Just imagine: your top employee hands in their notice. All the knowledge and experience that person has accumulated over the years leaves your company – in just a few days. Not to mention the business relationships that have been established over time. The consequences are serious: finding, training and integrating a suitable replacement not only costs time, money and, above all, nerves, but also has a direct impact on team dynamics.
In many industries, employee turnover is no longer just an HR indicator. This indicator is an accurate reflection of how well an organisation succeeds in retaining its best minds and promoting them in the long term. Companies that neglect this aspect risk both high costs and a loss of competitiveness. After all, it is not uncommon for a company's success to depend on a few key people.
So why do employees leave in the first place? And what can companies do to prevent these departures? Both are broad areas, so this article will focus on the key reasons behind employee turnover and provide practical tips on how companies can build and maintain a stable, loyal and productive workforce.
Employee turnover – a definition
Employee turnover describes the rate at which employees leave a company and are replaced by new people. There are basically three types of turnover, which can be categorised as natural (e.g. retirement or family reasons), internal (e.g. change of department) and external. Employee turnover is critical for company management because it affects both team stability and human resource planning. External employee turnover is the biggest risk factor for an organisation. One subtype of this is early employee turnover.
We speak of early turnover when employees resign and leave the company shortly after being hired. As a rule, the termination is at the initiative of the employees. The exact period of time during which an early turnover is considered is not uniformly defined. However, this period is often defined from the signing of the contract to the end of the probationary period.
There are different methods for calculating the fluctuation rate, which can be adapted depending on the company structure and data availability. The basic formula calculates the fluctuation, for example, by using the ratio of departures in relation to the initial headcount. More advanced approaches, such as the Schlüter formula, also take into account the additions during the observation period and provide a more differentiated picture of the personnel dynamics in the company (see Fig. 1).
These different calculation approaches make it possible to draw targeted conclusions about employee retention. Depending on the method, it is possible to see whether turnover is high or low compared to the industry, and this enables companies to develop targeted measures to optimise this rate.
On the whole, employee turnover is a key performance indicator in HR management that alerts the company to potential employee retention challenges.
Employee turnover in Germany
Even though the media may make us feel like more people are changing jobs these days (e.g. Gen Z), the turnover rate in Germany is practically constant. Historically, the rate dropped to just under 30% during the 2020 coronavirus pandemic – now we are back to pre-crisis levels.
However, the high fluctuation rate compared to other age groups (Fig. 4) does indeed apply to Generation Z (approx. 1995-2010). In this case, however, the start of working life plays a decisive role, especially for apprentices. In addition, job changes as part of a new or reorientation of one's career, such as during the probationary period, are also relevant.
Analysing the reasons for employee turnover
The causes of employee turnover are as diverse as the employees themselves and can often reflect deeper-seated problems in the corporate structure or culture. A detailed understanding of these reasons is essential to developing targeted countermeasures. The most important factors can be categorised as follows:
1. Lack of development and career opportunities
In many cases, employees are dissatisfied when they feel they are stuck in their careers. Companies that do not offer clear career paths or training opportunities risk losing ambitious talent to new opportunities. Employees expect a clear vision of their professional development, especially in digitalised work environments where skills quickly become obsolete. A lack of opportunities for further development is a major factor in increased turnover.
2. Stress and work-life balance
An unhealthy work-life balance, often associated with excessive workloads and a lack of flexibility (especially a lack of flexibility!), can lead to employee exhaustion in the long term. Modern employees increasingly crave flexible working models such as home office and flextime, which enable a better work-life balance. Particularly middle-aged people often have to cope with the double burden of caring for their own children and for their (dependent) parents. A failure to adapt in this area often inevitably leads to an increased desire for change.
3. Leadership and corporate culture
Relationships with superiors and leadership behaviour in general continue to play a central role in job satisfaction. An authoritarian management style that allows little personal responsibility or hardly values employees can have a lasting negative effect on motivation. Wirtschaftswissen.de emphasises that employees in such environments often feel that they cannot develop sufficiently or are not seen as individuals. Companies that rely on supportive, transparent and appreciative leadership can significantly strengthen employee loyalty.
4. Interpersonal tensions and team dynamics
Social aspects in the work environment also contribute to fluctuation. Conflicts in the team, insufficient support from colleagues or unbalanced team dynamics foster dissatisfaction. In such cases, employees often feel isolated or insufficiently integrated. A lack of conflict resolution and team-building measures intensifies this effect and ultimately drives up the fluctuation rate.
5. Private and personal reasons
Of course, not all factors that cause fluctuation can be controlled internally. Private circumstances such as family commitments, health changes or a geographical move can also lead to a change of job. However, companies can partially prevent such departures through flexible arrangements – for example, by offering the option of location-independent work.
Generally speaking, the reasons for employee turnover are complex and often due to a lack of adaptation to the personal and professional needs of employees. Next, we will look at how companies can reduce this turnover rate and promote long-term employee retention.
Ways to reduce employee turnover
We keep mentioning it: A central approach to reducing employee turnover is to create a work culture that takes the needs and expectations of employees seriously. The following strategies can help companies retain employees in the long term and reduce the turnover rate:
1. Create clear development and promotion opportunities
We recommend conducting regular development reviews and designing transparent career paths. Employees who have a clear idea of their future in the company are more likely to make a long-term commitment. Support programmes and continuous training for personal and professional development offer tangible added value and strengthen employee loyalty. You can find more information in our article on strategic employee development.
2. Fostering a healthy work-life balance with flexible working models
Introducing flexible working hours and offering employees the option to work from home or remotely are among the most effective measures for boosting satisfaction. Flexibility is at the top of the wish list for employees and is particularly sought after by top professionals. Companies should not only offer the opportunities, but also actively promote them to employees in order to prevent burnout. Especially in modern work environments, many employees expect such flexibility as the basis of their work culture. How does it work? Read the article by our partner PALTRON: From distance to unity: how remote work works successfully.
3. An appreciative corporate culture and supportive leadership
A transparent and appreciative leadership culture can make all the difference in employee retention. Appreciation is highly valued by employees. It is important that executives actively seek feedback and address the individual needs of their teams. Leadership that promotes trust and personal responsibility strengthens employee engagement and satisfaction. Our colleagues at CareerTeam have written a valuable article about the strategic upskilling of executives.
4. Team building and conflict management
Supporting positive social dynamics in the company is another essential measure. Organisations are well advised to actively invest in team-building activities and develop conflict resolution strategies to reduce interpersonal tensions. Regular team events and open communication help to build a strong sense of cohesion and foster a positive working environment. Again, the question is: Are you taking care of your corporate culture?
5. Offer attractive employee benefits
And last but not least, another tool for reducing turnover is competitive benefits that are tailored to the needs of employees. Salaries and additional benefits should be regularly evaluated and adjusted to market standards in order to position the company as an attractive employer. Benefits such as company pensions, budgets for advanced training or free fitness offers create additional incentives for employees. Speaking of benefits – in our last article ‘Why individual working conditions are the key to employee satisfaction’, we also present individual benefits and their advantages.
Of course, an attractive compensation package often lays the foundation for employee satisfaction. In addition to the salary, the individual benefits and working conditions just presented offer companies a great deal of leeway. The overall package has to be right. Read our article on the subject: ‘Attractive compensation packages for digital professionals’ and ‘Employee Retention – 10 measures beyond salary to retain your workforce’.
Conclusion
Employee turnover is a challenge for every company. The strategies mentioned above show that a comprehensive, employee-oriented corporate strategy is the key to reducing the turnover rate.
However, it is not only the implementation of individual measures, but the consistent alignment of the entire corporate culture that achieves a sustainable effect. From development programmes and flexible working models to appreciative leadership – companies that invest in the well-being and satisfaction of their employees create an environment in which talented people not only come, but also want to stay. And at the end of the day, everyone benefits from a positive and productive work culture.
.png)
