Companies today cannot afford to think of high employee turnover as a natural consequence of a fast-paced job market — replacing an employee who quits costs an average of 21 percent of his or her annual pay, according to research cited by the Harvard Business Review.
The reasons employees leave one company for another are simple, data analysis from Glassdoor suggests. Armed with this knowledge, employers can become better equipped to improve retention while simultaneously promoting higher employee engagement and satisfaction.
Here are four things to know about the drivers of employee turnover and tips for improving retention, according to the Harvard Business Review.
1. The No. 1 reason employees leave their jobs is an unclear path for development and growth in the company. Allowing employees to stagnate in their roles significantly increases the likelihood they will leave for another company to get to the next step in their career.
2. In addition to promotions and professional growth, pay matters. The Glassdoor analysis found competitive pay is essential to retaining talent — a 10 percent pay raise is associated with a 1.5 percentage point increase in the likelihood that a worker will stay with the company the next time they change roles.
3. Positive workplace culture is another strong driver of employee retention. According to the analysis, employees who switch companies usually go to those with higher ratings on Glassdoor. Employees who feel personally committed to a company and its value system are more likely to stay, while those who don't feel such alignment are more likely to look for a job elsewhere.
4. Surprisingly, a company's senior leadership has minimal effect on employee turnover, the analysis found. Employees' decisions on whether or not to leave a company have more to do with their own prospect for job growth, or perhaps their relationship with their manager, than they do with the CEO. Even the most inspiring CEOs may not engender more loyalty among employees who feel their careers are stagnating.