Is HR viewing the concept of employee turnover all wrong?

The perpetual ebb and flow of talent within organisations is a phenomenon that every business must grapple with. Traditionally, the concept of regular employee turnover is considered a negative. After all, knowledge and experience leaving the company and the cost of hiring are both net negatives. However, despite these elements, there are some vast positives to a healthy cycle of retention and turnover, that form a much bigger picture.

Is turnover inherently good or bad? This is the question we’re here to answer.

The current state-of-play for employee turnover within the UK

Firstly, let’s delve into the current state of employee turnover within the UK. In short, the cost of turnover is high. In fact, according to Cendex’s 2023 Turnover Report, replacing a single employee can take up to 28 weeks and cost over £25K in lost productivity, making it a big risk for any business. To add even more urgency to this issue, the data found that the overall voluntary labour turnover rate was 13.8% over 2023.

Moreover, one in seven employees resigned last year, with analysis showing that the public and not-for-profit sectors experienced the highest resignation rates. This could be due to a number of factors, but lower salary levels are not to be excluded as one of the possible reasons at the heart of these higher labour turnover rates.

The motivation behind career moves

According to the Cendex study, the key reasons given by organisations as to why they experienced employee turnover were:

• Keeping salaries competitive in the job market
• Managing hybrid working preferences and working environment
• Providing employee progression opportunities
• Managing wellbeing issues including stress, burnout and work-life balance challenges.

Additional research from the CIPD found that poor leadership is a key factor for many job moves. When asked why workers left their last organisation, one in five people (21%) gave ‘being unhappy with the leadership of senior management’ as a reason, rising to 30% for those who’ve changed jobs in the last 12 months.

Lack of development opportunities was also raised in the CIPD research as a key motivation in job hopping. Just 39% of lower earners (those earning up to £20,000 per year) stated that their job offers good skill development opportunities, compared with 72% of higher earners (those earning £60,000 or above per year). And only 25% of lower earners say their job offers good career advancement prospects, when compared with 51% of higher earners.

Charlotte Schaller, Partner and Head of Assessment at Aon says that, whilst there is inevitably employee turnover in all organisations, getting development right is fundamental part of retention.