10 Data-Driven Strategies to Reduce Employee Turnover

Reduce Employee Turnover with 10 data-driven tips

Employee turnover is a continual challenge across industries, as more than 3.4 million people – or an average of 2.2% of the labor force – quit their jobs every month (Bureau of Labor Statistics). Moreover, a LinkedIn survey revealed that a whopping 85% of employees are considering leaving their jobs in 2024, representing a 27% increase over 2023.

Replacing employees is costly, with the Society for Human Resource Management (SHRM) estimating the average cost of a new hire to be $4,700 – but when you account for soft costs such as training and lost productivity, that figure can balloon to three to four times the employee’s annual salary.

As we navigate out of the Great Resignation through the era of soft quitting with a looming recession, employee turnover is at the forefront of HR challenges, and the most successful companies are adopting focused employee retention strategies that extend beyond obvious compensation incentives. To that end, the following lists ten proven ways to reduce employee turnover, backed by industry research.

Quick Overview
Benefits of Reducing Employee Turnover
Causes of Employee Turnover
How to Reduce Employee Turnover

Quick Overview

Research shows these are some of the most effective ways to increase employee retention rates. Scroll down for more in-depth information.

1. Wellness Programs
2. Career Development Opportunities
3. Recognize and Reward Employees
4. Team-Building Initiatives

5. Make Managers Coaches
6. Provide Robust Resources
7. Promote a Healthy Work-Life Balance
8. Offer Fringe Benefits

9. Foster Inclusivity
10. Ask (and Listen to) Employees

Benefits of Reducing Employee Turnover

Retaining employees offers significant benefits to companies of all sizes and industries.

1. Reduced Costs

If it costs three times a position’s annual salary to hire a new employee, that means it would cost $180,000 to replace an employee who earns $60,000 per year. That adds up to $540,000 in annual costs for a 100-employee company with a 3% turnover rate. Reducing employee turnover by just 1% can save significant money.

2. Greater Continuity and Productivity

Experts say it takes a new employee one to two years to reach maximum productivity (Forbes). When you have high employee turnover, you lose the continuity required for productivity. Conversely, low turnover promotes high productivity.

3. Greater Profits

Companies committed to employee retention tend to have greater employee engagement – and companies with high employee engagement are 21% more profitable (Forbes).

4. More Qualified Employees

Employee retention grants companies experienced, talented employees who retain institutional knowledge over time. Highly qualified employees make fewer mistakes and bring seasoned ideas to the table, helping companies overcome difficult challenges and influencing business growth.

5. Improved Culture and Increased Job Satisfaction

A great employee culture improves retention rates, but it also works the other way around – when you reduce employee turnover, you improve employee culture by keeping employees long enough to become ingrained in your company. In addition, employees who work together longer are more likely to forge friendships, and people who have a best friend at work are more likely to be satisfied with their jobs and less likely to leave their companies (Gallup).

6. Better Customer Experience

Low employee turnover means more experienced staff who understand your customers and can provide fast, friendly, capable support, creating a better customer experience.

7. Enhanced Brand Reputation

Companies with low employee turnover are more likely to earn reputations as great places to work, contributing to a positive brand reputation. Many customers prefer supporting companies that treat their employees well.

Causes of Employee Turnover

Employees cite many different reasons for leaving, and various polls and surveys have varying outcomes.

For example, in one study, 56% of employees said compensation was a top reason they’d seek another job, and 41% said they would switch jobs for just a 5% increase in pay (CNBC). At the same time, 40% of Forbes survey respondents said they would leave their jobs for better benefits.

Compensation and benefits are common themes for quitting, and that’s to be expected, but they’re not the only drivers of employee turnover. Compare the results of a 2023 FlexJobs survey and a 2021 Pew Research Center survey:

Major Reasons for Leaving a Job
FlexJobs Survey	Pew Research Center Survey
1. Poor work-life balance: 29%2. Low or unfair pay: 28%3. Toxic company culture: 27%4. Felt disrespected/undervalued: 26%5. Limited advancement opportunities: 25%6. Too stressful: 25%7. Didn’t allow (enough) remote work: 23%8. Bad boss: 22%9. Misaligned company and personal values: 21%10. Inflexible work hours: 21%	1. Low pay: 37%2. Felt disrespected at work: 35%3. Lack of advancement opportunities: 33%4. Childcare issues: 24%5. Lack of flexibility to choose hours: 24%6. Poor benefits: 23%7. Wanted to relocate: 22%8. Working too many hours: 20%9. Working too few hours: 16%10. Required vaccine: 8%

The reasons employees give for quitting can differ from what they say they want. Thus, a sound strategy for reducing employee turnover addresses both “why they quit” and “what they want” from their jobs.

For example, Adobe’s 2023 The State of Work Report uncovered an overarching theme that isn’t completely represented in the previous statistics: employees want their work to be rewarding. That means they want:

Autonomy over how they get their work done: 75%
To provide input into business goals: 75%
Better alignment and collaboration: 46%
Better tools: 65%
Fewer apps to work in: 68%
A positive work-life balance: 59%

Such insights are valuable for developing a successful employee retention strategy.

How to Reduce Employee Turnover

Here are ten proven strategies to reduce employee turnover, backed by industry research.

1. Wellness Programs

Wellness programs are among the best ways to reduce employee turnover. In fact, research shows that 45% of employees in small and medium-sized businesses say wellness programs would make them stay with their employers a lot longer, and 87% of employees choose employers based on the health and wellness programs they offer (Forbes).

Moreover, Human Resource Executive found that 83% of employees believe their wellbeing is as important as their salary, and 77% would consider leaving a company that doesn’t focus on wellbeing.

A well-designed wellness program is comprehensive and holistic, addressing all six pillars of wellness:

Physical wellness
Mental and emotional wellness
Nutritional wellness
Occupational wellness
Financial wellness
Social wellness

Wellness programs not only show employees their employers care about them, they can reduce stress and chronic disease while improving quality of life and health outcomes – but wellness programs don’t just benefit employees. They also benefit businesses by:

Reducing costs
Decreasing absenteeism
Increasing productivity
Boosting morale
Fostering teamwork

A comprehensive review of 22 studies on the financial impact of worksite wellness programs found that for every dollar spent on wellness, companies yield a $3.27 return on investment in reduced healthcare costs alone.

Not all wellness programs are created equal, so it’s important to choose a wellness program based on scientific evidence to influence employee behavior and deliver positive outcomes.

2. Career Development

Career development is essential to employee retention. A LinkedIn Learning Report found that 94% of people would stay at companies that invest in their career growth, while an article published by the University of Massachusetts states that companies that offer professional development opportunities increase employee retention by 34%.

Career development ideas include:

Mentorships
Skills development programs with cross-training opportunities
Multi-disciplinary teams
Well-defined paths to advancement

3. Recognize and Reward

It’s no secret that employees want to be recognized and rewarded for their work, and they’re often loyal to companies that make recognition a priority. Companies that frequently recognize their employees are 41% more likely to increase retention rates (Brandon Hall Group).

Some cost-effective employee recognition and rewards ideas include:

Handwritten thank-you notes
Celebrating employee successes office-wide
Sharing how an employee’s contribution benefited the business
Employee spotlights on social media and in company newsletters
Celebrating wellness program achievements

4. Team Building

Fostering a team culture is essential to reducing employee turnover. A Gusto survey found that, other than salary, 37% of employees say the most important reason for staying at their jobs is working with a great team – and 52% have left or are considering leaving jobs because they don’t feel like they belong.

Employee team-building ideas include:

Health challenges, such as step challenges
Assigning multi-disciplinary projects
Fun games, activities, and offsite retreats

5. Make Managers Coaches

Management has a direct and powerful effect on employee turnover rate – after all, most employees work with and report to managers every day. Rather than consider themselves task drivers, managers should adopt the role of coaches, where their job is to support their team in achieving common goals.

Consider this Fortune article that describes how one company replaced managers with coaches, resulting in much happier employees and a 20% boost in productivity.

While we’re not suggesting you fire your managers and hire coaches instead, we are saying you can reduce employee turnover when your managers:

Have a team mentality
Are servant leaders
Are empowered to help employees

6. Provide Robust Resources

Employees are more likely to jump ship if they don’t have the tools and resources to perform their jobs effectively. Think about it: why would an employee stay at a job that makes them work twice as hard due to poor resources when they can get the same pay for half the work and frustrations elsewhere?

Adobe’s 2021 State of Work Report reveals that 49% of employees would leave their jobs over poor technology, while the company’s 2023 State of Work Report states that 16% of senior leadership would leave for a job with a better tech stack.

Key considerations include:

Give employees tools that make their jobs easier
Don’t assume; ask employees what they need
Introduce a comprehensive onboarding program

7. Promote a Healthy Work-Life Balance

Gallup found that 26% of employees cite wellbeing and work-life balance as the primary reason for leaving their previous job, behind only engagement and culture (40%) and ahead of pay and benefits (20%). It’s clear, then, that work-life balance is critical to reducing employee turnover, and companies that prioritize employee happiness are more likely to retain employees long-term.

There are many ways to promote a healthy work-life balance, including:

Offering flexible scheduling
Enabling remote and hybrid work opportunities
Prioritizing productivity over work hours

8. Offer Fringe Benefits

Over 60% of employees say benefits make them feel more cared for and loyal to their employers, according to MetLife’s 2023 U.S. Employee Benefit Trends Study. While many companies offer health insurance, workers’ compensation, and family and medical leave – required by law for most businesses – optional fringe benefits and perks can be significant differentiators that help companies attract and retain top talent.

Examples include:

Retirement plans
Paid Time Off (PTO)
Childcare subsidies
Commuter benefits
Financial and retirement planning
Gym memberships
Employee Stock Ownership Plans (ESOP)
Tuition reimbursement
Employee discounts
Health and wellness coaching

9. Foster Inclusivity

Much research has been devoted to examining the impact of diversity, equity, and inclusion (DEI) initiatives, and the evidence is overwhelming: employees are 5.4 times more likely to want to stay at inclusive companies long-term (Great Place To Work), while 81% of employees would consider leaving jobs over an employer’s lack of commitment to DEI (GoodHire).

Moreover, an Accenture report states that American businesses without inclusive work cultures collectively lose $1.05 trillion annually due to high turnover rates and low productivity and engagement.

Per Deloitte, today’s workforce is seeking a culture of:

Authenticity, where they can be themselves and leverage their unique strengths
Flexibility, where they can choose where and when their work gets done
Purpose, where they make an impact

10. Ask (and Listen to) Employees

In its 2023 The State of Employee Listening Report, Perceptyx notes that companies that listen to employee feedback and include employees in the change process are seven times more likely to retain talent – even during times of high attrition.

Companies that listen to their employees – and use their feedback to make positive changes – are far more likely to reduce turnover and reap the rewards of long-term loyalty.

Ideas include:

Conduct employee surveys
Encourage regular, honest employee feedback
Measure your employee Net Promoter Score (eNPS)

Reducing employee turnover should be a top property for every company. Institute the research-backed initiatives listed here to boost retention and gain a competitive advantage through increased productivity, reduced costs, and greater profits.

At WellSteps, we understand how effective wellness programs reduce employee turnover, increase job satisfaction, and drive positive business outcomes. Our wellness offerings are science-based, holistic, and tailored to fit each company’s and individual’s unique needs and preferences. Schedule a free demo to see how our program influences employee and business health today.

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