A high employee turnover rate can be expensive. Businesses lose revenue by having to replace employees, interview new hires, and train them. The main reason for low employee retention is poor management practices, including poor communication and a lack of employee respect. In this article, you’ll find tips for businesses that want to reduce employee turnover by empowering employees to implement change quickly and minimize employee turnover. Plus, you’ll learn how to calculate the employee turnover rate.

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How to Reduce Employee Turnover

1. Plan to retain employees

Employee turnover is a common problem for many businesses. It can be costly and time-consuming to train new employees, but it doesn’t have to be this way. One of the best ways to reduce employee turnover is by encouraging retention early in an employee’s career. This is especially true for high-level positions, where your company will see a higher turnover percentage as employees move up the ranks. Retention is a critical component of a company’s overall success. Employees must know their role in the company and understand what the company expects from them. This is especially true for new hires who may not be familiar with your company’s culture or goals. Companies that often hire externally for leadership roles instead of promoting from within typically see more employee turnover.

2. Keep communication open

Ensure all employees feel like they’re part of a team and can communicate with their superiors when they have questions or concerns about the business or their job responsibilities. Communicate regularly with all employees about your company’s values, vision, mission statement, and goals as part of this process, so everyone knows where they fit into the greater scheme of things at work. You’ll prevent involuntary turnover because by over-communicating the needs of the business, you’ll be less likely to lay off teams or individuals for performance.

reduce employee turnover

3. Offer Flexibility

Employees are constantly looking for ways to make their lives easier. For example, if they can take care of some day-to-day tasks, they’ll likely stick around and help you grow.

Offer your employees flexibility in their work hours. You may not control when employees can work outside standard business hours as an employer. Still, you can offer them flexibility in this area by allowing them to work remotely. You can also consider offering telecommuting options or flexible schedules that allow employees to choose between working from home or coming into the office on different days of the week.

Give your employees a way to save time by sharing information. For example, many companies use online tools that allow employees to communicate with each other through social media channels like Slack or Facebook Groups. These tools help reduce communication costs because everyone uses the same system rather than having individual conversations with different people each time a new issue arises.

4. Recognize and Reward Employees

Recognizing and rewarding employees is a great way to increase employee morale and employee retention. Many leaders have tried to motivate and recognize employees by giving them awards, bonuses, or other perks, such as free lunches, but these strategies are often ineffective. Why? Because most employees are not motivated by rewards alone. They are most motivated when they feel the reward is more than just a token of recognition for doing a good job.

To motivate your employees, you need to recognize their accomplishments and show your appreciation for their contributions to the company. A simple “thank you” or “good job” at the end of a project should be sufficient.

improve employee turnover rate

5. Maintain a Healthy Work-Life Balance

Shared values and a strong sense of commitment to the company are essential. But employees with a healthy work-life balance tend to be happier and more engaged. For example, one survey found that those with a balanced lifestyle were twice as likely to be satisfied with their jobs than those who struggled with work-life balance. Allowing employees to manage home responsibilities as needed during work hours, helps them manage the roles of parenting or other responsibilities. Alternatively, you can prevent employees from working in the evening and on weekends by cutting off online communication in those hours for them. Giving a healthy work-life balance will prevent burnout, increase employee engagement, and employee turnover.

6. Create Learning and Development Programs

Employee turnover can be a costly problem for organizations. The costs associated with hiring and training new employees and losing productivity due to higher staff turnover are significant. Learning is a lifelong process, but it doesn’t have to be expensive. Instead, create a training program to help your employees learn new skills and become more valuable to the company.

Suppose you’re looking for ways to reduce employee turnover; consider creating learning and development programs for employees who want to improve their skills or advance in the organization. These programs can effectively attract and retain top talent, especially when customized for each individual.

For example, if one of your employees has been with the company for many years but is having trouble keeping up with the latest technologies or trends, consider offering a training course that focuses on those areas. This will allow them to grow as employees while contributing to your company’s success.

7. Help employees find a career path

If your employees don’t feel like they’re in control of their careers, they’ll be less likely to stay with you. No matter how much money you make or how great the job is, this can be a problem. You must create a clear career path and ensure they know what’s in store. Help improve your employee turnover by promoting from within at every opportunity. You can help set up employees for success by investing in every employee’s career advancement by asking them how they’d like to grow in their career. Most people want to move up the corporate ladder, so creating paths for an upward trajectory will be key for improving your turnover rate.

career path

8. Hire the Right Team

Hiring is the most critical decision you will ever make. If you hire the wrong people, your company will suffer from it. Hiring the wrong person can be costly and time-consuming. Hiring the right person can save your company a lot of money and frustration. It’s not about how much money you spend on hiring but how much money and time you spend trying to fix problems caused by poor hires. However, hiring too slowly can also impede productivity. So finding the right balance of hiring the right people in a timely manner will also help improve your turnover rate.

9. Be Transparent

If you want to reduce employee turnover, one of the best ways to do so is by being transparent with employees. You need to tell them your expectations and be honest about how their performance will affect those expectations. If you’re not transparent, employees will likely be confused and frustrated by their situation when negative feedback arises. Employees who feel they’re being mistreated may stop working hard or perform poorly to seek new employment elsewhere.

When employees find out they’re being let go or terminated, they also want to know why. If you can’t provide a good reason for their termination, they may start looking for other jobs right away to get ahead at your company instead of waiting until after the fact when they have more time on their hands. This can be devastating for your business because it could cause employees to quit before they leave. Then others who are already employed may quit in sympathy for their colleagues who were just let go or terminated from their jobs at your company. So be honest about what’s going on with your company and ensure that everyone knows where they stand in relation to each other and the organization.

10. Create a positive work environment

Improving job satisfaction can play a positive role in the employee turnover rate. If you have voluntary turnover, it’s possible that your company culture needs some work. Often, employees feel like they work hard and their hard work goes unnoticed. It may sound counterintuitive but you can combat poor performance by creating a more positive culture. Talented employees will leave if there’s a lack of employee recognition. So train leadership and active employees to be more vocal with praise to create a better atmosphere for everyone. Plus, if you have poor work-life balance, give people employee perks like days off when your most talented employees hit high targets and achieve big wins. Down the road, you’ll save on recruitment costs. Ultimately, improving the employee experience can have a lasting positive effect on your monthly turnover rates.

company culture

11. Review compensation packages

If you have a high employee turnover rate, it’s possible that your employees are leaving for a new job due to their compensation packages. The national average isn’t a good indicator of what you should be paying your employees. They say that paying your employees a minimum of $70,000 helps people have good job satisfaction. So, consider increasing the employee’s salary when they ask for a raise. An employee departure can cost a business a lot of money. But by paying employees more than an industry average, you’ll be better equipped to retain them. So, avoid looking at labor statistics regarding salary as they tend to be on the lower-end of the spectrum and not really in the range people actually look for in a job. Once you’ve calculated the costs of your annual turnover rate, offer compensation packages that allow you to reduce costs on your turnover rate and retain employees for longer periods while keeping employee engagement high.

12. Train bosses to become leaders

When you have an above average employee turnover rate, focusing on the company culture to create a desirable turnover will be key. Employee departures are often caused by bad bosses. Do those in leadership roles have career advancement opportunities for all team members? What does the trajectory of career growth look like for a high performing employee? How do they let employees know that they’re a valuable asset to the team? Is performance management all about criticism or is it more about spreading high-fives to keep morale high when employees are crushing it? No one wants a boss, they want a leader. Those in leadership roles can create a positive atmosphere for each and every new employee. But, if there’s toxicity in leadership, there’ll be more job openings on your site from your dysfunctional turnover.

13. Create an engaging onboarding experience

The employee experience plays a big role in shaping whether or not an employee’s departure happens right away or years down the line. Using HR software or with the help of members of your human resources management team, you should consider creating an onboarding experience that helps excites employees about the company culture. You also want to set the tone of how to active employees should act in the company to create a positive atmosphere. Losing employees early on is often a sign that a company culture isn’t what it should be. There should be onboarding costs, such as a swag box, expensed meals, and other perks, which help reduce the new hire turnover rate. Consider employee mental health by setting a positive tone with every new hire to ensure that the atmosphere is always light and positive in your company.

employee morale

14. Study patterns in your turnover rate

When you calculate employee turnover, you’ll quickly see what your voluntary turnover rate is to help you understand whether or not you need to make changes to your company. Sometimes, difficult company moments can affect employee turnover rates. For example, if a CEO goes into Slack and criticizes employees endlessly during peak season, that can leave a negative hint in the company air, which causes more voluntary turnover. Alternatively, if there’s an incoming recession coming and sales are down, you might start laying off teams of people to save money, which increases involuntary turnover. By knowing the trends, such as seasonality, the economy, or a negative culture, you can make changes to your business to reduce your annual turnover rate.

15. Hire fewer temporary workers

If you’d like to reduce your employee turnover rate, consider hiring fewer temporary workers. Often, when you don’t make an investment in hiring people full-time to save costs, you’ll find workers who are less committed to helping the company grow. Hiring countless temporary workers is typically a sign that a company has a bad culture, low employee engagement, and isn’t the ideal place to work. If you’re serious about employee retention and would like to see your annual turnover rate go down, consider making an investment in the people you hire by offering a good compensation, benefits, and a good culture. Employees leave if they find a better opportunity somewhere else. The hiring process doesn’t need to be that difficult, you just need to make the experience positive for a higher number of employees. Treat your employees with respect and like they matter and more people will want to stay for longer. But if you only offer contracts or temporary roles, you’ll see a high turnover rate.

How to Calculate Turnover Rate

If employee retention truly matters to your business and you’d like to see your employee turnover rate improve, consider the following formula to calculate employee turnover to understand if you need to make any changes.

First, add the total number of staff at the beginning of the month to the total number of employees on the last day of the month. And finally divide by two. That’ll give you the monthly average. Then, add up the total numbers for the whole year to calculate your employee turnover rate for the whole year.


Employee turnover is an expensive business. It impacts efficiency and productivity, which are serious problems for any business. However, these economic complexities don’t always translate into a simple set of solutions. Instead, employers must deal with the underlying issues that lead employees to leave. Knowing how to identify the causes of employee turnover can help businesses ensure they’re reducing their chances of losing an invaluable asset.