ policy
refine yourÂ appraisal processÂ and management of individual/team performance
review yourÂ work-life balanceÂ arrangements - are your workers able to manage both their home and work commitments?
assess theÂ management styleÂ of your business
formulateÂ contingency plansÂ for coping with leavers
create and regularlyÂ review succession plans
examine your staff and your managers'Â leadership styles
A common way of discovering why employees leave or how current employees feel about your business is through exit interviews and attitude surveys.
Exit interviews and attitude surveys
When an employee leaves, use an exit interview to ask them their reasons for leaving and what they think the positive and negative things are about your business. It may be difficult for an employee to express their honest reasons or opinions, but you can help them to be open by using some simple strategies, such as:
interview away from work space
do not use the employee's direct manager
explain why the interview is needed
assure the employee answers will not affect future references
You should objectively review any information you gather from the interview and use it as a foundation for making improvements to your business. This could in turn strengthen your business' name, helping to retain existing staff and attracting others to your business.
For an attitude survey, you can include all employees or select a sample for more in-depth interviews. If you use a questionnaire, make sure it is well designed. Another method to consider is a confidential focus group supported by someone outside your business.
Make sure the survey is freely communicated to employees and acted on, otherwise it may well be counterproductive.
Here's how improving procedures helped us manage staff turnover
Shuttleworth Veterinary GroupÂ - Opens in a new window
Sue's top tips:
"Monitor staff turnover, but don't panic every time someone leaves - a certain level of turnover is normal and healthy."
"Invest in a structured training and development programme."
"Involve everyone in your vision for the company."
Shuttleworth Veterinary Group has been established in Rossendale, Lancashire for over 20 years. Two years ago, practice owner Sue Shuttleworth piloted the Investors in People (IiP) Work-life Balance Model (WLB), resulting in overhauled procedures and a revised management style. One of the benefits has been improved motivation and retention among the practice's 20 employees.
What I did
See the big picture
"High staff turnover can be a feature of many veterinary practices and ours was no exception. There's no single thing that makes staff stay or go, you have to look at the bigger picture and go through the business from the top down. That's what IiP and WLB made us do.
"We started by involving the team in redefining the mission and vision for the business, which included a strong emphasis on improving work-life balanceÂ - a big issue in our profession, as the hours can be unsociable. We then evaluated our current procedures in areas like recruitment, exit interviews, training and team working."
Implement new procedures
"We recognised that although we were already doing many of the right things, procedures needed to be formalised and there were gaps to be filled. We began with a staff questionnaire, which we've continued to issue every six months. This helped us to identify areas where we could be doing more to retain staff.
"Among other measures taken, we introduced weekly staff meetings and a monthly newsletter, implemented a rolling training programme and began conducting formal exit interviews. We also refined our recruitment process to ensure a better 'fit' among candidates. After all, one of the keys to managing staff turnover is to employ the right people in the first place."
"Consulting and informing staff about new procedures has made them feel part of the business in a way they didn't before. We've also trained line managers to communicate policy and procedural changes so the right messages filter down from the top and everyone feels involved.
"Overall, there has been a change in the company culture, with greater emphasis on team working and a no-blame philosophy that's encouraged a more proactive approach to problem solving. We've found that trusting people and giving them control over their work can be a powerful motivator and reason to stay."
What I'd do differently
Seek input sooner
"We've spent a lot of time communicating our mission and values to staff at all levels, but I wish we'd sought their input right from the beginning."
"We didn't realise how long it takes to truly change a company's culture and management style. It took around 18 months before we saw the maximum benefit from the policies and procedures we'd put in place."
08457 47 47 47
Related guides on businesslink.gov.uk
Use our interactive tool to investigate what kind of flexible working will best suit your employees and you
Making a job offer and getting new workers started
Set the right pay rates
The employment contract
Flexible working - the law and best practice
Meet the need for work/life balance
Implement staff incentive schemes
Fit the training to your needs
Use appraisals to manage performance
Recruiting and interviewing
Workers leaving: the basics
When an employee resigns
Inform and consult your employees
Manage absence and sickness
How to deal with stress
Set up employment policies for your business
Improve the performance of your staff
Skills and training for directors and owners
Develop your management team
Evaluate your training
Here's how asking employees for ideas improved our business
Here's how a staff incentive scheme improved our business
Related web sites you might find useful
Managing attendance and employee turnover guidance on the Acas website
Staff motivation online courses on the learndirect business website
Employee retention and turnover explained on the Chartered Institute of Personnel and Development website
ICE regulations explained on the Acas website
Front line managers guidance on the Acas website
Stress at work guidance on the Acas website
Leadership online courses listed on the learndirect website
You can find this guide by navigating to:
HomeÂ >Â Employment & skillsÂ >Â Managing changeÂ >Â Control staff turnover
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