November 1, 2014

Why Your Employees Leave And How to Stop Them

Did you know that almost one-fourth of all new hires leave their companies within one year of coming on board? A new study of 500 HR professionals by Allied Van Lines, reported in Business News Daily, found that the blame for this high turnover can’t be blamed solely on the economy or demographics. Instead, Allied found that failure to properly train, mentor and acclimate new employees to the workplace was a key reason behind their moving on.

stop employee

Employee turnover costs companies substantially, the survey found. The average cost for filling one position was $10,731. But despite the financial hit from high turnover, the majority of companies still spend far more on recruiting and advertising for new employees than they do ensuring that the employees receive proper training. Allied Van Lines found that the average company spends just $67 per employee on “onboarding.”

Companies considered “best-in-class,” however, spent nearly twice that amount, and their employees were far more likely than those at the average company to stay with the business for at least one year, become leaders within the business, and meet or surpass productivity goals. The survey also found that although fewer than one in five companies has a dedicated budget for onboarding new employees, those that did have dedicated budgets were nearly twice as likely to be successful at retaining new workers.

Survey respondents said the three most common reasons new employees leave within a year are:

  1. Relationship with their manager
  2. Job performance
  3. Career advancement opportunities.

Despite these issues, few companies in the survey were taking steps to deal with these problems. Only 66 percent of companies in the survey train new employees. Fewer than half (44 percent) have coaching or mentoring programs. Some 42 percent fail to clearly identify performance expectations or even job titles; just 32 percent set goals for employees to follow to advance in their careers.

How can your business avoid rapid turnover?

  • Provide training and orientation so employees know what’s expected of them.
  • Get involved with new employees’ onboarding, even if they don’t work directly with you. Management’s involvement in welcoming new employees makes a huge difference, and is one advantage small companies have over larger ones.
  • Develop a mentorship program or pair new employees with more seasoned workers who can show them the ropes, not only of the job but also of your business’s company culture.
  • Meet with employees regularly to set specific goals for productivity, achievements and skills. Review progress on a regular basis and provide ongoing feedback.

Don’t wait until it’s too late to find out if your new hires are unhappy. Although 54 percent of respondents in the Allied survey say they conduct exit interviews, just 13 percent interview employees to gauge their satisfaction while they still work for the company. Keeping communication channels open goes a long way toward keeping employees happy.


Stop Employee Photo via Shutterstock

11 Comments ▼
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Rieva Lesonsky


Rieva Lesonsky Rieva Lesonsky is a staff writer for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow her on Google+ and visit her blog, SmallBizDaily, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

11 Reactions

  1. I see so many benefits from mentors. Not only do you have someone the new employee can talk to and voice concerns, but you also have a seasoned employee who understands the concerns and can help with career advancement.

  2. Rieva, great article! Although it says within the first year, it’s gotten down to months and even weeks. Failure to assimilate new hires into the culture, or better yet hire FOR the culture is a big disconnect.

  3. Good article, though one thing not listed here is to train the management team. It’s the number one reason people leave yet very few companies set them up for success. A lot of managers were promoted as individual performers and aren’t equipped properly to develop as managers.

  4. In addition to above mentioned three reasons; too much work load and lack of motivation is another cause which leads to flee.

  5. Bwesit mong tanan

    I see so many benefits from mentors. Not only do you have someone the new employee can talk to and voice concerns, but you also have a seasoned employee who understands the concerns and can help with career advancement. Rieva, great article! Although it says within the first year, it’s gotten down to months and even weeks. Failure to assimilate new hires into the culture, or better yet hire FOR the culture is a big disconnect. Good article, though one thing not listed here is to train the management team. It’s the number one reason people leave yet very few companies set them up for success. A lot of managers were promoted as individual performers and aren’t equipped properly to develop as managers. In addition to above mentioned three reasons; too much work load and lack of motivation is another cause which leads to flee.

  6. In my opinion the success of working environment depends on 2 factors, great manager and good interpersonal relationship between employes.

  7. Great article, Rieva. You did a nice job of breaking down the important points of the study and relating them effectively to your audience so that we may utilize the data in a useful way. A business mentoring program can be such an integral part of a company’s success that can translate into talent retention (instead of turnover!), happier employees, and a healthier bottom line.

    Thanks for your insights and here’s to everyone’s mentoring success!

  8. Dear Concern,

    Good evening! I’m from Bangladesh in Chittagong district. Since 01 Dec 2012 I join with a new Chittagong district Local Company. I have experience near about three years for HR Personnel. In Bangladesh except MNC Company no one ever treat us as your article remarkable employee.

    In Bangladesh employer for Local Company they never think about employee honesty for money transaction they always nearest dearest kith and kin. Here manpower graduate is available to work low price. Employer treat employee they are poor, and have no right to be live in smart living. There is no justice for us who are employee in Local company.

    Still I’m working for better management participant. I am looking for a well renowned company who actually maintain all criteria of better business and I wish I will get it by the grace of almighty. But think about poor local management company employee situation how long they work as present. Today is 10 of February 2013 and employer expenses all money of employee salary for his personal business and employee family member who depend on them feel so helpless. I believe “it customer who pay the salary, employer just handle the money”.

    Be happy and wish for better moment in Bangladeshi job employee.

    -Hasan

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