Highlights:
- Employee churn can negatively impact your organization’s operations and hurt your bottom line, so it’s important to take steps to actively reduce employee churn rates.
- Monitoring your employee churn rate can help you see when and how to take appropriate steps to keep good employees.
- Implementing innovative technology plays a key role in employee retention and business growth.
Sparked by the recent health crisis, the so-called “Great Resignation” is a phrase that describes the historically increased rates at which employees have quit their jobs in recent months.
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Today, it can be tough for employers to hold on to good workers—or even find them in the first place. Recruiting and training workers is costly in terms of both time and money, so the goal is to keep employees on the payroll for the long haul.
Many organizations are having trouble meeting that goal and find themselves dealing with high employee churn rates. This type of disruption to the workplace eats into profits and puts businesses at risk.
According to the US Bureau of Labor and Statistics, about 4.27 million Americans quit their jobs in May 2022. That’s up from nearly 3.84 million in May 2021.
There’s a lot that goes into running a successful business, and keeping employee churn rates at low levels is one of them. Here’s how employee churn can impact your company and how to prevent it.
What is employee churn?
Employee churn refers to the share of workers who leave their place of work over a certain time period, whether voluntarily or involuntarily. According to a recent report from the Society of Human Resources Management (SHRM), employee retention and turnover is the number one challenge cited by 47% of human resources professionals.
While some employee churn is normal within any organization, particularly high rates can be costly. A lot of money is poured into the recruitment, hiring, onboarding, and training of employees, so when they quit after a short period of time, employers must again invest a lot of time and money into replacing them.
According to HR benefits company PeopleKeep, the cost of losing and replacing an employee can easily mount into thousands of dollars. PeopleKeep estimates the average costs as:
- $1,500 for hourly employees
- 100% to 150% of an employee’s salary for technical positions
- Up to 213% of an employee’s salary for C-suite positions
Average employee churn rates
Average employee churn rates vary depending on the industry. For example, according to the US Bureau of Labor Statistics, the average annual quit rate in the US across all industries in 2021 was 32.7%. In contact centers, agent churn rates are within the 30% to 45% range, which means these organizations are losing approximately one-third or more of their workforce on a regular basis. Moreover, it can take new agents an estimated 8-12 months to gain proficiency
Keeping employee churn rates at or under the 10% mark is ideal and is generally considered good. The lower the number, the better.
The voluntary employee churn rate continues to increase. According to the Work Institute’s 2020 Retention Report, there’s been an 8% rise in turnover rates since 2018. The recent health crisis has certainly played a role in these rate increases.
(Source: WorkInstitute)
After months of dealing with significant challenges both in life and at work as a result of the pandemic, many employees are looking to make a positive change, especially those who are unhappy with some facet of their job or how their employers dealt with the effects of the crisis at work.
(Source: HubSpot Blog Research)
Why employee churn is bad
There are several negative effects that a higher employee churn rate can have on an organization:
- Low workplace morale
- Diminished productivity
- Poor customer service
- Lost customers
- Reduction in employee ROI
- Negative workplace culture
All of these factors create a negative, unproductive work environment, which impacts valuable customers. Ultimately, you can incur significant costs by neglecting to deal with high employee churn rates effectively and in a timely manner.
How to prevent employee churn
There are several things you can do to reduce and avoid employee churn, including the following.
1. Offer flexible work arrangements
Today’s employees have come to expect and require a more flexible work schedule. Whether that means the flexibility to work remotely, work a variety of shifts, or dedicate their weekly hours to specific days, more versatility at work could help you more effectively retain your workforce.
This is especially true in a post-pandemic world. Employees are increasingly prioritizing life commitments and are seeking jobs that allow them to better balance their work-life responsibilities. They’re willing to leave their current jobs if they’re not getting what they need; 37.6% of employers polled by HubSpot Blog analysts cite a lack of a flexible work schedule as a reason why their turnover rates are so high.
You can avoid this situation by offering more flexible work options; work with individual employees to come up with an arrangement that benefits both the employee and you.
2. Provide solid training
Thorough training is crucial to ensure that employees are fully equipped to perform their best at work. Failure to train employees from the get-go can be detrimental to your operations and leave customers dissatisfied. At the same time, employees who feel they’re unable to adequately perform their assigned tasks may feel incompetent and disgruntled with work.
Even if customers don’t report poor customer service, employees may still feel inept on their own accord, which can lead to employee churn.
Comprehensive training provides employees with the skills and know-how needed to effectively do their job and serve customers.
3. Recognize good work
Employees that do their best to perform well at work want to be recognized for their efforts, and they should. Employees who are applauded by their employers feel more appreciated at work and may be more encouraged to continue to perform optimally every time they clock in. In fact, 69% of employees would work harder if they felt their efforts were better appreciated.
A team of incentivized and empowered employees can go a long way in creating a positive work environment and keeping retention levels high.
4. Provide real-time feedback
For employees to learn and improve at work, feedback from supervisors is essential. However, it’s timely feedback that matters most.
Giving meaningful feedback in real time can be an effective way to ensure employees are good at what they do and happy at work. Further, proactively addressing potential issues can also be helpful. Using innovative technology can help you provide this real-time feedback to employees so there’s always a clear understanding of what employees are doing well versus areas that require improvement.
5. Implement cutting-edge technology
The right technology can make it much easier for employees to carry out their day-to-day tasks, as long as they’re properly trained on how to use it. The right technology can also help employees collaborate with other employees and management, access centralized information, and perform their jobs from wherever they happen to be working.
Further, innovative technology that’s designed specifically for each industry can cultivate a more customer-centric work culture. Customers are more likely to have a better experience, which can reduce the number of stressful customer interactions that employees may have to handle.
Reduce employee churn with RingCentral
RingCentral offers a market-leading, cloud-based communications platform that supports employee collaboration and engagement. With multi-channel communication tools, employees can engage with each other, supervisors, and customers from anywhere at any time.
By unifying communications tools into one comprehensive solution, RingCentral helps eliminate employee frustration and supports employee productivity. From collaborative tools to communication channels to workforce management tools and beyond, RingCentral’s comprehensive communications solution provides you with exactly what’s needed to help keep employees productive and happy.
Request a demo to see how it works!
Originally published Aug 05, 2022, updated Jul 26, 2024
