Let’s face it: losing an employee isn’t just a headache. It hits your budget hard, eats away at team spirit, and can even slow down your entire business. That’s why understanding why people leave, and how to encourage them to stay, is crucial.
In this week’s HR Query, we talked with Sarah Peck, GM at Indeed Flex, a true expert in how people move through the job market. She’s got insights that can help HR leaders not only spot the patterns of people leaving but also figure out the real reasons why – and what to do about it.
Your HR Action Plan: The 4 Must-Watch Metrics
Sarah reveals that understanding turnover starts with tracking the right numbers. To truly get a handle on why your team members might be leaving, and to build a workplace where they want to stay, focus on these four key metrics:
- Attrition Rate: “This gives you a clear percentage of how much your workforce has shrunk. It’s the overall ‘who left’ number.”
- Retention Rate: “The good news side! This shows the percentage of employees who’ve stayed with your company over time. It paints a clearer picture of how stable your team truly is.”
- Cost-per-Hire: “This adds up all the money spent on finding, attracting, and bringing in new hires – from job ads to agency fees and onboarding. If many people are leaving, this cost often skyrockets.”
- Time-to-Fill: “Exactly what it sounds like – how long it takes to find and hire someone for an open job. A high ‘time-to-fill’ often means that turnover is hurting your team’s productivity.”
The bottom line? By regularly keeping a close eye on these four numbers, HR leaders can quickly spot areas where employees might need more support or resources, helping you improve retention and build a happier, more stable team.
What specific patterns should HR leaders be looking for?
SP: HR leaders should start by analyzing factors such as department, role, tenure and demographics. Some teams may experience higher turnover due to a variety of factors such as workload imbalance or management issues. By looking at this, businesses pinpoint areas experiencing higher attrition rates. Unclear expectations and lack of growth opportunities are additional factors that can lead to higher turnover.
You also want to make sure you’re looking for trends across age, gender and location. This can highlight whether specific groups within your organization feel unsupported or disengaged.
What value do exit interviews have and what should HR leaders be looking for?
SP: Exit interviews provide a more in-depth glimpse into the reasons why an employee decides to leave. These interviews can help identify patterns and any areas for improvement as a company. Start by conducting these interviews shortly after an employee submits their resignation. Use open-ended questions such as, “What factors influenced your decision to leave?” or “What could we have done differently to retain you?”, to ensure you’re leaving room for the employee to share specifics on their experience.
By looking at multiple exit interviews over a period of time, recurring issues, such as workload imbalances, poor management or lack of growth opportunities will start to appear. Organizations can then use this information to refine retention strategies and create a more supportive work environment for current and future staff.
What are some of the root causes of attrition?
SP: One significant factor in employee attrition is misalignment with employee compensation and benefits. Employees now expect their employers to provide comprehensive benefits packages. This can include tailored healthcare benefits, retirement plans, wellness plans and perks like flexible leave. Today, employees are also prioritizing hybrid or remote work options, customizable schedules and mental health support – and they’re looking for employers to provide that support and flexibility.
Another common cause is career development and growth limitations. Employees want to work for organizations that will invest in their growth. This can be through a more structured career progression framework or simply access to training and development programs. Nevertheless, employees want to know that their employer cares about their long-term growth and trajectory.
HR leaders also should look at workplace culture and any leadership challenges. While transparent communication, recognition programs and empathetic leadership can contribute to a positive workplace culture, a toxic culture or ineffective leadership can drive employees away.
Can you provide 2-3 ways to help reduce it?
SP: Reducing employee attrition requires HR leaders and organizations to proactively address the root causes. A few ways to help reduce it include:
- Employee Recognition: Recognition programs are proven to significantly boost employee morale, culture and loyalty. This can include peer-to-peer recognition that empowers employees to celebrate each other’s success, monthly awards or even more widely shared employee acknowledgment during team meetings or company events.
- Dedicated Career Paths: Employees are more likely to stay with organizations that invest in their growth. Career development should include mentorship programs that pair junior staff with more experienced and tenured leaders. Additionally, provide training and development opportunities that enhance employees’ skillset as well as clear and transparent career advancement opportunities.
- Competitive Compensation and Benefits: To attract and retain talent, organizations need to be offering packages that address an employee’s financial and non-financial needs. This includes customizable benefits, allowing employees to choose perks that matter most to them, bonuses tied to individual and organizational performance as well as non-monetary rewards, such as additional paid time off or professional development opportunities.