Knowledge Center

Turnover and Retention

Turnover

The Global Talent Shortage Is at its Highest in Over Ten Years1

Employers in Hong Kong, Japan, Romania, Taiwan, and Turkey reported the most difficulty filling open jobs.2

In 2016, the global voluntary turnover rate was 9.6%; for Europe it was 7.1%.3

  • The functions with the highest turnover globally include finance (12.7%), sales (12.6%), and HR (10.9%).4  
     

  • The functions with the highest turnover in Europe include finance (11.0%), sales (9.9%), and HR (9.7%).5  

By 2030 talent shortages will significantly impact the financial and business services sector with projected shortfalls.6

  • The United States = $435.7 billion
  • United Kingdom = $90.0 billion
  • Germany = $136.9 billion
  • China = $147.1 billion
  • Mexico = $9.0 billion

By 2030, India is the only country projected to have a talent surplus of skilled labor of 1.3 million workers.7

The Average Time Employees Remain at Their Jobs Is Decreasing8 

In 2016, the median length of time US workers stayed with their employers was 4.2 years (for men it decreased from 4.7 years in 2014 to 4.3 years in 2016, and for women, it decreased from 4.5 years in 2014 to 4.0 years in 2016).9   

Tenure by occupation in the United States: 10 

  • Management: 6.3 years
  • Architecture and engineering: 5.5 years
  • Business and financial operations: 4.6 years
  • Computer and mathematical occupations: 4.4 years
  • Legal: 5.5 years 
     
Turnover Costs Businesses Time, Money, and Performance11

Separation, replacement costs, training, and lost productivity all add up to make it expensive to lose an employee.12

In the United States, the total cost of voluntary turnover is over $536 billion a year.13 

  • There is no agreed-upon standard to accurately measure the full cost of employee turnover. Using 33% of an employee’s salary for the US median income of $45,000, one study estimates the average total cost for turnover in the US is $15,000/employee.14
     
  • Other research shows that employee turnover costs an employer 21% of the employee’s salary to replace for all positions except physicians and executives.15   

The average cost-per-hire in the United States is $4,129, with an average of 42 days to fill an open position.16

People Leave Jobs Due to Push and Pull Factors17

Over 75% of voluntary turnover is preventable and includes push factors such as career development opportunities, work environment, management behavior, job characteristics, compensations and benefits, and work life.18

  • Career development (22%) and work-life (12%) are the most often cited reasons for leaving a job, and these numbers are on the rise. 19
    • 33% of employees who cited career development as their reason for leaving did so because the job did not match employee expectations. This could be due to recruitment not providing an accurate description of the job responsibilities.
       
    • 21% of employees who cited career development as their reason for leaving did so for the opportunity to learn, grow, and be challenged.
       
  • Millennial women do not cite motherhood as a reason for leaving their jobs.20

 

Employees Are at the Highest Risk for Turnover Their First Year 21
  • Employees who quit within their first year on the job cite job characteristics, well-being, and work-life balance.22

 

Inclusive Leadership Can Reduce Turnover23

Diverse groups may suffer from turnover when stereotypes and favoritism divide people into in-groups and out-groups.24

Inclusive leaders form high-quality relationships based on shared power, mutual trust, respect, and obligation.25

  • Inclusive leaders both value their employees’ unique diversity and also find a common ground to foster a sense of belongingness.26

Retention

Older Employees Stay Longer 27

Older employees (ages 55 to 64) have a median tenure of 10.1 years—over three times longer than that of younger workers (ages 25 to 34), whose median tenure is 2.8 years.28
 

In 2016, slightly less than half (44%) of Millennials surveyed expect to leave their current employer in the next two years.29

  • A majority of Millennials believe they will leave their current company by 2020 across all of the various countries and regions surveyed, including: the United Kingdom (71%), Latin America (71%), the United States (64%), Canada (61%), Western Europe (60%), and Japan (52%).30


High‐Performer Turnover Negatively Impacts Firm Performance31

Organizations with a strong reputation attract higher quality talent, but they are more impacted by the loss of that talent—high performers are more difficult to replace. 32
 

Workplace Flexibility May Improve Retention33

Workplace flexibility often leads to talent retention, cost savings, job satisfaction, reduced stress, and fewer negative employee behaviors such as absenteeism and accidents.34

  • Family-friendly workplaces offer a competitive edge for companies. Women who don’t have flexibility or a family-friendly manager report dissatisfaction with their work, and 40% plan to leave their job within a year. 35

 

 

Additional Resources

 

Lori Goler, Janelle Gale, Brynn Harrington and Adam Grant, “Why People Really Quit Their Jobs,” Harvard Business Review (January 11, 2018).

 David Brown, Josh Bersin, Will Gosling, and Nathan Sloan, “Engagement,” Deloitte Insights (February 29, 2016).

New Calculator for Employers Tallies the Full Cost of Employee Turnover,” Center for Economic and Policy Research press release, May 12, 2015.

 

How to cite this product: Catalyst, Quick Take: Turnover and Retention (May 23, 2018).