8 min read
Considering the last few years, almost every worker in America has in some way felt the effects of employee turnover. You may have heard of the term the "Great Resignation" and more than likely know of at least one person in your life that has been a part of either a voluntary or involuntary turnover.
2022 had a record number of voluntary resignations, and a new forecast by Microsoft and LinkedIn shares that almost 50% of the workforce is considering leaving their positions this year. Involuntary turnover has also made news in recent years, especially for the tech sector which has lost around 191,000 positions in 2023 alone.
While these high turnover rates may sound shocking, there are opportunities for organizations to mitigate any negative effects of employee turnover. Keep reading to learn more about employee turnover and how policies and procedures can help in a time of transition.
What is Employee Turnover?
Employee turnover refers to the number of employees who leave an organization over a certain time period. There are two types of employee turnover: voluntary turnover and involuntary turnover.
Voluntary Turnover
Voluntary turnover refers to an employee leaving a company of their own choice, for one of a few reasons.
- Job dissatisfaction/burnout. Prolonged dissatisfaction or stress can lead to employees searching for a different organizational culture. This may come from various issues and personal reasons such as unmanageable workloads, lack of employee engagement, limited career growth, or lack of recognition.
- Better opportunities. Whether they have found higher salaries, career advancements, or improved working conditions, some employees may leave voluntarily to pursue a different opportunity.
- Poor management. Employees need good managers – and when this doesn’t happen, they may choose to leave the organization. This could be due to a lack of support, ineffective leadership, or a negative management practice like micromanagement.
- Retirement. Not all voluntary turnover is a direct response to negative practices within an organization. Retirement is a type of voluntary turnover that is typically planned where an employee chooses to leave the workforce after reaching a certain age or fulfilling their career goals.
Involuntary Turnover
Involuntary turnover refers to employees leaving a company without actively choosing to do so. The employer ultimately chooses to remove the employee from their position, which can happen due to a few different circumstances.
- Layoffs. While organizations do their best to avoid layoffs, they do happen in the workplace. This reduction in the workforce can be a result of financial difficulties, restructuring, or shifts in business strategy.
- Performance-based terminations. If an employee is not meeting the expectations or standards related to their role, they may be terminated based on unsatisfactory performance. Incomplete work or missing deadlines are a few examples of poor performance.
- Legal or compliance issues. Employees who violate company policies, laws, or ethical guidelines can be told to leave a company to prevent legal repercussions and maintain a positive work culture.
- Attendance issues. Tardiness or missed shifts cause a disruption to company productivity and drive a wedge between an employer and the employee. Should this become habitual, a company may dismiss the employee.
- Organizational changes. Organizational changes typically include mergers, acquisition, or restructuring. If this results in new operational frameworks or strategic goals, positions may be eliminated.
A high employee turnover rate can have several harmful effects on an organization, impacting its overall performance and stability. Some of the negative effects of employee turnover include:
- Financial Impact: The costs associated with recruiting, hiring, and training new employees are significant. Not only do you spend time on job postings and training materials, but time is also spent on interviews and bringing new employees up to speed during their onboarding process.
- Productivity Loss: Turnover disrupts workflow and reduces overall productivity. The absence of an employee introduces a gap that must be filled, leading to additional responsibilities for the remaining employees. Plus, it takes time for new employees that are eventually hired to come to full productivity.
- Difficulty Recruiting: Frequent departures can harm a company’s reputation and make prospective employees fear instability. This negative perception can make it difficult to attract and retain top talent.
- Decreased Employee Morale: Witnessing frequent turnover causes a sense of uncertainty, which can have a negative impact on remaining employees' morale and engagement.
- Knowledge Drain: When experienced employees leave, they also take with them their learned expertise and institutional knowledge. Even when knowledge is transferred to new employees and remaining team members, it still takes time and may not fully compensate for the experience lost.
- Lower Customer Satisfaction: For customer-facing roles, a frequent change in staff can disrupt customer service and relationships that are based on time and trust. There may also be delays or errors in delivery based on new employees taking time to develop knowledge of a company’s products, services, or customer preferences.
- Increased Risk for Mistakes: When people leave, there is a disruption to the system that can lead to a higher likelihood of errors. New hires may make mistakes while still learning the ropes, which can result in operational inefficiency or quality control issues (which could impact a company financially through fines or loss of product, depending on the mistake made).
How P&Ps Can Mitigate the Effects of Employee Turnover
Unfortunately, employee turnover does happen. Having policies and procedures in place, though, can help through the transition and mitigate any negative impact.
Consistency and Continuity
Standard operating procedures ensure consistency in operations even when employees leave. Your policies and procedures should be easy to understand and follow, allowing anyone to step in and take over the role of an employee who has left. When these documents are already created and accessible, there should be a smooth transition.
- Standardized Processes: P&Ps ensure that tasks are performed consistently, regardless of who is performing them.
- Minimized Disruptions: Having P&Ps in place can reduce disruptions caused by turnover, ensuring smooth transitions.
- Consistent Quality: When best practices are documented and used, the output is the same, no matter who in the organization completes the task.
Training and Onboarding
Streamline training and onboarding processes for new employees with policies and procedures. These operational documents share your company’s best way and can bring new employees to productivity quickly, giving them a sense of accomplishment and ownership of their work.
- Streamlined Training: P&Ps provide a structured training framework for new employees, making the onboarding process quicker and more efficient.
- Clear Guidelines: Having clear, documented procedures for new hires to follow can help them become productive faster.
- Better New Hire Experience: Clear guidelines and a quick ramp up in productivity can lead to fast job satisfaction and a positive feeling towards the company.
Knowledge Retention
Having policies and procedures in place and easily accessible ensures that any tips, tricks, learnings, and best practices will always stay with your company. This means that your workforce can retain organizational knowledge, even if fellow employees leave.
- Documentation of Best Practices: P&Ps capture institutional knowledge and best practices, preserving valuable information when experienced employees leave.
- Knowledge Transfer: Clearly written policies and procedures facilitate the transfer of knowledge to new employees, reducing the learning curve.
- Continuous Improvement: When policies and procedures are consistently reviewed, any best practices are updated, leading to continuous improvement in operational tasks.
Efficiency and Productivity
When employees leave, a company is left with less resources until a new employee can take their place. Sometimes there is no plan to backfill the position. Policies and procedures can improve overall efficiency by providing clear guidelines and procedures, even during times of transition.
- Defined Processes: P&Ps eliminate guesswork by providing detailed instructions for completing tasks, improving efficiency.
- Reduced Errors: Policies and procedures can reduce mistakes and improve the quality of work by providing clear, step-by-step guidelines.
- Continuous Work: If a process is well documented, there is no need for the work to pause when an employee leaves. Another person can step in and complete the work continuously thanks to the documented procedures.
Morale and Engagement
Clear procedures can improve employee confidence and morale by reducing uncertainty and confusion. This results in a feeling of a stable work environment and positive company culture, giving current employees confidence in their roles in times of transition.
- Clarity and Assurance: There are no questions about whether a job is being completed correctly when the best practices and procedures are readily available and easy to follow.
- Reduced Stress: Having well-documented policies and procedures is a great way to reduce stress and uncertainty for employees, leading to higher morale and job satisfaction.
- Increased Confidence in Work: P&Ps provide employees with clear expectations and procedures, boosting their confidence in performing tasks.
Quality Control
Policies and procedures provide standardized practices that maintain high standards regardless of who performs the tasks.
- Consistent Output: P&Ps ensure that products and services are delivered consistently, maintaining high quality standards even during turnover.
- Accountability: P&Ps help hold employees accountable by providing clear guidelines and performance standards.
- Established Standards: Policies and procedures document critical processes and knowledge, making it easier for new employees to learn and adhere to established standards.
Regulatory Compliance
When employees leave, an organization opens itself to the possibility of non-compliance – the results of which could be disastrous. SOPs define detailed guidelines that all employees can follow to adhere to legal and industry standards consistently.
- Adherence to Regulations: P&Ps ensure that all employees follow regulatory requirements, reducing the risk of non-compliance.
- Documentation for Audits: Well-documented P&Ps can simplify the audit process and demonstrate compliance with industry standards.
- Accessibility of Regulations: All staff members, regardless of their tenure, are aware of and can adhere to compliance standards, minimizing the risk of non-compliance due to lack of knowledge.
What Policies Could Improve Employee Retention and Minimize Turnover?
While of course policies and procedures can help when employee turnover occurs, the main goal is to avoid employee turnover when you can. And certain policies implemented at your company highlighting employee retention strategies can help promote a positive work environment where employees thrive. A few to keep in mind include:
- Employee retention. This policy outlines the efforts to keep employees engaged and satisfied. Do employees feel that their work has meaning? Are there opportunities for employees to expand their knowledge and grow in their role with professional development?
- Vacation. Work-life balance is an effective way to maintain employees and makes a big impact on the happiness of your workers. This policy outlines time off for employees as part of the overall compensation package offered with their positions. You may even be competing with companies that offer unlimited PTO.
- Remote work. With remote work becoming more and more of a common employment arrangement, employees are looking for opportunities to work from home. Would it be possible/helpful to include this flexibility?
- DEI hiring. A DEI hiring policy fosters a diverse and inclusive workforce, driving innovation and enhancing organizational performance by reflecting a wide range of perspectives and experiences. Do employees feel welcome, seen and heard? Can they bring their whole self to work?
- Feedback channels. Establishing open lines of communication, regular performance reviews, and anonymous feedback mechanisms can help identify and address employee concerns promptly. This helps support a responsive work environment where their voice is heard.
Create Clear Policies and Procedures with Zavanta
Creating clear policies and procedures is essential for mitigating the effects of employee turnover, and Zavanta provides a robust platform to streamline this process.
Client Example
Our clients have reported results like 50% faster onboarding. Here’s a real example:
One of our clients, a national parts supplier, experienced a sharp decline in their customer satisfaction rating. As you can imagine, their CEO became concerned. Preliminary analysis uncovered an increase in transaction errors which resulted in shipping incomplete orders and unnecessary delays. The company grew very quickly to 250 employees just in customer service. Most training was haphazard, done “word of mouth.”
After performing a financial assessment, they were astounded to find out just how much they were spending on training and turnover costs. Their turnover rate was 20%, which meant they were training 50 new people per year in customer service. They estimated their cost to train a new person was $8,000. For a firm of 250 employees, a training cost in excess of $400,000 was a tough pill for the CEO to swallow.
Using Zavanta, they were able to develop a process with related procedures and policies that they could use to train new hires from. This enabled them to reduce ramp-up time and the time people spent asking their neighbor and supervisors for help.
As an added bonus – by stepping back and reviewing their current operations they were also able to implement additional controls, making their work processes more efficient and less error prone.
Talk to Our Team to Learn More
Zavanta's end-to-end solution allows organizations to capture and manage all critical policies and procedures in a centralized, easily accessible location. By using Zavanta, companies can ensure that their guidelines are consistently updated and readily available to both existing and new employees.
When employees have access to well-defined guidelines and procedures, they are more likely to feel confident in their roles and less affected by the disruptions caused by turnover.
Contact our team to learn more.
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