10 Causes of High Employee Turnover And How to Prevent/Reduce It

Introduction

"The only thing worse than training employees and losing them is not training them and keeping them."- Henry Ford.

Employee turnover is not just about better salaries elsewhere. It’s about how employees feel at work every single day. India’s workforce is changing with professionals prioritising growth, respect, and balance more than ever.

Moreover, the cost of replacing an employee can range from one-half to two times their annual salary.

However, most companies still focus too much on recruitment and too little on retention.

If organisations fail to invest in employee skill development, fair compensation, and workplace culture, they practically push talent out the door.

The truth is that a well-trained, motivated workforce is an organisation’s strongest asset. Yet, far too many businesses overlook this, forcing employees to seek growth elsewhere!

Instead of treating resignations as an unavoidable cost of doing business, it’s time to analyse the real issues.

Further in the blog, we’ll break down the top 10 reasons why employees leave and, more importantly, how to prevent the same before they impact your business.

Key Takeaways

Employee turnover refers to the rate at which employees leave an organisation and are replaced by new hires within a specific period.

The cost of replacing an employee can range from one-half to two times their annual salary, with the company bearing hiring costs, low productivity, training expenses, low team morale, and reputation damage.

An annual turnover rate of 10% is considered healthy.

Lack of support, unclear expectations, micromanagement, ineffective leadership, and inadequate compensation are the reasons people leave jobs.

Tips to reduce employee turnover include regularly reviewing salaries, encouraging flexible hours, offering training, training managers in leadership skills, promoting teamwork, etc.

Employee Turnover Rate Formula = Employees who left during a period divided by the average number of employees during that period x(multiply) by 100.

What is Employee Turnover?

Employee turnover refers to the rate at which employees leave an organisation and are replaced by new hires within a specific period.

Employee attrition, employee turnover, and employee churn all refer to an employee quitting the job and are often used as synonyms.

The turnover rate is the percentage of the total workforce that leaves over a certain period.

Turnover includes retirements, layoffs, dismissals, and even internal transfers. While some employee movement is natural, a consistently high turnover rate signals deeper organisational issues.

High turnover may harm a company's productivity if it cannot easily retain or replace skilled workers.

Companies may track turnover internally across departments, divisions, or demographic groups, such as women's versus men's.

For Indian businesses, where industries face aggressive hiring competition, reducing turnover is a business survival strategy!

Classification of Employee Turnover

1) Voluntary vs Involuntary turnover:

Voluntary turnover occurs when an employee voluntarily resigns from the organisation. Involuntary turnover occurs when the employer decides to discharge an employee, and the employee unwillingly leaves their position.

2) Functional vs. Dysfunctional turnover:

Functional turnover occurs when a low-performing employee leaves the organisation, while dysfunctional turnover occurs when a high-performing employee leaves the organisation.

3) Avoidable vs. Unavoidable turnover:

Avoidable turnover occurs when the organisation can change to make employees change their minds and not quit. Unavoidable turnover occurs under unavoidable circumstances, such as a family move, serious illness, or death.

4) Internal vs. External turnover:

Internal turnover occurs when employees leave their current position and obtain a new job within the same company. External turnover refers to cases in which the worker and employer separate, voluntarily or involuntarily.

5) Skilled vs Unskilled turnover:

Uneducated and unskilled employees often have a high turnover rate and can generally be replaced without the organisation or company suffering a loss of performance. On the other hand, skilled and educated positions can pose a risk to the company if they leave, thereby leading to replacement costs and competitive disadvantages.

How does Employee Turnover Affect a Business?

Steve Jobs once said, "Great things in business are never done by one person; they’re done by a team of people." But what happens when that team keeps changing?

The reasons for the high turnover rate cause disruptions that affect departments across the board, concerning service quality, project deadlines, and even customer satisfaction.

Businesses in India often underestimate the financial and operational impacts of employee attrition.

But every resignation comes with a price. The Society for Human Resource Management (SHRM) states that replacing an employee can cost six to nine months of their salary when factoring in hiring, training, and lost productivity.

Here’s what companies actually pay when employees leave

Hiring Costs - Recruiting, advertising, and onboarding new employees is costly.

Lost Productivity - New hires take time to reach full efficiency, impacting output.

Training Expenses - Upskilling new employees requires time and resources.

Lower Team Morale - Constant "leaves" create uncertainty and stress among remaining employees.

Reputation Damage - A company with a reputation for high turnover struggles to attract top talent.

What is a Good or Healthy Employee Turnover Rate?

Employee turnover is unavoidable, but not all turnover is bad. A healthy employee turnover rate balances retention with fresh talent, ensuring that businesses maintain stability while welcoming new skills and perspectives.

Typically, an annual turnover rate of 10% is considered healthy. In India, the ideal rate varies by industry. Tech and retail often see higher turnover, while sectors like healthcare and manufacturing tend to have lower rates.

Turnover is only "good" if it removes underperformers and brings in better talent. If high-performing employees leave frequently due to poor leadership, lack of career growth, or unfair compensation, turnover becomes harmful. Maintaining the right balance guarantees stability, business growth, and a motivated workforce.

10 Common Causes of High Employee Turnover

Companies that fail to address the reasons for employee turnover often face constant hiring cycles, productivity loss, and increasing costs.

Understanding why employees leave is the first step towards reducing turnover in the workplace and building a loyal workforce.

According to a LinkedIn Workforce Learning Report, 94% of employees would stay longer if their company invested in their careers.

1) Lack of Career Growth Opportunities

Employees want progress. If they don't feel they are progressing, they’ll leave. Upskilling, promotions, and career planning are some of the best ways to reduce employee turnover.

2) Poor Leadership and Management

A Gallup study found that 75% of employees quit jobs because of their managers. Micromanagement, lack of recognition, and poor communication are key reasons for employee attrition.

3) Inadequate Compensation and Benefits

Fair pay is a necessity. Competitive salaries, bonuses, and benefits like health insurance can greatly reduce turnover in the workplace. When employees feel undervalued, they seek better opportunities elsewhere.

4) Toxic Work Culture

A negative work environment, office politics, and discrimination create unbearable workplaces. Employees don’t just work for money but for respect, inclusion, and growth. A positive culture is one of the best ways to reduce employee turnover.

5) Work-Life Imbalance

Long hours and unrealistic expectations lead to burnout. In India’s fast-paced job market, employees increasingly prioritise flexibility. Companies that support work-life balance improve retention and job satisfaction.

6) Lack of Recognition and Appreciation

Feeling invisible at work? Many employees leave because their efforts go unnoticed. Regular feedback, rewards, and a culture of appreciation are essential employee retention strategies. Recognition costs nothing but retains everything.

7) Job Mismatch

Hiring the wrong people for the wrong roles is a formula for failure. Employees who feel unfit for their job struggle to stay engaged. Clear job descriptions and proper hiring procedures help calculate attrition rate and reduce unnecessary turnover.

8) No Employee Engagement or Connection

Employees who feel disconnected from the company’s mission will not stay. Engagement activities, open communication, and a strong sense of belonging are essential for retention.

9) Better External Opportunities

When competitors offer better pay, culture, and growth, employees leave. A strong employer brand and competitive perks can counter this challenge.

10) Poor Onboarding Experience

First impressions matter. A weak onboarding process leads to early exits. Proper training, clear expectations, and mentorship help new hires integrate smoothly, improving long-term retention.

Tips to Reduce Employee Turnover

Regularly review salaries against industry standards. Add perks like health insurance, bonuses, and performance incentives.

Encourage flexible hours, remote work options, and discourage overtime culture.

"Take care of your employees, and they’ll take care of your business." – Richard Branson

Offer training, mentorship, and clear promotion paths.

A simple "thank you" can go a long way. Employees who feel valued are more likely to stay. Use bonuses, awards, or even public praise to show appreciation.

Train managers in leadership skills and encourage open feedback. "People leave managers, not companies".

Promote teamwork, transparency, and respect at all levels.

Create a structured onboarding process and check in regularly with employees.

Use surveys and feedback tools to keep improving workplace conditions.

Ask departing employees for honest feedback—then act on it.

How to Calculate Employee Turnover or Attrition Rate?

Here is how you can calculate employee turnover rate :

Step-by-Step Calculation :

Choose a Time Period (Monthly, Quarterly, or Yearly).

Count Employees Who Left (Voluntary + Involuntary exits).

Calculate Average Employees

Add employees at the start and end of the period, then divide by 2.

Apply the Formula

FAQ’s

Conclusion

High turnover will heavily affect morale, productivity, and your business.

But the good news is you can fix it. Invest in your team. Train them.

at-HiQ, we help companies by providing corporate training that minimises turnover by building people who want to stay in because your best asset isn’t your product- it’s your people. Let’s keep them.