The 7 most effective ways to reduce employee turnover

Heather Harper

Written by Heather Harper

May 31, 2018  - Last updated: Aug 10, 2023

How to reduce employee turnover

Chances are, if you’re searching for how to reduce employee turnover, you’ve probably already got a high employee turnover rate, or you’re worried because your employees are starting to leave at a quicker rate than before… Or, you’re just inquisitive, in which case, good on you!

Unfortunately, unless your company's culture is one that permotes and encourages high employee turnover, for instance if you typically employee many people for temporary or seasonal work; then a high voluntary turnover rate is rarely a good thing.

A high turnover rate typically means that your employees are unhappy or unsatisfied with your company, or as working as part of your team. This may be because they are overworked, and underpaid, they feel like they are treated differently to other employees, there is no career development opportunities or because the culture within your company isn’t a pleasant one to work in.

If you’re wondering whether employees are leaving your team left, right and centre, here’s some ways to work it out:

  • Overall employee retention rate: you will need to select a measurement period, this could be as short as a month or as long as a year. You then divide the total number of employees at the end of this measurement period by the total number there was at the start of the measurement period and multiply it by 100.

  • Overall employee turnover rate: again, to calculate this, you will need a measurement period. You then divide the total number of employees who have left in the time period by the average number of employees in your company during that time period, and multiply to total by 100. This will result in your average turnover rate.

  • Calculate the average length of employment: to do this, add the length each employee has been in the company, and then divide by the total number of employees. Look for trends, the longer the average contract length, the better.

If your retention rate is low and your turnover rate high, you need to improve your employee engagement. Luckily, there are solutions to fix this, and some of them are listed below! Enjoy.

Offer competitive salaries and packages

At the end of the day, the main reason why we go to work everyday is to earn money, so use this to your advantage to keep your employees! One way in which you can ensure your employee turnover reduces, and retention increases, is to offer more competitive salaries or offer benefit packages.

When hiring new employees, make sure the salary is competitive for the role and location. Check out other companies of similar size and recognition and see what they offer as a salary, or bonus packages, for the role similar to the one you’re advertising.

Try and offer more than, or the same as, your competitors; as the old saying goes ‘if you can’t beat them, join them!’, so offer the same salary and benefits as they do. This will attract the best candidates, and ensure they don’t feel that they could get a better deal elsewhere, reducing their desire to leave in the future.

The same thing applies to your current employees; check out what other companies are offering their employees in similar positions and attempt to raise your employees salary where possible if what you're currently paying them is considerably lower.

This may come at a cost to you initially, but experts do reckon that the cost of hiring a new employee is double the old employees salary; so you’re saving money in the long run.

Competitive salaries

There is also the opportunity to offer enticing workers-benefit packages. Your packages can be set and therefore the same for all employees; for instance all employees will receive a monthly gym membership, or can get discounted car insurance through the company.

Or alternatively, you could offer packages that allows the workers to choose what they most need, for instance covering fuel costs, a higher pension scheme or free/discounted child care to those employees with young children. This will save you money, as you won’t be offering all employees the same benefit packages, and therefore paying for benefit packages that employee’s won’t use.

The addition of these benefit packages will raise employee morale, increase satisfaction and reduce their desire to leave your company.

Finally, you could use money or benefit packages as incentives. When a team excels their weekly targets, offer a bonus. Carry out annual reviews with all employees; if employees are performing exceptionally well, reward them with a pay rise for their good work, loyalty and cooperation. These incentives will encourage employees to work more efficiently, will boost morale and will thus increase retention rate and decrease the overall turnover rate.

Ensure the workload is fair

Nobody likes to feel overworked and exhausted. Sure, some employees will feel excited and livened by a challenging role, but setting only a select few employees excessive amounts of work is sure to cause them to feel underappreciated, overworked and overwhelmed, making them want to leave.

A solution to not exhausting your employees is to make sure the workload is split fairly between each team. To do this, firstly, make sure there is enough people to complete the workload.

Then, check that each team member has the skills and knowledge to complete the task they are being set. After this, check that each employee roughly has a similar workload, remember that some jobs take longer to do than others.

Fairly distributed workload

To ensure your workload is fair, you could also ask the team members how they think the work is balanced. From the feedback, create plans of workload distribution and implement these plans to balance the workload and improve overall productivity. Revisit each employee's job description and provide a clear delineation of roles. These plans should promote healthy competition amongst the employees to beat their workload first.

Finally, meet with your team once a week to discuss how they think the workload has been for the week; if they feel their tasks are longer or harder than the other employees, change the distribution plan.

Making this workload fair should mean all employees feel satisfied at work as they are not bombarded with a huge workload; this will increase morale and reduce turnover.

Get to know your employees, and get them to know each other

One of the most important things you can do is to get to know your employees on a more personal level. Get to know if they have any kids, what there dog is called, or where they went on holiday last year. People love to know that someone else is interested in them; it’ll make them feel wanted as part of the organisation, increase their morale and encourage them to stay.

You could also use personality tests to get to know your employees better. Studies have shown that individuals who are low on agreeableness or high in openness to experience are more likely to engage in unplanned quitting and that employees who are low emotional stability may quit for other reasons than just workplace dissatisfaction.

By using personality tests, you can have an idea of which employees are more likely to leave your company and you can then work closely with these employees on a personal basis to increase their morale and make them want to stay in your team.

Personality tests can help you to understand how best to communicate and work with each employee. For instance, an introvert won’t necessarily appreciate you getting to know them on such a personal level, whereas an extrovert will want to get to know you and they’ll be very grateful if you put them in a big team.

Essentially, understanding each employees personality allows you to put them in the right working environment and react to them in the most effective ways; making them more satisfied and decreasing their likelihood of leaving. To find out more about personality tools and tests that can be used at work, have a read of this article.

Employees will appreciate some one to one reviews. Statistics have shown that four out of ten workers reported feeling disengaged when no one prioritizes employee feedback at work, so in order to engage your employees, you should provide regular one to one constructive meetings.

Finally, to get your employees to know and trust each other, engage your whole team in ice breaking activities, or team building activities. Some of my personal favourites are listed below, but there is an abundance if you look on the internet, others have been outlined here.

The blind wine waiter: employees get into teams of six and have to successfully remove the cork and pour a bottle of wine into five glasses. In the team, five people are blindfolded and each person can only do one task.

Dream trips: gather everyone together and ask how the would spend their time and money if they were allowed a whole month away from work. This task encourages employees to share personal details and desires, which in return, creates trust.

Slice and dice: get the team to stand in two lines facing each other with their arms extended so that they intersect. The employee at the end of the line will walk down the center and person will raise their hands to allow safe passage. This requires each employee to put trust in their team to allow them to walk down the center, it’ll also increase the employees' confidence.


Make your employees feel respected and trusted

Some of this will come from using the solutions outlined above; employees will feel respected if they earn a fair salary, aren’t overworked and they will feel trusted by their team leaders and other colleagues. The trust building activities, outline above, will increase the employees trust in each other, and if the team leader participated would increase the employees trust in them, and allow them to feel trusted by the team leader.

There are lots of ways to build respect and trust. Some of the easiest and simplest include sharing the responsibility, engaging them in decision making and asking for their opinion. You should always aim to create a positive work environment and to be open and transparent with your employees.

Always remember that trust and respect is a two-way street, you should trust and respect your employees, and they should trust and respect you back. Make sure you promote a trusting and respectful environment and take action on any employees that show distrustful or disrespectful actions to any other employee. This article gives more in-depth ideas on how to build team trust.


Hire the right employees in the first place

Seems obvious, right? So, why don’t people do it? Hiring the right people who instantly feel like they have the correct skills and fit into the culture will reduce your turnover rate instantly; these employees will feel happy and satisfied in their role, so they’ll want to stay!

To hire the right people for the right job, you need to be upfront in the recruiting process as to what will be expected of the employee once they start working. This way, there will be no nasty surprises that will make them want to leave. There is a number of ways to assess whether the employee is rights for the job, I’ve listed a few below:

Skills testing: This will assess whether potential new hires have the desired skills for the job during the onboarding process. It helps ensure they're a good fit for the role in terms of technical skills.

Emotional intelligence tests: which measure a potential new hire's ability to handle their emotions and feelings in all types of situations.

Cognitive skills testing: which measures a potential new hire's memory, intelligence and mathematics skills - personally, not my idea of fun.

Personality testing: there is a wide range of personality tests available to you which can measure whether potential new hires have the right characteristics and strengths to fit into both the job role and the company culture.

Be flexible

In recent years, there has been a rise in the number of remote business, and lots of them are very successful! 'Why?' , you may ask; well, they are more successful because people want to work for them. Generally speaking, remote business offer something invaluable that every business should offer where possible: flexibility!

Studies have shown that companies with employees with greater work-time control and flexibility have reduced turnover rates. So, if possible, you should allow for flexibility in working hours within your team.

There are a few ways to do this, these include:

  • Allow one day a week to work from home. This also has great effects on one's work-life balance, which could contribute to employee happiness immensely.

  • You could also being to allow ‘flexitime’, where the employees must work a set number of hours per week, but they can choose when they work these hours.

  • You could allow employees to finish earlier on a Friday, this will increase their morale and give them something to look forward to.

  • There are also ROWE (results only work environments) programmes, these essentially pay employees for their results rather than the hours worked. These a great for motivating workers to work quickly, and work for companies that are focused on producing lots of products at a fast rate; they won’t work for all companies though.


Allow for career development

Finally, if employees are leaving your company, they might not actually be dissatisfied with the company or their current role, it is possible that they may just feel that it’s time to progress in their career, and thats something you can't offer them.

Sometimes, employees do, unfortunately, want more than you can offer. But if you’re losing valuable employees because they feel like you can’t offer them career development, when you can; you’re making a huge mistake!

Career development

If you have the resources, promote employees up the ladder of job roles. If a graduate started at a very low level in your company two years ago, the chance are after, they have now learnt enough to progress to higher roles - so, find a position for them at a higher level. Ideally, you should aim for internal promotions and ‘job filling’, if someone leaves a high position, pick a current employee that you feel fits for the role and promote them.

You could also offer career development advice within your company. Perhaps employing a freelance life coach or career advisor would help your employees to figure out where they want to be in a few years, and will allow you to adapt to these needs.

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Heather Harper

About the author

Heather Harper is a psychology student from the University of Lincoln. She currently works as an intern for WorkStyle and is studying a Masters in Occupational Psychology at the University of Manchester.