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Understanding and improving employee turnover

17th May 2016

Employee turnover tends to be a pressing concern for most businesses, especially in markets where competition for the best talent is fierce and the costs for recruitment are high. A high employee turnover rate affects organisational morale, productivity and continuity. It can negatively impact the employer brand as a whole, leading to a perception that the company isn’t a great place to work.

In fact, research recently released shows that staff turnover is costing British business over £4 billion annually, with new staff taking up to 8 months to work up to optimum levels of productivity.

If turnover levels exceed internal targets for reasons that are not linked to seasonal fluctuations or anticipated contract or restructure changes, then it is essential to identify the problem, find the root cause and address it.

One primary issue comes down to the bottom line. It can cost tens of thousands of pounds to advertise for, interview, appoint and on-board skilled roles, so high turnover ultimately drives up costs and can threaten profits. For entry-level staff, replacement costs can be 30-50 per cent of annual salary. For more senior staff, costs can reach 150 per cent of salary.

The associated training costs are also a factor, in addition to reduced productivity and the opportunity costs of getting the correct hire in place for the long term. The time needed for new staff to become fully productive is also an issue. Research delivered by Oxford Economics showed that it costs over £25k to bring each new staff member fully up to speed.

Understanding the reasons

There are various factors which can lead to unexpectedly high turnover. The first is that you are simply hiring the wrong people, which necessitates a fundamental change to your recruitment strategy. Some departing employees cite the prevailing corporate culture, and a situation where managers are forced into making hasty hiring decisions is also a recipe for trouble.

If you are hiring people on a knee-jerk basis, they will struggle to do the job and will ultimately leave. If they don’t fit with your corporate values or culture then, again, they are likely to leave. Ultimately, a poor recruitment process results in a hire who will ultimately leave for one reason or another.

Finding solutions


One key solution is to improve your screening process to ensure that you are getting the right candidates through the door and into interview. Research shows that structured interviews, supported with the right competency testing, can vastly increase the success of your hires. Recruitment needs to be measurable, objective, results focused and scalable – and it must translate fairly across hiring managers, so that individual ‘gut instinct’ doesn’t take over.

A second and supporting solution relates to management, and ensuring that those good hires are retained in the business through a successful on-boarding programme. Most professionals, especially younger millennials, are increasingly less persuaded by monetary rewards and instead want meaningful opportunity and career progression. If you aren’t providing these things, you’ll lose your top talent.

Getting the help you need through Big 5 Assessments

Big 5 Assessments offer a range of employee selection and testing tools to help employers make better hiring decisions. Why not take a look at our employee calculator which assesses the costs of recruitment, training and induction to your business – and the cost of turnover where these elements fail. We show how the costs of turnover translate into an impact on your bottom line, and how every percentage improvement translates into hard cash.

When you calculate your costs, you’ll receive an individualised 10 point personal employee turnover report by email, giving you vital insight and tips to help you begin to implement a remedial strategy in order to improve employee turnover within your business. You’ll also find a wealth of information about vital tests and insight packages available to help make better hiring decisions.

Visit to find out more


About the Author:

Nikky van Bommel is the Marketing Director for Big 5 Assessments and has worked in the Psychometric Testing industry for over 10 years. Nikky is responsible for all marketing and social media for the organisation.

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