High employee turnover damaging company culture, research suggests

Experts warn that despite the discomfort, organisations need to understand the reasons behind significant staff attrition

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Increased employee turnover is leading to the deterioration of company culture, a report has found.

Research published by Wiley Edge as part of its The hidden costs of onboarding graduate talent report found that company culture had suffered in almost two-thirds (63 per cent) of UK businesses as a result of high staff turnover.

The report, which gathered data from 500 UK-based business leaders, also revealed that high staff turnover had led to 23 per cent of businesses receiving complaints from remaining team members about a change in company culture, with another 23 per cent having noticed company culture deviate from the stated mission and values.

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The research also found that 22 per cent of organisations reported issues arising between team members because a ‘toxic culture’ had developed; 21 per cent had noticed a decrease in employee engagement; while 22 per cent had seen long-standing employees leave the company as a direct result of the culture change.

Further to this, the report highlighted how poor retention rates can turn into a vicious cycle where culture gets destabilised and results in even more employees choosing to leave, further increasing recruitment and onboarding costs.

Commenting on the findings, Tom Seymour, senior director of HR at Wiley Edge, warned that poor retention rates could be very costly for businesses, driving up recruitment and training expenses. He also emphasised that its impact on company culture is often overlooked, but “it can have its own more long-term implications, both financial and otherwise”.

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Focusing on the younger end of the workforce, job hopping has already been established as a trend amid millennials and Gen Z workers, with 16 per cent of the organisations surveyed reporting that 51 to 100 per cent of their graduate employees typically leave the business within 24 months.

A further 38 per cent found that between 21 per cent and 50 per cent leave within two years, and only 28 per cent of businesses said 10 per cent of graduates or fewer leave within that time period.

A separate Wiley Edge survey found that when asked what would encourage them to stay in job for longer, three in five (59 per cent) of 1,000 21 to 28-year-olds in full-time employment cited good benefits; 54 per cent said a supportive manager/colleagues; 46 per cent were looking for a socially active team; and 44 per cent wanted a culture that matched the stated mission and values.

When quizzed about their main reasons for leaving a job, the same group of people’s most common reasons included a toxic company culture (40 per cent), a lack of opportunities for progression (40 per cent) and a lack of support from management (36 per cent).

With this in mind, when it comes to younger employees, Seymour advised employers to make sure they are really listening to them and meeting their needs to prevent high levels of turnover. “By creating a positive, welcoming environment in which employees from all backgrounds can flourish and progress in their careers, businesses should not only find that their retention rates improve, but also that employee engagement increases, productivity improves, and recruitment and onboarding costs are minimised,” he said.

At the same time, Chris Preston, director and co-founder of The Culture Builders, also emphasised that if organisations have high employee turnover, they were probably facing deep-seated issues, so he suggested that leaders work to address the root causes and find out why people are leaving. “Listen to those exit interviews. It’s uncomfortable, but you have to know why you’re seeing big attrition. It’s then about using that intelligence to create an environment that feels like the best place possible to work in,” said Preston.

While acknowledging that some industries have a traditionally higher turnover rate, such as retail, Preston said organisations might want people to think twice about moving on. “If they can’t get out of the door quick enough, you need to know why,” he said.