How to Reduce Employee Turnover: 5 Strategies

Keeping the employees you have happy—and healthy—is crucial to creating a stable, engaged workforce

Published Date: Aug 2, 2023

When a person leaves a job, it can create a ripple effect through your entire organization. Institutional knowledge is lost, employee morale is impacted, and recruitment and training must be prioritized over other tasks.

Employee turnover also significantly affects your bottom line.

This article reviews the direct and indirect costs of replacing workers, the reasons people leave a job, other ways this affects your business, and how to reduce employee turnover.

The True Cost of Employee Replacement and Recruitment

According to the Society for Human Resource Management (SHRM), the act of replacing an employee costs as much as 50% to 60% of that person's salary. But when you account for all of the ways a departure impacts a business, that can ramp up to 90% to 200%.

SHRM benchmarking data found that the average cost per new hire was almost $4,700. (2) That only accounts for “hard” costs (e.g., salary, recruiter fees, etc.), which SHRM estimates make up only 30% to 40% of the expense.

The other 60% involves the "soft" costs of tapping employees and HR professionals to screen resumes, interview potential candidates, and make the final decision—all while being pulled away from their usual responsibilities.

That means you will need to spend $30,000 to $36,000 to replace an employee with an annual salary of $60,000. It also means that your company can take a $54,000 to $120,000 hit overall because of their departure.

According to a LinkedIn survey looking at data from July 2021 to June 2022, the average turnover rate across industries was over 10%. Professional services had the highest turnover rate across industries at 13.4%.

A high employee turnover rate can also impact your company’s reputation and worsen your company culture, particularly if you lose long-time employees. And it can spur your remaining employees to test the job market.

Employee retention is essential to the continuity and success of your business. People who feel valued, as well as supported in and outside of work, are more likely to stay.

Causes of Employee Turnover

Reasons for leaving a company are often multifaceted and personal. Still, there are common themes, as illustrated by a Pew Research Center survey conducted in 2021, at the height of the "Great Resignation."

These issues include:

  • Low pay: Sixty-three percent of employees who left their jobs cited low pay as a reason.

  • No opportunity to advance: Sixty-three percent of respondents also cited a lack of opportunity to advance as a reason they quit their job.

  • Poor corporate culture: Fifty-seven percent of employees cited feeling disrespected at work as a reason they quit.

  • Poor job benefits: Among respondents who were offered health insurance, 43% left their job because they said benefits were lacking.

It’s crucial to acknowledge that your employees are not just valuable assets to your company, but people who can only work their best when they feel their best. That means allowing for a healthy work/life balance and supporting them as individuals.

Health issues employees are dealing with are an often overlooked part of the equation. 

Five chronic diseases or risk factors cost U.S. employers $36.4 billion a year because of employees missing work: diabetes, high blood pressure, smoking, physical inactivity, and obesity.

A 2020 study in the Annals of Translational Medicine found that low back pain is the leading cause of activity limitation and absenteeism.

When an employee struggles to get to and perform their job, it can quickly become apparent to them, the employer, or both that staying on board may not be sustainable.

Chronic health conditions, in particular, can impact mental health and the focus, clarity, and demeanor an employee is able to bring to work.

According to survey results of more than 500 business leaders, conducted by the non-profit Health Enhancement Research Organization (HERO), more than 90% stated that promoting wellness can enhance employee engagement, productivity, and performance.

5 Tips for How to Reduce Employee Turnover

You can take action to reduce employee turnover rate. Staying a step ahead will help you create and keep a more stable, engaged workforce, as well as attract top talent.

1. Hire the right people: Keeping your employees happy starts with hiring those who are the best fit for your organization. Look not just for people who are well-qualified for a given role and exude potential, but who also seem like a match with your company culture.

2. Offer competitive salary and benefits: Employees are savvier than ever about what they might expect to be paid for their role and in their industry—and the types of benefits different employers offer.

To avoid compensation-related turnover, start employees at a competitive salary and adjust it over time based on performance, cost of living, and inflation. Be clear about when compensation will be re-evaluated.

3. Recognize and reward: According to Gallup, employees who feel that they and/or their work are ignored are twice as likely to say they'll quit in the next year.

Recognition can be in the form of in-person or email communication from a manager, high-level leader, or CEO. It can be conveyed publicly or privately, through evaluations, promotions, an award, a bonus, and so on.

4. Promote work/life balance: The COVID-19 pandemic caused many workers to question what was really important to them. Many felt they were lacking a healthy balance between work and personal time.

Consider offering options such as remote work, flexible schedules, and family leave, encouraging daytime breaks, regularly reviewing workloads, and encouraging managers to focus on productivity rather than work hours.

5. Address employees as people, not just “human resources”: The work your employees do is just one aspect of their lives. Each of them is dealing with additional challenges that can impact all hours of their day.

Think of tailoring your benefits to their unique needs.

  • For example, if a significant part of your workforce is middle-aged, consider providing an elder care benefit to help them support their aging parents.

  • If your employees are struggling with chronic pain (as evidenced by healthcare claims), consider offering them a solution like Hinge Health, which provides accessible, tailored exercise therapy to help them move better both at work and in their personal lives.

How Hinge Health can help you

Joint or muscle pain touches virtually every area of your business. Sufferers are less productive and more likely to be absent or prone to presenteeism. And with rates of new chronic pain cases soaring, already-high related healthcare costs will only continue to grow.

Hinge Health is a clinically complete MSK care approach that keeps members engaged. For everything from minor sprains to chronic pain, our care team uses advanced technology to manage member pain and remove barriers to recovery.

Studies demonstrate that our powerful, clinically validated digital MSK solution yields positive long-term outcomes and claims reductions.

There are many health issues you can’t have much of an impact on.

This isn’t one of them.

Let’s talk about how we can get to work for you.

The pain crisis affecting your workforce

Additional Resources