High staff turnover is bad for business

Staff turnover increasingNew research from Robert Half UK shows that a voluntary turnover in UK businesses has increased.

The survey, which polled 200 HR Directors, found that 49%, nearly half, of UK HR Directors say that employee resignations are on the rise, a sign that signifies greater employee confidence in the UK job market.

With more people now in employment compared to last year according to ONS figures*, UK businesses based in London and the South East are experiencing the highest level of voluntary turnover, reported by nearly 6 in 10 (58%) HR Directors. By sector, those employed in the public sector are most likely to tender their resignation, with half (50%) of respondents experiencing an increase in turnover compared to three years ago.


“Why has voluntary turnover increased within your organisation?”

  • Lack of remuneration/recognition: 40%
  • Concern over company performance/fear of redundancies: 29%
  • Poor work-life balance: 28%
  • Boredom with current role/company: 27%
  • Stagnant career prospects: 26%


The grass is greenerAccording to HR leaders within UK organisations, disgruntled staff are citing a lack of remuneration/recognition by their company as the primary reason for this increase, with small businesses being worst affected (46%), along with those in the public sector (61%).

There are several reasons why poor employee retention might be bad for business.


  • Increased recruitment costs – advertising the vacancy, interviews/psychometric testing, temporary staff whilst the vacancy is filled.
  • Increased training costs – retraining existing staff or training new employees
  • Decreased morale – as employees see their colleagues leave
  • Lower productivity – whilst vacancies remain unfilled and new employees settle in

High voluntary staff turnover can be a vicious circle as poor morale causes more employees to leave in search of a career elsewhere, which further reduces team morale.


Improving staff retention

Retaining staff has numerous benefits to your business and there are several ways you can improve your employee retention.


Recognition and reward programmes

In a 2012 survey Forbes.com found that companies that scored in the top 20% for building a “recognition-rich culture” actually had 31% lower voluntary turnover rates. This is because recognition awards make people feel valued.

However it’s important to get an employee recognition programme right from the start. Your recognition scheme shouldn’t be just a tenure-based reward scheme, such as long service awards, it needs to recognise your employee based on specific results and behaviours that are tied to your overall business goals.


Incentive schemes

An effective incentive scheme can reduce employee turnover and as such they are an essential ingredient for enabling you to retain employees who have key skills and attributes that are important to your business.

Effective incentive schemes need to have memorable and motivating rewards. However, get the right reward can be a minefield due to the diverse nature of the workforce. To get the best out of your employees choose incentive schemes that offer a range of rewards that cater for every segment of your workforce.


Employee benefits

Survey after survey reports that most employees aren’t encouraged to remain loyal to their employer purely based on remuneration, instead it’s the total package of pay AND benefits that count.

This might include employee benefits such as flexible working arrangements and attractive pensions as well benefits that make their life just that little bit easier such as cashback cards and discounts from high street stores.


It is important to recognise however, that in some conditions high staff turnover may be beneficial to businesses. New employees can bring with them fresh ideas and up-to-date market knowledge and it’s an opportunity to source employees with specialist knowledge and expertise.

But if that’s not the case, then it’s clear that businesses that want to retain the very best staff need to act now to put schemes in place before staff start leaving at an alarming rate.



John Sylvester

John is responsible for the motivation division of p&mm ltd and a Director on the board of the IPM. Specialising in developing, implementing and directing many large scale staff motivation, recognition and employee communications programmes.

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