Staff turnover: what’s the right percentage?

Often, when organisations talk about their staff turnover being a problem, it’s because it is seen to be too high. In call centres in the UK for example, current rates of staff turnover are about 23-24% – meaning that centres lose and need to replace about a quarter of their workforce every year, or that on average staff stay about four years. This is an improvement on far higher rates in the past.

In major UK urban centres, young adults often say that they want to move jobs every two to five years, a rate that seems too fast for them to learn how to do a job well before moving on. The employment prospects of young adults in the UK are the worst they’ve been for fifty years or more, mainly due to the worldwide economic crisis, but maybe also partly due to employers not seeing young people as a ‘good investment’ when they want to move on so soon.

So, is low staff turnover and high staff retention always good? Oakwood associates have considerable experience in working with organisations based in small communities far from major urban centres. In these settings we see many people who have 25 or more years’ service with their employers, with no plans to move on or indeed to progress or develop within their organisation until they retire. Some of these people are in top management positions, but not all are.

In many of these organisations, such long service is rewarded without looking at the relative productivity or profitability of long-serving employees. If the organisations are not growing, unproductive long-serving workers can block the recruitment, development and promotion of newer employees and in so doing stifle innovation and useful change.

So what’s the answer? We need effective competency models and performance management systems that enable us to set standards and measure the effectiveness of all employees. And we need to ‘know the numbers’ about how employees’ effectiveness changes through their life-cycle in the organisation. Only then can we start making policy about ideal minimum and maximum staff turnover and retention rates: but in the future we could see 25 years service as no better than 2 years!