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7 Keys to Combating Employee Churn

7 Keys to Combating Employee Churn

Employee turnover could be costing you more than you realize. While the financial cost of replacing employees can total thousands of dollars a year, the residual effect of high churn on remaining staff and customers could add up to even more significant losses for your company.

According to the Society for Human Resource Management (SHRM)/Globoforce 2015 Employee Recognition Report, employee retention/turnover is the number one challenge facing most businesses today. Forty percent of the organizations surveyed cited this issue as the most important challenge facing their businesses; 29 percent even admitted to be stressed about finding replacement talent.  

In 2015, the average annual churn rate in the United States was 16.4 percent, up from 15.7 percent in 2014, according to Compdata Survey. Employers in the South Central region had highest rate at 17.7 percent, while those in the Northeast recorded 14.1 percent. Across industries, healthcare, hospitality and manufacturing continue to experience the highest turnover.

Understanding the Effects of Churn

High churn rates can have a huge impact on a company’s bottom line. Lowering the rate by even half can result in significant revenue differential. For example, SHRM provided a scenario in which a company with 1,000 employees averaging $50,000 per year experienced a staff turnover rate of 10 percent. The annual cost of employee turnover to that company was $7.5 million. However, if the rate could be cut in half, the company would actually add $3.75 million to the bottom line.

But for many companies, employee turnover has far-reaching effects across all areas of the business, most notably in recruiting and job training costs. The Center for American Progress estimates that replacing a single employee costs approximately 20 percent of that employee’s salary. This is in addition to the lost expertise that can take years to replace.

Churn also affects two other critical areas of a business: productivity and employee morale. When companies are short-staffed, products or services can suffer drastically, straining relationships with customers and vendors. And remaining employees, forced to take on additional responsibilities and work overtime, can become disengaged and stressed. In fact, a study by the American Institute of Stress indicates that workplace stress leads to almost 50 percent in voluntary turnover.

Retaining Millennials

Voluntary turnover is the highest among the Millennials, who have surpassed the Baby Boomers in the labor force. Be aware that a good majority of them will not be with you for the long term. In a December 2015 workforce survey by Future Workforce, a whopping 91 percent of Millennials said they expect to stay in a job for less than three years.

In the survey, Millennials stated three reasons why they are likely leave their current positions: (1) a desire to explore options; (2) a desire not to get bogged down in the same job; and (3) a desire to seek opportunities for faster career advancement.

On the flip side, many business leaders feel that Millennials are also one of the smartest, most talented and most creative generations. To retain them as employees, they need to feel challenged and valued. Offer career advancement opportunities, whether it is in upskilling or changing positions within the company. And most importantly, provide flexible work hours as they absolutely insist on a work-life balance.

Keys to Combating Churn

To help you recruit and retain the best talent for your organization, here are seven keys to combating churn:

  1. Carefully vet all your candidates. While some may possess all the required skills and even the nice-to-haves (additional skills) you desire, they may not necessarily be the best fit for your company culture. Always, always do reference checks.
  2. Compare your compensation and benefits to those of your competition. Are they in line with what is being offered at other companies? If not, make the necessary adjustments to ensure you are competitive in the marketplace.
  3. Have your HR department map out career advancement plans for all employees.  Ensure that each employee understands his/her intended career path and make adjustments as necessary.
  4. Provide on-going training and upskilling opportunities to employees. With emerging technologies bringing revolutionary changes, new skills will need to be learned.
  5. Create a culture in which employees have the work-life balance they desire. Offer flexible hours and the opportunity to telecommute, where possible.
  6. Keep a watchful eye on employee morale. It is the best indicator of trouble within a company. Making adjustments to your business is more cost-effective than incurring the high costs associated with employee churn.
  7. If you experience high turnover rates, review national trends as well as those within your industry to gain a better understanding as to why there is an increase. Take the necessary measures to combat the trend.

Employee churn can be costly. Remaining aware of employee needs and having employee-focused programs and policies in place will help keep your best talent on board and protect your bottom line.


Explore FieldAware's blog and visit our website to learn more about how our field service management solution can help to combat employee churn.