the top causes of employee turnover and how to reduce it.

Today's employees have options — and they're not afraid to use them. With job hopping on the rise, it's time for businesses to take a hard look at the causes of employee turnover and why their talent is jumping ship.

Attitudes to work are changing in Canada. Randstad’s 2024 Workmonitor report found that:

• Almost half (47%) of Canadians would quit a job that was stopping them from enjoying life.
• Around two in five (41%) would consider resigning if they had to spend more time in the office.
• A third (32%) would leave their job if it didn’t offer career advancement opportunities.
• Nearly a quarter (23%) would quit if they didn’t have opportunities to upskill and future-proof their career.

If you’re not taking these factors into account, you risk losing your best talent. The good news is that you can control employee turnover to some extent.

Firstly, you can identify retention problems in specific teams and departments by tracking employee turnover rates. Secondly, you can address the things that really matter to employees, like learning, work-life balance and career growth opportunities.

Let’s look at some of the leading causes of employee turnover and explore valuable retention strategies to keep your top performers.

why does employee turnover matter?

Simply put, employee turnover matters because it costs you money. First, it’s expensive to keep hiring new employees. According to Gallup, the average cost of replacing a frontline employee is 40 percent of their salary. However, this figure rises to 80 percent for professionals in technical roles and an eye-watering 200 percent for leaders and managers.

beyond recruitment expenses, high turnover has a ripple effect. New employees aren’t initially as efficient as existing staff, while remaining staff may struggle with lowered morale.

Occasionally, the resignation of a key team member can trigger a domino effect, leading to a wave of departures.

The lesson is clear. HR managers and corporate leaders must analyze staff turnover to identify why employees are leaving and to implement meaningful changes.

what is employee turnover?

In a nutshell, employee turnover is the rate at which employees leave your company, requiring you to hire or reassign staff to maintain operations. However, there are several types of employee turnover, some desirable and some undesirable. Below, we’ll break down the different classifications of terminations, including voluntary and involuntary. We’ll also talk about redundancies.

• desirable versus undesirable turnover
• voluntary resignations
• involuntary terminations
• redundancies

why measure employee turnover?

Keeping tabs on turnover gives you clear insight into your organization's health. When staff leave more frequently than expected, you'll need to step up your hiring efforts—and that comes with significant costs.

Think about recruitment fees, training time and lost productivity while new hires get up to speed. These expenses can build up quickly, especially if you're dealing with higher-than-average turnover rates.

Most organizations look at their numbers every three months or once a year. While broad company-wide figures tell part of the story, examining patterns across different teams and locations can reveal valuable patterns. For instance, you might spot that one branch has stellar retention while another has high rates of voluntary turnover.

The key is consistent measurement. Regular tracking helps you:

• spot early warning signs
• plan your recruitment budget
• compare results across your organization
• make informed decisions about retention strategies

how to calculate the employee turnover rate

Working out your turnover rate is straightforward—you just need accurate HR data and a simple formula. Here's how to break it down:

1. Pick your timeframe. Start by choosing how often you want to measure: monthly, quarterly or yearly. Most companies look at quarterly or annual figures, as these give a better view of long-term patterns.
2. Count departures. Tally up everyone who's left during your chosen period. This includes resignations, dismissals and retirements.
3. Calculate your average workforce size. Take your headcount from the start of the period to the end of the period. Add these numbers and divide by two.
4. Run the calculation. Here's the formula: (Number of departures ÷ average workforce) × 100 = turnover rate percent

example of employee turnover formula

Imagine you employed 200 people on January 1st and 196 people on December 31st. Between January 1st and December 31st, 20 people left your company (actual employee turnover). With those figures in mind, here’s how you’d calculate your employee turnover percentage:

• (200 + 196) ÷ 2 = 198 average employees
• (20 ÷ 198) x 100 = 10.1 percent employee turnover annually

If you employ temporary or seasonal workers, measure turnover for this group separately from full-time and part-time employees. That way, you can track staff-related expenses more accurately.

what is a good employee turnover rate?

A zero percent employee turnover rate simply isn’t realistic or desirable. So what is a realistic turnover percentage, then? The answer varies depending on the region, industry and roles within those industries.

In addition, data methodology and world circumstances affect rates. For example, Mercer's research found that the turnover rate in Canada rose after the pandemic, growing from 12.4 percent in 2022 to 15.5 percent in 2023 before dipping back to 11.9 percent in 2024. The Canadian retail and wholesale industry has the highest turnover rate in 2024 (25.9%), while the energy sector has one of the lowest (8%).

By tracking employee turnover, you can spot concerning trends and compare your business to others in your industry and region. Before we focus on improving your staff turnover rate, let’s discuss why employees move on.

what are the causes of employee turnover?

Employees leave for various reasons, including poor work conditions, better pay elsewhere and a desire for career progression. Some motives are out of your control, such as a change in a family situation, relocation or illness.

However, most voluntary resignations happen because of management problems, lack of opportunity, low job satisfaction or burnout. The State of the Global Workplace 2024 Report from Gallup provides insight into workers’ mental states and reasons for job dissatisfaction. Let’s dive deeper into some common turnover triggers.

top causes of employee turnover

management problems

When managers constantly criticize employees, the work environment becomes unbearable, driving employees to quit. Supervisors who micromanage — or take the opposite tack and leave employees entirely to their own devices — also increase staff turnover. People who find their line managers difficult to work with often dread coming to work.

uncomfortable work environment

Sometimes, the problem isn’t the boss but the coworkers. If the company culture doesn’t provide a safe, inclusive work environment, people feel stressed and are quickly willing to jump ship.

burnout

High-pressure working environments and too little downtime invariably cause employee burnout. When people feel overworked and overcommitted, they begin to feel overwhelmed. Unless they’re given opportunities to restructure their schedules, these workers seek new jobs.

boredom

Not every job can be as exciting as we would like it to be. However, companies need to find ways to challenge their employees. Changing up tasks and providing chances for upskilling can help prevent workers from feeling disengaged — a feeling over three-quarters of participants in the Gallup poll admitted to.

not enough flexibility

Randstad’s Workmonitor report revealed that almost half (47 percent) of Canadians say working from home is non-negotiable. A similar number (52 percent) say their employer isn’t providing enough flexibility around working from home. If your company isn’t keeping up with flexible working opportunities, you may need to prioritize a hybrid workplace to attract talent.

reducing employee turnover

Understanding how these key triggers apply to your organization is the key to hanging on to your best talent. Only then can you devise a specific strategy to combat each situation.

With the knowledge of your organization’s dynamics, including its chain of command and current employee training and incentive programs, you can make targeted changes. For example, here are three actionable steps to boost employee retention.

create training opportunities

Investing in comprehensive training can significantly reduce employee turnover. In particular, the widespread adoption of artificial intelligence (AI) is fuelling a demand for better training in this area. According to LinkedIn’s 2024 Workplace Learning Report, four in five people would like to learn more about how to use AI in their jobs.

Training programs allow employees to develop new skills and explore different career paths within your company in a practical way to combat boredom and reduce burnout. Ideally, training should start at the onboarding stage and then continue on an ongoing basis.

Furthermore, management training can help develop the traits necessary to create effective leaders. Employees desire a fair, encouraging boss who provides positive feedback and recognizes their talent.

offer flexible scheduling

Many employees benefit from flexible schedules and the opportunity to work remotely, such as parents who need to pick kids up from school or employees with long commutes. Other individuals prefer to work on a per-project basis rather than a per-hour basis.

In the manufacturing industry, multi-shift days lend themselves well to flexible scheduling. Likewise, many companies in the logistics sector operate 24 hours a day, 7 days a week, making them well-suited to flex scheduling.

However, there’s a growing disconnect between employers who want workers back in the office and employees who wish to remain working from home. Nearly one-third (30%) of participants in Randstad’s Workmonitor survey said their employer expects them to be in the office more now than six months ago.

Understanding what employees really want and adapting to their needs allows you to get ahead of competitors when recruiting and retaining talent.

implement a recognition program

Well-designed employee compensation and recognition programs give workers a lift and help to improve retention rates. Traditional awards like Employee of the Month still work well, as do bonus checks and project-based awards. To make the most of your recognition program, acknowledge achievements promptly and provide meaningful feedback.

working with a trusted partner

If you’re looking for strategies to reduce employee turnover, the first step involves understanding the top causes of employee turnover. Then, consider turning to a trusted staffing partner like Randstad. We can help identify and address turnover drivers, ensuring you have a more productive and stable workforce.