Categories Menu


Partnering with a more human resource

Data-Driven Insights Can Help Reduce Costly and Disruptive Employee Turnover

In today’s tightening labor market, recruiting and hiring skilled talent isn’t the only challenge employer’s face. The other, equally important, consideration is employee retention. This is especially important amid a 17-year-low for unemployment and increasing market incentives for job-switchers.

The ADP Research Institute® (ADPRI) recently published a report, “Revelations from Workforce Turnover,” which found that more than 60 percent of employee turnover is voluntary. Using aggregated and anonymized payroll data from more than 41,000 companies and 12.5 million employees, ADPRI identified that, on average, five percent of U.S. employees leave their jobs every month and more than 40 different factors can contribute to their decision to leave.

Day-to-day, business and HR leaders witness firsthand the challenges and costs associated with voluntary employee turnover. This includes hiring and training new workers, managing employees through temporary capacity gaps during vacancies, and surviving the loss of valuable institutional knowledge. These are difficulties employers have simply come to accept as the byproduct of turnover. But what if there was a solution?

The ADPRI has found that, data can help predict and potentially reduce voluntary turnover. In fact, they have developed a model to help predict employee turnover and shed light on the unique factors driving it. As a result, when a company’s historical turnover rate is applied to the probability model, it can identify “at-risk” employees five to six times more accurately than guesswork.

In a red-hot job market, it’s imperative that employers understand what is uniquely driving voluntary turnover in their industry, region, and individual company in order to protect against it. The report explores a number of findings related overall in the turnover landscape, including:

  • The seasonality of turnover: The majority of turnover takes place in September, when nearly 1-in-17 employees leave their current company, and March has the lowest turnover rate. Industry also affects when turnover highs will occur.
  • Turnover by industry: The highest average monthly turnover occurs in the leisure and hospitality industry (9.1 percent) followed by construction (6.2 percent), and education and health (5.5 percent). The lowest turnover rates are in manufacturing (3.4 percent), with the finance (3.8 percent) and information (4.1 percent) industries close behind.
  • The different factors that contribute to turnover: Pay and promotion are the lead drivers of voluntary turnover, but more than 40 individual factors can contribute to turnover, including those related to overtime/premium time, commuting, experience and tenure, and other job characteristics.

Armed with insights unique to their industry and combined with their own internal data, companies can begin to identify turnover causes that even an expert may miss. This gives employers an opportunity to engage flight-prone employees before it is too late and work to save them. As the war for talent rages on, data driven insights that boost retention will become imperative for organizations to remain competitive.

Download the complimentary report here.

Post a Response

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s