Staff Turnover: The Silent Killer of Your Business
Hello, my name is Adam. I’m a leadership coach and owner of Seeding the Lead, and today we’re going to talk about staff turnover.
What Is Staff Turnover?
To kick things off, what is staff turnover? Staff turnover—staff turnover is essentially anytime an individual leaves a position and it is now vacant. Staff turnover occurs for many different reasons. One of those reasons is simply overworked: they are exhausted, in a toxic work environment, and they’re looking to leave. Sometimes it could be retirement; sometimes it could be life circumstances. There’s many reasons why individuals leave from their current job and move on to another company or organization. This is completely fine and normal.
Healthy Staff Turnover Rate (≈10 Percent)
When we look specifically at healthy staff turnover within an organization, we’re looking for about 10 percent staff-turnover rate. This is going to account for retirement, people moving on with their life, life changes, or even career changes. This is considered normal, especially for a large organization. For a small organization—for example, my company—there’s only me, so if I leave that’s 100 percent staff turnover, and that’s not considered healthy. But for someplace like a university or maybe a government, 10 percent is really what we’re aiming for.
Unhealthy Turnover: The Danger of 0 Percent
When we look at unhealthy staff turnover, the first one to consider is 0 percent staff turnover—we don’t want that at all. What that means is that at 0 percent people are being forced to stay in this position and they don’t want to be there, or we are not helping those that need to move on out of that position. For example, down in the States, in some healthcare facilities they have nurses sign NDAs—non-disclosure agreements—forcing that nurse to work within that hospital, because if they quit they’re not allowed to get a job at another healthcare facility within the entire city.
This forces the nurse to stay at that hospital. The downside to this is that that nurse becomes disgruntled, they become upset, and they start intentionally sabotaging at the workplace, which we don’t want, ’cause that lowers efficiencies, that lowers productivity, and hurts the organization as a whole.
Red-Flag Turnover: 30 Percent and Up
So, when we look at it from a broad perspective, we do want some staff turnover—we want our people to leave, but when they are ready. That brings us to what is unhealthy when we look at turnover which isn’t zero but is above 10 percent. Specifically, around 30 percent means that there is a problem there: there could be burnout, there could be bullying, there could be a toxic culture, this could be a micromanager—I don’t know. But at 30 percent staff turnover within an organization, it’s pretty safe to say something’s going on there that needs to be changed.
Case Study: 50 Percent Turnover in a University Department
I remember talking with an individual, and they said the math department at a university had around 50 percent staff-turnover rate. They said it’s always just hard to find people to staff this position because they paid so low, and that was an indicator to me, saying, “Hey, something’s going on here.” When I dug into it, it turns out that the manager was intentionally lowballing many of their staff members to get them to essentially take a position with lower pay.
Eventually these individuals that did take this position didn’t like it, because they weren’t being appreciated or recognized, and they would move on to a different facility. What I had to do in that instance was help them recognize that, “Hey, this is a culture in this department that we have to change—this isn’t something that’s considered normal and is hurting you as an organization.” That’s the key point: it’s hurting the organization to have staff turnover of over 30 percent.
Extreme Scenario: 80 Percent Turnover
In fact, I remember working with one organization, and they had over 80 percent staff turnover. At that point leadership was just asleep at the wheel—that’s not healthy, that should never be happening—and at that point it was a discussion of potentially changing all of leadership or retraining them to start really correcting the ship and making sure that we get that turnover rate to about 10 percent.
Hidden Costs of Replacing Employees
So, the big question I often get asked is, “Well, why do we care about staff turnover so much? What is the cost of it?” What most people don’t understand—or they do understand and then they forget—is that it costs an organization huge sums of money to replace a staff member. On the low end it costs 30 percent of the staff member’s salary just to replace them, and on the high end it could cost upwards of 400 percent just to replace that staff member. Many managers don’t understand where these costs are, because they’re hidden.
Tangible Costs: Recruiting, Interviewing, On-Boarding
The first cost is: when you get rid of somebody—or that person leaves—you have to pay another individual to remove them from your system, to make sure that your systems are secure. If you loan any equipment out to them, that equipment gets brought back; that payment is there. The next one is: you have to pay for creating the job and posting it. Someone has to go through the résumé when they receive it and look through the résumés of which candidates are potential candidates and which aren’t. Then you have to do job interviews with the potential candidates.
I remember going through one interview and there were five managers in this interview. I started doing the math, and I realized that there were over $100 to $200 per hour, per interview—this was adding up. I asked them, “How many interviews are you doing today?” and they said nine interviews. Well, if they’re paying $100 per hour, that’s $900 right there. I estimated, because of these managers, that they were probably spending per interview around $300 to $400 just based on management pay, which is an obscene amount of money.
Once you have hired this individual on—however, they’ve gone through the interview process, you like them, you’re going to hire them on—you then have to pay to maybe have a hiring incentive or a bonus. Then you have to pay for somebody to put them into your system. Then you have to pay for training and orientation, and these costs just start adding up, and these are more the tangible costs.
Intangible Costs: Productivity Loss & Team Grief
What many managers don’t understand is there’s also intangible costs. One of those is the loss of productivity: it often takes a new employee anywhere between six months to a year to feel fully competent in that role. What that means is, within that six months to a year, that individual is making mistakes, they’re making errors, they’re costing the organization productivity and money—and this is normal, this is a part of the training process. But in order for that individual to become fully efficient within that role, what they have to do is continue to work at it, and they have to do it for the course of one to two years.
It takes an individual one to two years to be fully efficient at the role, to reach their maximum productivity—and that’s a long time for an individual to go from being unproductive ’cause they just got hired on, to being fully productive and efficient at their job. Some of the other intangibles that we look at is also grief on the team. When an employee moves out of an organization, there will be a loss; this means that there is naturally going to be a decrease in productivity.
This is normal, but because there’s also that loss, the team’s going to be less productive. But also that workload is still going to be there—it’s going to be shared amongst the team members, which could potentially cause a lot of burnout down the road. That burnout, unfortunately, could cause more staff turnover, which means that we are hemorrhaging money.
Why Turnover Gets Ignored: Incompetency & Apathy
Now, I know what you’re thinking: if it costs so much money to replace somebody, how come managers do it all the time? The truth is incompetency, or they just don’t care. The great irony I see is most companies are looking at profits—they’re looking at making the most money possible—yet they are hemorrhaging it by staff turnover. Ideally, if an organization is truly interested in money, they should be looking to save their staff.
How to Fix High Staff Turnover
When we look at fixing staff turnover, the first way we do it is to start listening—start listening to our staff and hearing what they are saying to us. For example, exit interviews are phenomenal: the individual is leaving our organization and they will tell us what is wrong with the department—maybe they weren’t recognized, maybe there wasn’t enough team building, maybe they just didn’t feel heard, I don’t know. But when we start listening, then we can start fixing the staff-turnover problem.
If you found this video helpful, give a like, subscribe, and share it with a friend. Otherwise, I’ll see you in the next video. Cheers.