Employee turnover appears frequently in the news. In the aftermath of Covid, media headlines were dominated by the great resignation, which saw frustrated staff leave their employers in droves. But high inflation and macroeconomic pressures soon left workers seeking job stability above all else. With hiring intentions dampened and turnover in decline, the Chartered Institute of Personnel and Development (CIPD) announced that the so-called big stay was upon us.
No matter the trend, the message for HR leaders has been clear: retain talented staff at all costs. But not all resignations are ruinous. Low turnover can be just as damaging to growth as high turnover. To better understand how attrition impacts their organisation, HR leaders are turning to new AI-powered analytics tools, which offer nuanced insights on appropriate staffing levels and hiring strategies.
Determining the “normal” rate of turnover is difficult. According to the Office for National Statistics, the UK-wide employee turnover rate is 35%. That figure, however, includes part-time, short-term and gig workers. Strip these out, as well as non-voluntary departures such as redundancies, and the natural attrition rate is closer to 15%, meaning almost one in seven full-time employees leave their employer each year. But understanding these figures is more complicated still.
Get granular to understand attrition
“The 20th-century view of turnover was fairly binary,” says Thomas Calvard, senior lecturer in human resource management at the University of Edinburgh. “It said if people are dissatisfied with their job beyond a certain level and they can leave, they will do so. Today, it’s much more of an unfolding, ambiguous process you need to dig into to see what’s going on.”
Let people go if they’re ready to, but don’t burn your bridges. Let them go with a nice handshake and they might come back
Calvard explains that HR has historically focused on intrinsic motivators – a sense of purpose, the opportunity to progress or a two-way relationship with managers, for instance – to determine whether an individual is engaged in their job. But there are often external factors at play, including the business’s policies on hybrid working. “Everything in your HR strategy could potentially be pushing or pulling people in one direction or another,” he adds.
Turnover rates vary significantly across industries. According to analysis by the CIPD, turnover in the UK ranges from 24% in the public sector and 26% in financial services to 52% in accommodation and food services. The British Retail Consortium sounded the alarm in 2024 when annual figures in its sector breached the 50% mark.
Location is a factor, too. Employers in rural areas, where there are relatively few employment options, may prove ‘stickier’ for staff. Turnover rates also vary widely across jurisdictions. Spain, for example, has maintained a rate of 3% over the past few years, with potential job leavers spooked by consistently high unemployment in the country. Job hopping is common in the US, meanwhile, where turnover rates regularly exceed 40%.
By investigating factors such as demographics, job function and location, people teams may spot patterns among their firm’s leavers and understand whether turnover is a problem in their organisation. Consider working mothers, Calvard says. When women return from maternity leave, they often leave their job after a couple of years. Firms should anticipate this. Employee age and experience may also shift the baseline. For instance, many employees quit two or three years into their first role because they have no clear progression path.
Is high employee turnover always a bad thing?
According to a 2021 paper by researchers at the University of California, high staff turnover is strongly correlated with future financial underperformance. The report named Abercrombie & Fitch (37% turnover) and Tesla (34%) as stark examples. Even more extreme, a leaked internal presentation at Amazon in 2022 purportedly showed the company’s turnover to be 150%. Amazon denies this figure. At the other end of the scale is Nvidia, which has one of the lowest turnover rates among large global businesses – 0.9% in its Chinese division.
But attrition isn’t always a bad thing. CHROs in parts of the public sector regularly bemoan turnover in the single digits, which stops them bringing in fresh skills and different mindsets. And, as Calvard points out, employees who choose to stay may still be disengaged and dissatisfied.
Everything in your HR strategy could potentially be pushing or pulling people in one direction or another
Analytics can help HR leaders differentiate between good turnover and bad turnover. At the gambling giant Entain, Ciprian Arhire, global head of people programmes and analytics, separates turnover by region and role and cross-references it with reported levels of engagement and sentiment. These findings are then mapped to job types to understand whether the unhappiest people are also the hardest to replace and compared with exit interviews from past departees.
Arhire says lack of career progression is a common complaint among leavers but cautions that many people are motivated by individual circumstances – their journey to work or relationship with colleagues, for example. His hope is to turn the data into a predictive model that will help target interventions at the most at-risk staff before they decide to leave.
This requires specific data skills in HR, he says, but also the right mindset. “Too often people are looking for data to validate their assumptions rather than turning their assumptions into testing scenarios to understand whether they’re true or not. As an HR leader, you need someone dedicated or specialised to be able to convert [ideas] into the right research questions and then look for the data that will either support or dismiss them.”
How to solve employee churn
What to do with the findings is difficult to prescribe. Arhire says assuming a pay rise will solve high turnover is almost always wrong. Calvard suggests targeted benefits – such as flexible working, retirement planning or childcare vouchers – can be more cost-effective than salary hikes. He adds that listening mechanisms such as ‘stay interviews’, where employees talk about their career plans and motivations, can also alert HR teams to future problems.
Sometimes, however, retention isn’t the best option. “One paradoxical way to deal with turnover is to let people go if they’re ready to, but don’t burn your bridges with them,” Calvard says. “Let them go with a nice handshake and they might come back.” Maintaining an alumni network can also help HR to keep track of top talent.
And if the numbers instead show that turnover is too low? Things could be worse. In 2000, a south Wales factory closed after its entire workforce shared £4.4m won in the National Lottery. There are some eventualities that even the best employers can’t plan for.
Employee turnover appears frequently in the news. In the aftermath of Covid, media headlines were dominated by the great resignation, which saw frustrated staff leave their employers in droves. But high inflation and macroeconomic pressures soon left workers seeking job stability above all else. With hiring intentions dampened and turnover in decline, the Chartered Institute of Personnel and Development (CIPD) announced that the so-called big stay was upon us.
No matter the trend, the message for HR leaders has been clear: retain talented staff at all costs. But not all resignations are ruinous. Low turnover can be just as damaging to growth as high turnover. To better understand how attrition impacts their organisation, HR leaders are turning to new AI-powered analytics tools, which offer nuanced insights on appropriate staffing levels and hiring strategies.
Determining the "normal" rate of turnover is difficult. According to the Office for National Statistics, the UK-wide employee turnover rate is 35%. That figure, however, includes part-time, short-term and gig workers. Strip these out, as well as non-voluntary departures such as redundancies, and the natural attrition rate is closer to 15%, meaning almost one in seven full-time employees leave their employer each year. But understanding these figures is more complicated still.
