Introduction
Employee turnover is a persistent challenge for organisations, leading to increased costs, operational disruptions, and decreased morale. In a recent report by Vanguard, it was estimated that 71% of employees in Nigeria resign within 12 months of starting a job. In a bid to investigate and address the pressing issue of high employee turnover, Proten International carried out research spanning several industries to explore the root causes of high turnover and provides data-driven strategies to improve employee retention.
Source: Jobera
According to a study by Kronos, 87% of HR leaders say employee retention is the top priority for the next few years. This is because of the significant financial and operational implications of employee turnover, whether it is voluntary or involuntary. While some turnover is inevitable, building a retention strategy to prevent as much voluntary turnover as possible can save an organization time and money. After all, it’s much easier and much less expensive to train and develop your current employees than it is to continually hire new people.
Organizations must address both the push factors (dissatisfaction, lack of career growth, toxic work environments) and pull factors (better opportunities, higher pay, improved work-life balance) that contribute to employee departures. By implementing targeted interventions, organizations can foster a more engaged workforce, enhance productivity, and significantly reduce attrition rates.
Understanding the Cost of Employee Turnover
When asked if they were considering leaving their current jobs, 48.3% of employees surveyed by Proten International said they were considering leaving their current employment. An attrition rate of this level has some detrimental effects on organisational health, some of which include:
Fig.1: Are you considering leaving your current job?
Source: Proten International
1. Financial Costs: Hiring, onboarding, and training new employees is expensive. Research by the Society for Human Resource Management (SHRM) estimates that replacing an employee can cost between 50-200% of their annual salary. In another corroborating report, Gallup estimates the replacement of leaders and managers costs around 200% of their salary, the replacement of professionals in technical roles is 80% of their salary, and frontline employees 40% of their salary. That’s why it makes good financial sense to invest in a solid employee retention strategy.
2. Operational Disruptions: High turnover results in productivity losses and knowledge gaps. Oftentimes, high attrition means that employees who remain have to take on the tasks of the ones who left. As employees temporarily take on more to pick up the slack and resources are diverted from projects to focus on backfilling a position, productivity suffers, especially when a high performer leaves.
3. Cultural and Morale Impacts: Poor retention rates create a sense of instability in the workforce, leading other employees to question if they should start looking for a new job. If one person leaves a team, it’s more likely another will, damaging overall morale. Likewise, strong retention suggests people consider the company a place to stay and build a career.
Root Causes of Employee Turnover
Fig 2: Primary reasons employees are considering leaving their organisations
Source: Proten International
• Inadequate Compensation and Benefits:
Of the employees surveyed by Proten International, 29.4% are currently considering leaving their jobs due to dissatisfaction with salary and benefits. This is the leading cause of employee turnover from the survey carried out.
While pay and benefits are not the only consideration that employees have when deciding to leave or stay with an organization, it is often the top factor for consideration. Employees who feel underpaid for their work might look for better prospects in other organisations.
• Limited Career Development Opportunities:
From the Proten International employee retention survey, 23.5% of surveyed employees listed a lack of growth opportunities as a reason they are considering leaving their current jobs.
Nobody wants to feel stuck in a rut at work. Poor promotion practices create staff turnover because people feel like management passed over them for promotion opportunities that they are qualified for in favour of new hires. Employees value organizations that provide career advancement opportunities.
• Poor Work-Life Balance:
Work-Life balance was another leading cause of employee turnover from Proten’s survey with 23.5% citing this factor as the reason they are looking out for new opportunities. Similarly, a Kronos study in the Employee Engagement Series found that 95% of HR leaders admit employee burnout is sabotaging workforce retention.
Employees have a life outside the organization, and they shouldn’t spend all of their free time working. When employees constantly put in overtime, don’t take breaks, or never go on leave, their work-life balance will suffer.
• Toxic Workplace Culture:
From our research, toxic workplace culture accounted for 17.6% of why employees are considering leaving their current organisations.
When employees feel like the culture of an organisation is harmful to their mental and psychological health, it is often a leading precursor to high turnover. In a different survey by MIT Sloan Management Review, they found that a toxic corporate culture was the strongest predictor of attrition and ten times more important than compensation in predicting turnover.
• Weak Leadership and Management:
This was the least cause of turnover from our employee retention research as only 5.9% of surveyed employees cited poor management as the reason they are currently looking for new jobs.
Sometimes, employees leave bad managers, not bad jobs. If a leader’s management style is critical or combative, it doesn’t create a positive work environment and this can be a significant cause of employee attrition.
Effective Retention Strategies
Fig 3: What factors are motivating employees to stay in their current organisation
Source: Proten International
1. Competitive Compensation and Benefits
Let’s start with the obvious; if you want to keep your best employees, you have to offer competitive compensation. With the high and constantly rising inflation in Nigeria, compensation is a primary concern to employees. It comes as no surprise for instance that the cost of living has gone up over the last year, so it means that employees who are earning the same amount as one year ago are making less now than they were before.
It is important for organisations to evaluate their compensation plan regularly to know where they are with regards to their competitors in the industry, and where possible, adjust the pay structure. However, if an organisation is currently unable to affect salaries directly, there are things that can be done. Performance-based incentives and recognition programs can be considered. Also, offering benefits that align with your employees’ values can also help. For example, if employees value training and education, consider providing tuition reimbursement.
Comprehensive benefits, including healthcare benefits, wellness programs, paid parental leave, and retirement plans, can help improve job compensation satisfaction as well.
2. Career Development and Growth Opportunities
Data acquired from Proten International’s employee retention survey showed that the primary consideration (at 40%) for employees who are motivated to remain with their current organisation was growth opportunities.
Despite this high interest in career growth by employees, a LinkedIn 2024 workplace report found that only 33% of organisations have internal mobility structures. This reality makes it challenging to retain employees, especially top performers.
Professional development is a priority for many employees. Providing employees with opportunities to learn and grow at your organization can encourage them to stay longer. There is a need for organisations to create clear career progression pathways with transparent promotion criteria. When employees see opportunities to grow internally, they are less likely to look externally.
Aside from opportunities for promotion, career development can include regular training, mentorship and coaching programs, access to online workshops and conferences, and more. There’s no better way to show you value your employees than by investing in their futures and giving them the tools to grow.
3. Work-Life Balance and Flexibility
Organisations must begin to think sooner rather than later about what they can offer employees to enhance workplace flexibility. Most companies looking to offer flexibility to their employees opt for hybrid workplaces where possible, and data shows that a good chunk of workers agree.
A healthy work-life balance is essential to employee retention. Encourage employees to set boundaries and take their leave when due, as it helps employees recuperate and deliver more efficiently. And if late nights and weekend work are necessary to wrap up a project, consider giving them extra time off to compensate.
4. Effective Leadership and Management Practices
Great managers are linked with a 72% reduction in attrition risk and a 3.2X increase in employee retention, according to a Boston Consulting Group survey. For managers to effectively support their teams, they need the right training, tools, insights, and incentives. Training should focus on enhancing communication, active listening, empathy, conflict resolution, and leadership skills.
Organizations can also encourage managers to prioritize internal talent when filling open positions. Additionally, providing managers with valuable resources—such as learning materials to share and data on employee sentiment over time—can help them lead more effectively and foster stronger team relationships.
Everyone wants to feel appreciated for the work they do, so be sure to thank your direct reports who go the extra mile and explain how their hard work helps the organization. Whether you’re a C-level executive, HR professional, or middle manager, it’s critical to commit to creating a better employee experience and management culture to reduce turnover for your high-performing employees.
5. Building a Positive Workplace Culture
Your human capital is your most important resource; it is therefore important to create a people-centred workplace. In a people-centred company, the organization prioritizes the people who support the business, its growth, and its revenue. Note here that the term “people” refers not just to employees, but also customers and the community at large.
Creating an environment where workers feel respected, have a sense of psychological safety, maintain their overall well-being, and have a sense of belonging is critical to a positive workplace structure and therefore retention.
Conclusion…
Source: Proten International
Creating a retention strategy isn’t just a good idea if you’re experiencing higher-than-average turnover. It’s a good idea for any organization wanting to improve its culture, employee experience, business outcomes, and more.
Various factors cause employee turnover. Luckily, many of them are controllable. Understanding common causes of employee turnover and how to avoid it can help you retain your employees, enhance their well-being, and improve your organisational outcomes, all at the same time.
Addressing turnover requires a multi-faceted approach that aligns with employee needs and organizational goals. By investing in competitive compensation, career development, leadership training, work-life balance, and a strong company culture, organizations can break the turnover cycle and build a loyal, engaged workforce.
Some team members will inevitably leave your organization sooner than you’d like. But you can at least make their decision a little tougher. And if those employees leave your firm knowing they were valued and supported, they’ll say good things about your business which creates a formidable brand. The implementation of these data-driven retention strategies can lead to sustainable business growth, higher employee satisfaction, and a stronger employer brand.
How Proten International can help
If you are ready to take steps to break the cycle of employee turnover within your organisation, Proten International can help! We have a track record of helping organisations diagnose and address issues of poor culture, management gaps, ineffective compensation plans, and structural ambiguity, in order to help them keep their top talents, improve productivity, and grow their business.
We can help you assess your current retention challenges through employee surveys and turnover analytics, and then implement tailored strategies to improve engagement and satisfaction. By partnering with us, your organisation can create a work environment that attracts and retains top talent, ensuring long-term success.
