1Employee turnover is a sticky subject for many firms, especially in industries such as hospitality and healthcare. High turnover rate leads to high people cost, around 33% of employee compensation packages including salaries and benefits. In addition, the ripple effects of derailed projects, dampened morale, etc.

According to the CIPD’s Labour Market Outlook Report (Spring 2019), 41% of employers disclosed that they were having more challenges filling in vacancies than the previous year and 33% reported employee retention being more difficult. Certain industries are struggling with trend more so than others; hospitality sector, for instance, experienced 90% turnover rate due to the looming threat of Brexit which would impact the flow and movement of foreign workers on which hospitality workforce depends.

Given these moving parts, how should HR and/or Recruiters think about its people strategy and talent pipeline?

First, think about your organisation’s ideal turnover and retention rate

Since the goal of recruitment is to find talents that will stay long term and add value to the company’s bottom line greater than the cost of their hire/employment (ROI), it is sensible to have your recruiting strategy aligned to that of the employer’s overall people goals including attrition rate.

In order to develop a data-driven strategy, you should track tracking and retention separately – meaning that you should segregate internal transfer from company departure. Voluntary turnover (i.e. employee resignations) vs. involuntary turnover (i.e. layoffs) should be segmented as well.

Then, observe the trends in your own verticals and set appropriate benchmarks for target employee turnover and retention rates.

Second, understand the turnover from the employees’ POV

Employees are pushed or pulled (or a hybrid of the two) into new jobs or employers. Highly talented workers will be sought out by other recruiters and will constantly want better offers that your organisation may not be able to accommodate. If the work environment is unbearable, people will be forced to find alternatives.

Some level of turnover is desirable. It will help naturally weed out ones who are bad fit and also infuse new ideas and disciplines into the organisation. And sometimes, employees who leave for something different come back after a few years.

So the natural inflow and outflow of people is actually good for both the employees and employers – an important concept to keep in mind when defining people goals.

According to a study by Investors in People (IIP), over 30% of workers are unhappy with their current role (‘push’ factor for departure). The same study identified the top 5 reasons for employee turnover: Pay, Bad Manager, Underappreciation, Career Growth, Work/Life Balance.

While these studies are helpful, there is no better way to collect the most relevant data than asking your own employees. Most companies conduct exit interviews but many employees are often reluctant to be forthcoming in them. Thus, having an external interviewer conduct these interviews might produce more truthful data.

Lastly, take an end-to-end approach to managing employee lifecycle

Having hiring, on-boarding, training, internal mobility, and offboarding in silos could cause the leadership (as well as each individual owner of each component of the employee lifecycle) miss out on important insights from the feedback loop.

You should know if there are patterns worth investigating. Are there specific groups that keep losing people? Maybe that group has a bad manager and/or culture. Are there certain types of employees (their background, attributes, etc.) that seem to be less satisfied with the firm? Maybe their characteristics and background are not actually a good match for the roles they are being hired for. Are you experiencing difficulty with ensuring employees are active in continuous learning and upskilling? Maybe you should look for candidates who exhibit commitment to continuous knowledge acquisition (e.g. taking extra courses, active in extracurriculars, etc.).

Upskilling existing employees is the most popular measure taken by employers to fill in ‘hard-to-recruit-for’ positions, indicating that recruiting should not be so outside focused. Recruiting for high-talents internally could help reduce the cost of recruitment and significantly reduce harmful turnover (i.e. losing talents you don’t want to lose).

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