Managing Employee Turnover: Effective Strategies for Retention
Employee turnover has become a defining challenge for many organizations as they navigate a new era of work. Engagement has dropped to new lows, retention strategies are misaligned with evolving employee expectations, and leaders are left grappling with the consequences of a revolving workforce. In some cases, businesses and even entire sectors are facing rates of turnover that are not only costly but indicative of deeper cultural or organizational issues.
But turnover is rarely about a single event. It’s often the accumulation of unmet needs, miscommunication, and missed opportunities. As such, addressing it requires more than one-off interventions. It demands a systematic, principle-based approach that empowers both leaders and team members to thrive.
Let’s delve into a comprehensive exploration of employee turnover, including what it is, why it happens, and—most importantly—what leaders can do to reduce it, even as uncertainty and disruption continue to impact virtually every industry. We’ll define key concepts, identify causes, and provide actionable strategies to build a workplace where people choose to stay and contribute their best work.
What is Employee Turnover?
Employee turnover refers to the rate at which employees leave an organization and are replaced by new hires. This includes both voluntary exits and involuntary exits.
Understanding turnover is critical for strategic workforce planning. When organizations track employee turnover effectively, they can identify trends, anticipate challenges, and allocate resources where they’ll have the most impact. Turnover reflects movement—of people, knowledge, and energy—and carries both operational and cultural consequences that leaders cannot afford to ignore.
Employee Turnover vs. Attrition
While often used interchangeably, employee turnover and employee attrition are two distinct workforce dynamics that require different responses.
- Employee Turnover: The exit of employees with intent to refill the role. This metric includes all types of exits and signals a disruption to your workforce flow.
- Employee Attrition: A gradual workforce reduction where roles are left unfilled, often due to retirement, elimination of roles, or restructuring.
Why Turnover Is the More Urgent Metric
Turnover demands action. Unlike attrition, which can reflect a planned decrease in headcount, turnover represents disruption—and is often preventable or even undesirable. High turnover, especially in critical or high-performing roles, creates a ripple effect of issues. It’s also a signal that leaders may be missing something. In many cases, it’s one of the clearest indicators that your workplace experience, leadership practices, or culture may be misaligned with employee expectations.
Attrition is passive. Turnover is active. That difference matters. The strategic value of tracking turnover lies in its diagnostic power. It uncovers not just that people are leaving—but why, from where, and how frequently. This insight enables more effective retention planning and budget forecasting.
Types of Employee Turnover
Not all turnover is created equal—and the distinctions matter. By categorizing the types of turnover, leaders can better interpret patterns, identify risks, and respond with targeted strategies.
Voluntary Turnover
Voluntary turnover occurs when an employee chooses to leave the organization. While personal circumstances (like retirement, family-related changes, or health challenges) may occasionally drive such exits, they may also reflect unmet expectations within the workplace experience that culminate in the pursuit of opportunities outside the organization. Voluntary turnover is especially damaging when it involves high-performing employees or occurs at scale.
Involuntary Turnover
Involuntary turnover, on the other hand, is initiated by the employer and may occur due to:
- Performance concerns
- Behavioral or compliance violations
- Structural changes, such as mergers and acquisitions, reorganizations, or layoffs
While necessary at times, involuntary turnover should not be taken lightly. Each exit has implications—operationally, legally, and culturally. If handled without clarity or care, it can damage morale, foster distrust, and lead to fear-based disengagement among remaining employees.
Functional vs. Dysfunctional Turnover
Not all turnover is detrimental. Sometimes, turnover contributes positively to team health and long-term performance. That’s where functional and dysfunctional turnover come into play.
- Functional turnover occurs when underperforming or misaligned employees exit the organization, whether voluntarily or involuntarily, making space for better-aligned talent. In these cases, turnover can revitalize teams and improve overall performance.
- Dysfunctional turnover happens when top performers leave, especially due to preventable issues such as poor leadership, lack of development opportunities, or employee burnout. These exits are costly—not just financially but culturally and strategically.
While functional turnover can change teams for the better, dysfunctional turnover is not just a talent loss; it’s an indicator of leadership breakdown, missed feedback loops, or failure to meet key employee expectations.
What Causes Employee Turnover
While some reasons for turnover are outside an organization’s immediate control (such as personal circumstances or relocation), many causes of turnover are internal, preventable, and tied to organizational practices, culture, and leadership behaviors. Below are some of the most common and avoidable drivers of turnover, offering a detailed look into the factors that often lead employees to leave.
1. Limited Pathways for Growth
Employees are motivated when they can see a clear pathway for career growth within an organization. When opportunities for advancement are limited or unclear, employees often feel stagnant and frustrated. This leads to disengagement and, eventually, resignation.
In today’s rapidly changing work environment, employees want to know that their skills will be developed, that they will gain new experiences, and that there is room for upward mobility. Multiple studies have found that professional development holds the key to retention, with LinkedIn’s Workplace Learning Report revealing that employees who make career advancements within the organization are 20% more likely to stay than employees who stay stagnant in their current roles. What’s more, Pew Research Center reports that 63% of people who left jobs in 2021 did so due to lack of advancement opportunities, while another study revealed that professional stagnation was one of the leading causes of turnover in 2025.
The bottom line: A lack of professional development opportunities—whether through formal training, mentorship programs, or stretch assignments—contributes directly to turnover.
Download our free guide, Leverage Learning Science for Lasting L&D Impact, to reveal how professional development can upskill and retain your workforce.
2. Ineffective Leadership and Management Practices
It’s often said that employees don’t leave companies; they leave bad managers. Leadership is often the most significant—and often overlooked—factor influencing whether employees stay or leave an organization. Employees who have supportive and communicative leaders are far more likely to stay engaged and committed. On the flip side, ineffective leadership can lead to disengagement and turnover.
Gallup research reveals a striking statistic: nearly half of employees (45%) who voluntarily left their jobs said they had no discussions about their job satisfaction or career future with their manager in the three months leading up to their departure. Additionally, almost 30% of respondents said they would have remained in their jobs if they’d had more positive interactions with their managers. Those surveyed indicated that a lack of recognition, respect, and trust from their managers motivated their exits. Combined with inadequate conversations around growth and career development, it’s easy to see how these conditions can create a sense of isolation and disconnection—leading employees to seek environments where they feel more valued.
3. Lack of Recognition for Meaningful Work
Employees seek recognition for their efforts, particularly when they make meaningful contributions to the organization’s success. In fact, employees who feel they’re properly acknowledged and praised for their work are 45% less likely to leave their jobs within two years.
A lack of appreciation, both at the individual and team level, can lead employees to feel undervalued and disconnected from their work. This sense of being overlooked or unrecognized can cause employees to seek employment elsewhere where their contributions are more appreciated. Conversely, employees who feel recognized are more likely to be motivated, productive, and loyal.
4. Work-Life Imbalance
The challenge of work-life balance has become one of the most critical factors driving employee turnover in recent years. Employees today are not only looking for competitive salaries but also for organizations that respect their personal time and wellbeing. Heavy workloads, unrealistic deadlines, and inflexible schedules can lead to burnout, making employees less likely to stay with an organization that doesn’t prioritize balance.
Burnout is a direct outcome of work-life imbalance and has been linked to decreased job satisfaction, lower engagement, and higher turnover. An inability to disconnect from work and renew negatively impacts mental and physical health, driving employees to seek better balance elsewhere.
Download our guide, Employee Burnout: A Heat Map to Find and Fix Your Team’s Hot Spots, to discover the factors most closely linked to burnout and how your organization can prevent burnout-related turnover.
5. Unhealthy or Misaligned Workplace Culture
Developing—or perhaps redeveloping—a healthy, organizational culture in today’s environment requires an investment of patience, trust, and support. But the reward is a workforce that shows up authentically, does their very best work, and is less likely to exit when things get tough.
An unhealthy or misaligned workplace culture can significantly contribute to turnover. Culture encompasses the values, behaviors, and norms that shape the work environment. We like to say it’s what the majority of your people do the majority of the time.
When a company’s culture is misaligned with employees’ values or fails to support collaboration and respect, employees become disengaged and disillusioned. Eventually, they may leave in search of an organization whose culture is more in sync with their personal values.
6. Compensation That Undervalues Contribution
While compensation may not always be the only reason for turnover, pay can be a significant factor that can drive employees to seek better opportunities. When employees feel their compensation does not reflect their effort or does not provide needed stability, they may leave in search of better financial rewards.
Competitive pay is fundamental to attracting and retaining talent. Inadequate compensation not only affects employees’ financial security but can also lead to feelings of being undervalued, which directly impacts morale and loyalty. Employees are more likely to leave when they feel their compensation is unfair relative to their peers or industry standards.
7. Ineffective Onboarding Experiences
The first experience employees have with an organization often shapes their long-term engagement and retention. Poor onboarding experiences can lead to early exits, even within the first few weeks or months of employment. A disorganized onboarding process contributes to employee dissatisfaction and role confusion, setting a negative tone for the entire employment experience.
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The Business Impact of High Employee Turnover
Employee turnover isn’t just a human resources challenge; it’s a strategic risk that can significantly impact an organization’s operational performance. While turnover is often seen as an unfortunate but inevitable part of business, its cumulative impact on the organization can be far-reaching—affecting everything from employee morale to productivity, innovation, and even customer satisfaction. Left unchecked, turnover can erode your company’s competitive edge, stymie growth, and weaken trust among both employees and customers.
Financial Costs
Perhaps the most immediate and quantifiable impact of high employee turnover is its direct financial costs, including:
- Recruitment and hiring expenses: When an employee leaves, the organization must replace them—a process that involves advertising open positions, paying for recruitment, conducting interviews, and reallocating working hours from managers and HR. If the process drags out, these costs only increase.
- Training and onboarding costs: New hires must go through a training and onboarding process, which often takes weeks or months to complete. During this period, new employees are typically not yet at full productivity, which means there is an added opportunity cost for the business and possible further productivity loss by existing employees due to training.
- Productivity losses during ramp-up time: The learning curve for a new employee can be steep. Even highly skilled individuals need time to adjust to company processes, culture, and systems. During this ramp-up time, their productivity is often below the organization’s expectations,
Cumulative financial losses from these various sources can easily exceed several thousand dollars per employee, depending on the role and industry. Over time, even modest turnover rates can erode profitability, affecting both short- and long-term financial performance.
Loss of Knowledge and Expertise
Less quantifiable but no less important is the loss of expertise and institutional knowledge that comes with turnover. When experienced team members leave, they take with them:
- Specialized knowledge
- Historical context
- Key relationships
- Internal processes and procedures
- Strategic insights that have been accumulated over time
This can cripple an organization’s ability to innovate and adapt. New employees may lack the nuanced understanding needed to effectively carry out critical tasks, while the remaining employees may find themselves scrambling to fill the knowledge gaps.
The ripple effect of this loss is often most felt in knowledge-intensive industries, where long-tenured employees hold the keys to decision-making and customer relationships. When these employees leave, productivity declines—forcing the organization to face serious operational risks as it scrambles to replace the depth of knowledge that has been lost.
Decreased Morale and Productivity
High turnover is not just a financial burden—it creates emotional strain within the organization. When employees witness frequent departures, especially of their peers or high-performing colleagues, they can become disengaged and feel less connected to their work and the organization’s mission. Employees may begin to question the organization’s leadership, stability, and commitment to their well-being. High turnover signals instability, prompting some employees to fear that they might be next.
Remaining employees often take on the additional work left behind by departing colleagues, leading to increased stress and workload strain. These employees are less likely to give discretionary effort. They may begin to mentally check out or even actively look for jobs elsewhere, contributing to a vicious cycle of turnover.
Moreover, when high turnover disrupts team dynamics, collaboration falters and collective goals become harder to achieve. This strain on team cohesion significantly hampers overall productivity and hinders organizational performance.
Loss of Trust and Engagement
Extending trust is the ultimate act of leadership, the defining skill that transforms a manager into a leader.
Perhaps the most intangible and damaging consequences of high turnover is the erosion of trust and engagement within the workforce. Engagement is a core driver of retention, and high turnover undermines this by:
- Sending the message that employees are disposable: Frequent departures signal to remaining employees that their contributions may not be valued, undermining trust in leadership.
- Fostering a culture of uncertainty: High turnover can create a sense of instability, making employees feel less secure in their roles and less motivated to give their best effort.
- Decreasing the connection between employees and their work: When turnover is high, remaining employees often feel disconnected from the organization’s mission and vision. Gallup data supports this by revealing that only 17% of employees who left their jobs voluntarily said their managers asked what it would take to keep them—a glaring signal that leaders are missing critical opportunities to understand and address the causes of dissatisfaction before it’s too late.
Download our free guide, The Art of Employee Engagement, to build trust, promote purpose, and revitalize disengaged employees.
How to Reduce Employee Turnover: 6 Actionable Strategies
While there is no one-size-fits-all solution to employee turnover, there are proven methods that leaders can employ to reduce turnover rates and create an environment where employees feel valued, supported, and motivated to stay. Let’s explore six actionable strategies that are not just about retaining employees but creating a culture that people want to be a part of.
1. Strengthen Communication Through Intentional Transparency
Clear, open, and transparent organizational communication a cornerstone of any successful business. When leaders fail to communicate expectations, changes, or future opportunities, employees may feel left in the dark—leading to confusion, frustration, and, ultimately, turnover.
Leaders should focus on building a communication culture that prioritizes clarity and openness. This means:
- Regularly sharing updates on company performance, goals, and changes that affect employees.
- Being transparent about challenges the company is facing and the strategies in place to address them.
- Providing feedback and guidance on performance, both positive and constructive.
Transparency isn’t just about what is communicated; it’s about how leaders engage with their teams. Active listening is just as important as broadcasting information. Employees need to feel their concerns, ideas, and aspirations are being heard and addressed.
Learn to fuel connection, clarity, and collaboration with our free guide, From Misunderstood to Magnetic: A Leader’s Guide to Clear Communication.
2. Build a Culture Where People Choose to Stay
Organizations must cultivate a culture that people don’t want to leave. A winning culture helps align employee values with company values, fostering deeper engagement and satisfaction. Culture is the thread that binds employees together—it sets the tone for how people interact, collaborate, and feel about their roles within the organization.
Leaders should actively nurture a culture that:
- Embraces shared values such as respect, accountability, and collaboration.
- Encourages mutual trust between management and employees.
- Aligns people and purpose to drive innovation, engagement, and results.
Building this workplace culture requires more than words; it requires consistent, authentic actions from leadership. Model the behaviors you want to see, whether it’s showing appreciation, being transparent, or creating opportunities for win-win thinking.
Discover the importance of trust, accountability, feedback, and change management for today’s most successful organizations when you download our guide, The 4 Pillars of a Thriving Workplace Culture.
3. Invest in Career Development and Growth Pathways
One of the primary reasons employees leave is a lack of career growth. While employees of all ages benefit from professional development, Gen Z is particularly interested in learning and growing at work. When employees don’t see opportunities to grow or advance in their careers, they often seek opportunities elsewhere. Leaders must create a culture of development that recognizes employee potential and provides them with the skills, resources, and support they need to evolve in their roles and within the company.
To invest in career development, organizations must:
- Create clear growth paths for employees at all levels of the organization, beginning on day one.
- Offer continuous learning opportunities through employee development programs, mentorships, and skill-building initiatives.
- Encourage mobility within the organization, allowing employees to move into new roles or departments that align with their evolving interests and skills.
Career development doesn’t just refer to promotions; it’s about providing opportunities for personal and professional growth that align with employees’ aspirations.
4. Give Feedback and Recognition
Regular recognition drives engagement, improves morale, and fosters loyalty, while feedback provides employees with the tools and insight they need to continue making improvements.
Recognition should be genuine and tied to specific achievements. Leaders should create a regular cadence of recognition by:
- Providing consistent feedback, both positive and constructive. Feedback should be specific, actionable, and given frequently—not just during annual reviews.
- Recognizing employee achievements by celebrating milestones, accomplishments, and efforts to foster a sense of pride and purpose.
- Creating a culture of peer recognition where employees feel empowered to celebrate each other’s successes.
Creating a culture of feedback and recognition doesn’t require huge budgets—it’s about making people feel valued through consistent, meaningful interactions.
5. Model Self-Renewal
Employees are increasingly seeking workplaces that prioritize their health and wellbeing; without such a focus, employees are at a higher risk for burnout, stress, and disengagement, all of which directly contribute to turnover.
But wellbeing isn’t just about offering benefits like gym memberships; it’s about creating a culture that respects work-life balance and encourages employees to bring their whole selves to work. Leaders can model well-being by prioritizing not only physical renewal but also the mental, emotional, and spiritual. This holistic approach is grounded in Habit 7: Sharpen the Saw®, the last of the 7 Habits of Highly Effective People®. This habit teaches that regular renewal in four essential dimensions of self-care is key to both individual and organizational success.
By modeling self-renewal, leaders can help their teams avoid burnout and ensure long-term vitality and effectiveness. Leaders must:
- Prioritize self-care for themselves and their teams, recognizing that leaders set the tone for organizational health.
- Encourage breaks, reasonable workloads, and time off to prevent burnout and maintain a healthy work-life balance.
- Create a culture of renewal that allows employees to recharge their physical, emotional, intellectual, and spiritual batteries, ensuring they have the vitality and energy to bring their best selves to work.
Promoting well-being is essential for sustainable organizational success. When renewal is a core focus, organizations can reduce turnover and foster an environment where employees thrive, grow, and contribute at their fullest potential.
6. Develop Your Leaders
Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.
Leadership has a direct impact on whether employees choose to stay or leave. Effective leadership establishes the environment and culture in which employees operate, influencing everything from their engagement to their job satisfaction. When employees feel trust, clarity, and a sense of purpose under the guidance of their leaders, they are far more likely to stay, contribute, and flourish within the organization.
Leaders must go beyond simply managing tasks. They must lead by example and foster environments where employees want to stay and are motivated and inspired to grow and innovate. They must actively work to:
- Build high-trust relationships: Trust is the cornerstone of any successful team. Leaders can build trust through integrity, transparency, and accountability in all of their actions. When employees trust their leaders, they are more likely to stay engaged, collaborate openly, and feel comfortable sharing feedback and concerns.
- Create clarity around goals, roles, and expectations: Uncertainty about roles and goals can cause frustration and disengagement. Effective leaders communicate clearly, ensuring that every team member understands what’s expected of them, how their work contributes to the broader mission, and what success looks like. This clarity fosters a sense of ownership and alignment, reducing confusion and stress.
- Lead through change with confidence: Change is inevitable in today’s workplace, but it can be disruptive. Strong leaders don’t shy away from change; they embrace it and guide their teams with confidence and stability. Providing clear direction, support, and reassurance during times of uncertainty helps employees navigate transitions with a sense of purpose. Leaders who manage change effectively help their teams stay engaged and motivated, even in the face of adversity.
Leadership isn’t just about being at the top. It’s about being there for your team every step of the way. When leaders show their integrity, communicate clearly, and express genuine concern for their employees, they create a workplace where employees are inspired to stay, perform at their best, and contribute meaningfully to the organization’s mission.
Retain Your Employees for Improved Organizational Performance
While benefits and pay are essential, they’re not what keep employees around for the long haul. Employees stay for clarity, purpose, and trust.
As such, leaders must become more than managers of tasks—they must be stewards of growth, integrity, and purpose. When they do, they unlock the full potential of their teams and drastically reduce turnover.
Download our free guide, From High Turnover to High Agility: Rethinking Retention to Drive Performance, to equip your leaders with the tools, practices, and mindset needed to lead teams where people choose to stay, contribute their best, and grow their careers.