Vacant roles in your company are costing you a small fortune. If your business isn’t operating at full capacity, it’s likely burning through your profits. 

This is because your reduced employee pool is over-worked, tired and making mistakes as they struggle to keep up with the demands of your business.   

Letting this situation continue, can lead to more staff leaving as they search for roles which are less stressful, more rewarding, and offer better benefits.

The UK jobs market passed 1 million vacancies in July and employees are realising they can move industries, sectors and careers to find jobs better suited for their needs and lifestyle. 

At the moment we really are in a candidate-driven market. The power is with the employee and they’re happy to use that power to search for their next role, there are plenty of jobs going about after all.  

This situation is causing headaches for many companies and HR departments as staff turnover is causing them productivity and skill issues. People are leaving businesses to find new roles but filling those vacant slots is proving difficult for companies of all sizes. 

This has made reducing staff turnover a key metric for many HR teams post-Covid. This focus on retaining staff will likely stay until the end of 2022. Businesses that can successfully hold on to their staff and avoid the costly process of hiring new starters or dealing with empty seats in the office will be in the best position to grow and capitalise on the ongoing confusion brought about by the national staff shortages. 

In this article we’re going to explain how HR software can help your business and HR team hold on to staff. We’ll also share the simple calculation you can do to figure out your yearly staff turnover.    

But first, what is causing this big move of employees? Why have people decided now is the right time to move companies and why is the workforce doing it en masse? To answer that question we need to understand the “great resignation”.  

What is the “great resignation” and why is it affecting employers now?  

The pandemic has had far-reaching consequences and effects on our society. No doubt historians will talk about it for years to come. But one of the very immediate effects of the pandemic has been the “great resignation”.

The term, which has been coined by HR professionals, is being used to describe the mass movement of employees between industries and companies in the wake of the pandemic. It seems like the consecutive lockdowns and furlough schemes have been the catalyst many employees needed to start re-evaluating their jobs and begin taking the next steps in their careers.

This has led to many people seeking employment in new businesses, industries, sectors and even countries. For HR teams, this is further piling on the pressure as they not only need to manage welcoming staff back to the workplace but they also need to deal with employees potentially leaving their company in droves.   

The number of vacancies on the UK job market combined with employees looking for new roles, means it’s becoming very difficult for businesses to retain their best staff. Employing new team members is costly and there’s no guarantee they’ll hang around long enough for a business to see an ROI from them. This makes retaining your top talent the most important goal for your HR team and HR software can help you do just that.  

How can you calculate your staff turnover rate 

Knowing how to calculate your staff turnover rate is essential for any HR team that wants to be able to accurately report on their retention metrics. Most people look at turnover rate on a yearly basis and figuring it out requires you to know three pieces of data:

  • The number of employees who left your business in the last year
  • How many employees you had at the beginning of the period
  • The number of employees you had at the end of the period

Once you have these three pieces of data you should add the number of employees you had at the beginning of the period with the number of employees you had at the end then divide the result by two. This will give you your average number of employees.

Once you have this number it’s easy to calculate your staff turnover rate. Just use this formula: 

Turnover = (Employees who left ÷ Average number of employees) x 100

Once you know this simple formula you can use it to gain insights on lots of things in your business. You can compare turnover rates between senior management and regular employees, you can look at the turnover rate between voluntary and involuntary leavers and you can even look at the turnover rates in different departments within your business.

All this information can be used to your advantage when identifying areas within your company that can be improved. You can also look at your retention rate for employees who’ve been at your company for less than a year. If that’s low then you likely have an issue with your recruitment and onboarding processes.

What is a good turnover rate?

Turnover rate varies drastically between industries but the UK’s average employee turnover rate is approximately 15% a year

Many organisations aim for a turnover rate of around 10% or less a year. Every company is different and it’s important that businesses find the right turnover rate for them. Turnover rates can be valuable metrics to use when comparing yourself with competitors and they’re great benchmarking tools to see how you’re performing in your market. 

It should be noted that some turnover in your company is a good thing. You shouldn’t aim for a 0% turnover rate. Onboarding new employees allows for new ideas, practices and skills to enter your business and keep you competitive in an ever-evolving candidate marketplace. 

What are the main reasons for staff turnover?

Employees will leave a company for various reasons. Some cannot be helped, others should actively be encouraged and some should be avoided at all costs. Staff turnover is a normal part of any business and the goal of your HR department is to retain the best staff for as long as possible, whilst identifying team members who are likely flight risks and putting plans in place for when they leave your business. 

There are hundreds of reasons a staff member may want to leave your business and we’ve listed some of the most common reasons below. 

Heavy workload

Overworking employees is one of the leading reasons people leave a company. If individuals can’t get their work done on time, and their deadlines aren’t feasible, this can lead to stress and disengagement with their work as no matter how hard they push themselves it’ll never be enough. 

Poor leadership

Not everyone is a born leader or manager. Some people can learn good management skills and other people just have a natural knack for it. But for others management is a skill they struggle to grasp and poor management can lead to employees feeling micromanaged, stifled and stressed. 

Employees won’t stay long in a company if the leadership is oppressive. They start looking for a new role almost immediately.

No career progression

People aren’t going to hang around in your business if there are no opportunities to grow and learn. Sometimes this can’t be avoided. Your business is just too small for upward mobility. But wherever possible, companies should be mapping out the career progressions of their employees to let them know they have a plan for them long term and they care about their progression. Otherwise there’s no reason for them to stay. 

4 practical ways HR software can reduce staff turnover

People management software gives HR departments a myriad of powerful tools they can use to analyse their employee data sets and gives them powerful insights they can use to reduce their staff turnover. Here are 4 ways HR software can help your HR team combat staff turnover. 

HR software can help you understand how your staff turnover rate compares to other businesses in your industry

HR software can help you to better understand the turnover rates in your business and gives you the tools you need to compare your turnover against your competitors. This can give you a good understanding of how successful your retention strategies are and will let you know if you need to tweak or change your approach based on what your competitors are doing. 

Advanced retention analytics can also help you spot who in your company is leaving and will let you know whether that’s a problem or not. Your business could have a 5% churn rate a year but those 5% could be the people in your business you absolutely don’t want to leave. An understanding of your businesses retention rates at a granular level like this is important if you want to retain your best staff and compete in your market.

Comparing your turnover to other companies in your sector also has another benefit. It can help you attract the best talent to your business. If you’re in competition for employees with several other businesses and you’re all offering the same benefits and remuneration packages, the differential that could make people work for you is the length of time employees stay at your business. 

A company that churns through employees gives off red flags to a lot of job seekers and in a very competitive candidate-driven market this could be the difference between getting a new hire or not.

HR software gives you a better picture of your workforces age and demographics

Understanding the lifestyles of the people who work for you is useful for many reasons. It lets you create benefits packages and workplace initiatives that your employees will love. This will increase loyalty and engagement with your business and reduce churn. 

Look at it this way, if your office is primarily made up of young parents with children they’re probably not going to be enticed to stay at your company if you take them out every Friday night for a social. They’ll probably be more interested in a flexible working initiative and subsidised childcare. Likewise, if your office is full of young 20-somethings they’ll probably want that Friday night out.   

For larger companies, separating these different demographics and offering them different benefit packages is the best way to ensure a happy workforce across your business. Using data analytics and HR software tools to monitor these groups is the best way to make sure the benefits you’re offering are still relevant and useful to your staff. 

HR software gives you the tools to spot patterns in your historical data 

Spotting trends in your employee data set can help you predict and model what might happen in the future. Exploring and understanding trends in your workforce lets you pre-emptively step in and help staff who may be coming disengaged with your business. 

For example, the data you have on your previous employees shows 70% left after spending between 18 – 24 months at your business and the main reason they cited for leaving was a lack of progression. You can now use this data to help you inform a strategy that targets employees who are at this stage in your business. 

You could offer employees a training budget at 18 months so they feel like they’re growing and developing, or you could give them new responsibilities or a pay rise to incentivise them to stay.

This is just one example of how analysing historic employee data using HR software can help you with your retention metrics.  

You can identify patterns of absences that prelude a member of staff leaving

Having a large amount of historic workforce data also means you can begin to look at the patterns of sickness and absences that prelude a staff member leaving. As people look for a new role they need to take time off to go to interviews, search for jobs and generally focus their mind on finding a new role. 

This often means staff members need to leave work on short notice to attend interviews and this often means a lot of sick days are taken right before someone leaves a company. 

Identifying and understanding this pattern early can help HR teams either step in and try and stop the employee from leaving or prepare early for their departure and find a suitable replacement so no productivity is lost trying to find someone to fill the role.  


This blog was written by Phase 3 on their website here. They are an exhibitor on the HRTech247 Consulting & Advisory Partner floor of the Partners Hall. You can visit their virtual space here