Employee Turnover

First published on Thursday, June 4, 2020

Last updated on Friday, June 14, 2024

Employees leaving your company is unavoidable. But every time someone leaves, it costs you both in time and money.

It’s important you understand how employee turnover can increase your employee retention. The last thing you want and need, is to spend more money hiring and training new staff on a regular basis.

The average cost of turnover for an hourly employee in Canada is 33% of an employees’ annual salary. As an economical point of view, it’s key you reduce your employee turnover as much as possible.

In this article, we’ll explain what staff turnover is, the causes and effects and how to go about managing employee turnover.

What is employee turnover?

Employee turnover refers to the number of staff who leave an organization and are replaced by new employees. Your staff turnover ratio and average employee turnover rate are key to managing and improving the situation at your company.

What is employee turnover rate?

An employee turnover rate refers to the percentage of employees leaving an organization in a period of time.

Don’t include internal promotions and transfers in your calculation, as they’re not actually leaving your company. Make sure you include the following:

  • Staff dismissals.
  • Voluntary resignations.
  • Retirements.

Avoid a high turnover rate in your company by using a cost-effective hiring and training process for new staff.

Employee turnover causes and effects

There are a range of causes which could lead to an increase in employee turnover within your business. Not all are the fault of the employer, but that doesn’t make them any less important to you:

  • Not enjoying the job/didn’t meet expectations.
  • Work-life imbalance.
  • Poor working relationships with management or colleagues.
  • Not enough feedback from management.
  • Frozen wages (if promised raises and bonuses).

Following an employee leaving their role, there are economic knock-on effects for your business. As well as taking time to find a replacement, there are many financial outgoings:

  • Hiring a replacement: Time needed to undertake background checks as well as recruitment fees.
  • Advertising: The costs of placing your job advert online, as well as marketing and any paid ads.
  • Onboarding: Cost of employee equipment, uniform, benefits packages, and any other resources they may need.
  • Interviewing time: The amount of time you spend reviewing CV’s, conducting interviews, and selecting the replacement.
  • Time taken to train new employees: The amount of time taken to train a new starter, which could be anything from two weeks to six months.

High employee turnover industries

In 2018, a global labor survey showed Canadian companies have the fourth highest employee turnover rate.

The following industries have the highest amount of personnel turnover:

  1. Technology.
  2. Retail and consumer products.
  3. Media and entertainment
  4. Professional services.
  5. Government/non-profit.
  6. Financial services.
  7. Telecommunications.
  8. Oil and energy.
  9. Transport services.
  10. Healthcare.

Indirect costs of employee turnover

The value of employee retention to you as an employer is huge. The longer your staff work together, the stronger their working relationships will be.

There may also be a loss of morale within remaining employees if they feel a high number of their colleagues are leaving. A dip in morale could lead to a dip in motivation, which could mean a loss in productivity.

With each employee that leaves your company, you are losing an amount of knowledge, skillset, expertise, and trade secrets.

How to reduce high employee turnover

Holding exit interviews is becoming more common throughout Canada following an employees’ departure.

By undertaking these interviews and studying the answers, you can use them to increase employee retention. Especially if the same answers are being given.

Businesses need to create successful retention strategies to reduce employee turnover. Offering more feedback to your staff, training your managers more often and giving regular performance reviews, can go a long way.

How does training reduce employee turnover

Regular training for your employees can show you are committed to their professional development.

Feeling appreciated and wanted are two of the major factors in an employees’ happiness. The happier they are, the more likely they won’t be looking for a different role.

Get help with employee turnover today with BrightHR

Managing your employee turnover correctly is important to you. Exit interviews and more training with your staff will reduce the amount of people that will leave.

BrightHR has a range of tools that can help you reduce your employee turnover and streamline your interview and onboarding process!

Our HR document storage allow you to keep your job ads and new starter forms in the cloud for use any time.

Contact us on 18882204924 or book a demo today.


Jenny Marsden

Associate Director of Service

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