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turnover and retention 1

AHRI pulse suRveyTurnover and reTenTion

HR:pulse

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AHRI’s previous 2008 Pulse survey on turnover and retention in Australian businesses found an average turnover figure of 18.5 per cent, a number that was too high and rising: http://ahri.clients.squiz.net/resources/reports-and-white-papers/?a=7540

Four years later, this survey reveals a turnover average of 13 per cent. By usual standards, that rate would be regarded as a number more in keeping with best practice: Enough to enable fresh blood and renewal, but not so great as to indicate that years of staff investment are walking out the door or that the costs of replacement will be prohibitive and destabilising.

Even though nearly half of the respondent sample believes that retention is too high in their organisation, around seven out of ten expect either a decrease in turnover in the next 12 months (30 per cent) or no change (40 per cent). The figures suggest that perhaps more businesses are getting recruitment and retention right. On the other hand, the relatively low rate might indicate that employees are showing a reluctance to move, with confidence low and wages flattening out in a prevailing mood of business uncertainty.

Lack of promotional opportunity and poor relationship with manager show as the most common reasons for departure, with better induction, better communication and better selection processes being the most common interventions used to improve retention.

Around six out of 10 respondents see their brand as a positive retention factor and the same proportion believe their recruitment processes are effective, indicating that some lessons are being learned.

Peter Wilson AM Chairman Australian Human Resources Institute


This report is based on a wide ranging survey that asked questions of the AHRI database on HR working hours and learning & development, in addition to turnover and retention. This report is focused on the turnover findings.

The findings stand in stark contrast to the findings of a similar survey AHRI conducted in 2008, just prior to the global financial crisis. Business conditions have changed in the interim so a different set of findings is not surprising.

The findings, nevertheless, are sufficiently interesting to offer a persuasive case for running surveys on this subject more regularly. Your feedback on that would be welcome. Please write to [email protected]

Lyn Goodear Chief Executive Officer Australian Human Resources Institute

Acknowledgements

Project Sponsor: Peter Wilson Project Director: Lyn Goodear Research Coordinator: Anne-Marie Dolan Report author: Paul Begley

© Copyright Australian Human Resources Institute August 2013


Key FIndIngs At A glAnce

• Average turnover of employees reported by respondents in the sample group was 13% over the previous 12 months. It compares with an 18.5% average in the previous HR pulse report in 2008.

• A quarter of respondents in the sample (27%) expect an increase in staff turnover during the next 12 months, with a slightly greater proportion (30%) expecting a decrease, and nearly 40% expecting no change.

• Nearly half the respondents (47%) believe that turnover in their organisation is too high, while 39% think it’s about right. A relatively small minority (14%) would like to see greater turnover in their organisation.

• The three top reasons respondents report on why people leave are lack of promotional opportunity (20%), poor relationship with manager (17%), and insufficient pay (12%).

• Respondents report the three most common interventions for improving retention are better induction processes (12%), improved employee communication (12%) and better selection techniques (10%).

• Around six out of ten respondents (59%) see the brand of their organisation as a positive retention factor, while 11% see brand as a negative.

• About one in five respondents (19%) believe their organisation does not have an effective recruitment process, though nearly 60% believe their recruitment process is effective. Around 20% are unsure.

• As a way of measuring the effectiveness of retention, exit interviews are the most common technique used with nearly half of the respondent organisations using either face-to-face exit interviews (26%) or interviews by other means (21%). A quarter use employee surveys (25%) and 14% rely on word of mouth and anecdote.


suRvey OveRvIew

The survey that resulted in these findings was conducted online towards the end of 2012, and communicated by email to a sample of the member database of the Australian Human Resources Institute

A total of 561 respondents returned answers to the survey. Responses were treated anonymously.


demOgRApHIcs

28.3%

71.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Male Female

Nearly three quarters of the respondents (71.66%) were female and 28.34% were male, as indicated in Figure 1.

Figure 2 shows that more than half the respondents (56.33%) work for organisations consisting of 250 or more employees, including 20.68% with organisations of more than 2500 employees. Around 40% work for organisations of between 15-250 employees, with 4% employed by organisations with fewer than 15 employees.

Figure 1. gender561 reSPonSeS

Figure 2. Size oF organiSaTion561 reSPonSeS

4.5%

19.3%20.0%

14.8%

9.8%11.1%

20.7%

0%

5%

10%

15%

20%

25%

15 or less 16-100 101-250 251-500 501-1000 1001-2500 Greater than 2500


demOgRApHIcs

Figure 3 indicates that more than half the respondents (55.81%) work in the private sector, including approximately 9% in ASX listed companies, 9% in global subsidiaries and 38% in privately owned businesses. Around a quarter are from the public sector (26.48%) and approximately 18% from not-for-profit organisations.

According to figure 4, slightly more than half the respondents (52.69%) reported being in their current position for less than two years. Around a quarter (26.88%) reported between 3-5 years, 14.7% from 6-10 years and a mere 5.73% longer than 10 years.

Figure 3. SecTor oF organiSaTion559 reSPonSeS

Figure 4. Tenure oF reSPondenTS558 reSPonSeS

8.6%

38.1%

26.5%

9.1%

17.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

ASX Privatelyowned

Public Globalsubsidiary

NFP

52.7%

26.9%

14.7%

5.7%

0%

10%

20%

30%

40%

50%

60%

0-2 years 3-5 years 6-10 years Longer than 10years


ANSWER COUNT PERCENTAgE

$0 - $40 000 5 0.90%

$40 001 - $60 000 41 7.39%

$60 001 - $80 000 89 16.04%

$80 001 - $100 000 132 23.78%

$100 001 - $120 000 90 16.22%

$120 001 - $140 000 87 15.68%

$140 001 - $160 000 36 6.49%

$160 001 - $180 000 22 3.96%

$180 001 - $200 000 17 3.06%

$200 001 - $240 000 25 4.50%

$240 001 - $280 000 6 1.08%

$280 001 - $320 000 1 0.18%

$320 001 - $360 000 2 0.36%

$400 001 + 2 0.36%

demOgRApHIcs

Table 1. Salary range oF reSPondenTS555 reSPonSeS

According to Table 1, almost a half of respondents are on salaries of less than $100K per annum, including around a quarter (23.78%) on salaries between $80 and $100K. Nearly a third (31.9%) are on salaries between $100k and $140K, with nearly one in five (19.09%) on salaries ranging between $140K and $280K. Fewer than 1% of respondents are on salaries greater than $280K.


detAIled FIndIngs

The two sets of numbers shown in Table 2 indicate the comparative average turnover rates by size of organisation to two AHRI Pulse surveys, one in 2008 and the present one in 2012.

Overall the present turnover rates are lower and result in a total average rate of 13%, a significant drop on the 18.5% rate reported in 2008.

It’s notable that the present rate is significantly higher for organisations with 250-499 employees at 17% than for organisations of other sizes, though it is lower than the 20.4% rate reported for organisations of that size in 2008.

In 2008 there were 1007 response to that survey, while 439 respondents answered this question in 2012.

EMPLOYEESAVERAgE TURNOVER 2008 (%)1007 rESPONSES

AVERAgE TURNOVER 2012 (%) 439 rESPONSES

1000+ 17.4 10

500 - 999 19.3 14

250 - 499 20.4 17

100 - 249 19.3 14

50 - 99 17.111

Fewer than 50 18

TOTAL 18.5% 13%

Table 2. average Turnover during The laST 12 monThS


detAIled FIndIngs

26.9%

30.3%

39.1%

3.8%

0%

10%

20%

30%

40%

Increase Decrease Stay the same Don’t know

Figure 5. anTiciPaTed Turnover in nexT 12 monThS555 reSPonSeS

Figure 5 shows that around nearly three out of 10 respondents (30.27%) expect a decrease in turnover in their organisation, a quarter (26.85%) expect an increase, and around four out of 10 (39.1%) expect no change in turnover.

wHy RespOndents expect tuRnOveRRespondents were asked to set out reasons for their expectations with respect to future turnover. A sample of the 492 responses is set out below.

decReAsIng expected tuRnOveR“ Data showing continued improvement. Significant focus

on retention by all leaders in business”

“Finally found the right people”.

“HR efforts specifically aimed at reducing turnover”

“ Because I believe that all staff (only 13 of them internally) are happy and content in their role and the organisation is performing well. There is little to no conflict and the results and feedback of the recent performance evaluation process were outstanding”

“ Culture change project coming to a conclusion. International merger caused upset and concern which is moderating as we get used to a new regime”.

“More focus on retention within the organisation”

“ Staff retention strategies are working well and the state of the economy will continue to slow turnover”

“ Strong focus on understanding turnover triggers and reducing for selected employee groups”

“Stable organisation, good internal opportunity”

“ We have had an abnormally high turnover this year, coupled with a high internal movement rate, therefore I would expect that this figure will reduce in 2013”

“ Good culture and team environment - genuine respect for all. Flexibility given to full time & part time workers. Good pay & working conditions - knowledge of how this is different compared to other parts of the same industry (i.e. pharmaceutical)”

“ Workforce planning and internal studies indicate fewer employees will leave this financial year”

IncReAsIng expected tuRnOveR“ Upcoming business restructures and redundancies - will

increase planned turnover and potentially impact morale and thereby increase unplanned turnover as well”

“Downturn in commodity prices - iron ore and coal”

“ Things are tough. People aren’t spending so we are not requiring the same amount of staff”

“ Fundamental issues with the organisational culture are not being addressed, so the same issues that cause turnover today (particularly for staff with less than 2 years’ service) will continue”.

“ There is a severe shortage of qualified Automotive Technicians. We employ and train Automotive Apprentices. The training period takes on average four years or 48 months and unfortunately, some choose to leave their employment with us at the end of their Apprenticeship”


“ We are in a low-paid, and low skilled industry which is characterised by high turnover. We have plans in place to address the reasons for our turnover, but they are unlikely to see a material change for the next 6 months”

“Casual nursing staff has a high turnover factor”

“Ageing workforce. Improved superannuation returns”

“ More stores opening, which means more employees and higher turnover”

“Tightening of the state public sector job market”

“Retirements”

“Aggressive performance management planned”

“ Low salary increases in January 2013 due to difficult business conditions”

“Downsizing in the public sector”

“No effective strategies to reduce turnover”

“Off shoring”

“Takeover/merger”

“ We have a project finishing so the contractors will be ceasing employment”

“Budget reductions”

“Mainly due to the current economic climate”

“ Change of government - cost cutting and national attrition”

nO cHAnge expected In tuRnOveR“ The organisation I work for is considered to be the best

employer in our field the region. Technical medical staff will not leave our organisation to work for fellow competitors, due to these beliefs”

“ The market in which we operate (land development) has softened, with many of our competitors resorting to redundancies in the last 6 months. As a result, there will be fewer opportunities available to those employees looking to move on and they are likely to be seeking stability”

“ Most employees think it is a good organisation to work for. The benefits are extraordinary. A high proportion of employees are 50+ and waiting out their retirement”

“ We have introduced a number of new strategies to boost retention and have also changed our candidate sourcing strategies”

“ Over the past couple of years the turnover rate has remained the same, so can’t foresee it changing”

“ Current volatile marketplace and headcount reductions in prior years forecast consistent employee engagement and limited turnover - average turnover per year is always between 9-11%”.

“Employee engagement , uncertainty in the industry”

“ No major influences to change retention in next 12 months”

“ The economy is not as certain so less employees will leave”

detAIled FIndIngs

Figure 6. WhaT iS your vieW oF The currenT level oF Turnover in your organiSaTion?545 reSPonSeS

4.2%

10.6%

39.1%

25.7%

20.4%

0%

10%

20%

30%

40%

One Two Three Four Five

Figure 6 shows that nearly four out of ten respondents (39.08%) think that turnover is about right in their organisation. A slightly greater proportion (46.06%) think turnover is too high and approximately 15% think there is not enough turnover in the organisation.


detAIled FIndIngs

Table 3. Why PeoPle leave537 reSPonSeS

What do you believe are the three most common reasons people leave your organisation?

Table 3 indicates that when asked to nominate the three most common reasons people leave the organisation, one in five respondents (20.43%) believe that lack of promotional opportunities is the most common reason, followed by poor relationship with manager (16.57%) and inadequate pay (12.29%). Other reasons given include lack of training opportunities, poor work/life balance, promises not kept by management, boring work, and no confidence in the future of the organisation, each of which are nominated by fewer than 10% of respondents.


Lack of promotion opportunities 286 20.43%

Inadequate pay 172 12.29%

Poor relationship with supervisor/manager 232 16.57%

Poor work/life balance 93 6.64%

Lack of training & development opportunities 110 7.86%

Promises not kept by management 89 6.36%

Uninteresting work/boredom 74 5.29%

Lack of confidence in the future of the organisation 73 5.21%

Lack of teamwork/cooperation 40 2.86%

Lack of independence in carrying out the job 33 2.36%

Uncomfortable working conditions 36 2.57%

Lack of belief in the purpose of the organisation 34 2.43%

Poor corporate social responsibility 4 0.29%

Other 124 8.86%


detAIled FIndIngs

Figure 7. Who haS The Primary reSPonSibiliTy For addreSSing reTenTion in your organiSaTion?559 reSPonSeS

32.2%

18.6%

34.4%

6.8%

1.8%

6.3%

0%

10%

20%

30%

40%

HR department Business unit managers Senior executive team Team leaders or supervisors Don't know Other

Figure 7 indicates that around a third of respondents report that the prime area of responsibility for retention is shared almost equally with the senior executive team (34.38%) and the HR department (32.17%), with nearly one in five (18.57%) reporting it is with business unit managers.


detAIled FIndIngs

Figure 8. Who haS The beST underSTanding oF The reTenTion iSSueS and WhaT needS To be done To addreSS Them?547 reSPonSeS

Figure 8 indicates that considerably more than half of respondents (57.59%) report that HR departments have the best understanding of retention issues, while about one in 10 believe that understanding is shared equally with the senior executive team (12.8%) and business unit managers (12.8%), with team leaders next on 9.51% of respondents.

58.0%

12.8% 12.9%9.5%

2.2%5.1%

0%

10%

20%

30%

40%

50%

60%

70%

HR department Business unit managers Senior executive team Team leaders or supervisors Don't know Other


detAIled FIndIngs

Table 4. WhaT inTervenTionS are emPloyed To addreSS reTenTion iSSueS?556 reSPonSeS

What interventions are employed in your organisation to address retention issues?

Table 4 shows that there is not one outstanding intervention used to deal with retention issues, but that the main ones reported are improved induction (11.89%), improved communications (11.82%), better selection techniques (9.84%), improved line management HR skills (8.01%), better work/life balance options (7.45%), better career development approaches (7.68%), better employee recognition (7.27%) and a more positive performance management system (7.53%).


Improved induction process 319 11.89%

Improved employee communications 317 11.82%

Increased pay 99 3.69%

Improved selection techniques 264 9.84%

Improved options for employee work/life balance 200 7.45%

Improved line management Hr skills 215 8.01%

Offered coaching/mentoring/buddy systems 185 6.90%

Improved benefits 111 4.14%

Improved recognition of employee contribution 195 7.27%

Improved approach to career development 206 7.68%

Increased employee involvement in decision making 94 3.50%

Improved physical working conditions 50 1.86%

More transparent levels of pay and conditions 62 2.31%

redesign of roles to increase job satisfaction 81 3.02%

Introduction of an alumni program 16 0.60%

A more positive performance management system 202 7.53%

None of these 44 1.64%

Don't know 3 0.11%

Other 20 0.75%


detAIled FIndIngs

Figure 9. do you believe your emPloyer brand iS a negaTive or PoSiTive reTenTion FacTor?553 reSPonSeS

Figure 10. do you believe your organiSaTion haS an eFFecTive recruiTmenT ProceSS?558 reSPonSeS

Figure 9 indicates that around one in ten respondents (11.03%) believe their brand is a negative retention factor, while a considerable majority (59.32%) see it as a positive factor, and nearly a third (29.66%) see it as neither positive nor negative.

Figure 10 indicates that around six in ten respondents (59.14%) believe their organisation has an effective recruitment process, while one in five (19.35%) believe it does not, and nearly the same proportion is not sure (20.61%).

4.0%

7.1%

29.7%

36.2%

23.2%

0%

10%

20%

30%

40%

One Two Three Four Five

59.1%

19.4% 20.6%

0.9%0%

10%

20%

30%

40%

50%

60%

70%

Yes No Maybe Don't know


25.6% 25.3%

13.8%

20.8%

4.5% 4.3% 4.7%

1.0%

0%

5%

10%

15%

20%

25%

30%

Face to face exitinterviews

Employee surveys Word ofmouth/anecdotal

Exit surveys Focus groups Online feedback forms None Other

Figure 11. WhaT meThodS are uSed To meaSure The eFFecTiveneSS oF reTenTion STraTegieS and inTervenTionS?556 reSPonSeS

Figure 11 indicates that exit interviews are the main method used to measure retention effectiveness with a quarter (25.55%) being face to face exit interviews and a fifth (20.82%) being exit interviews conducted by other means. A quarter of respondents (25.32%) use employee surveys, 13.8% rely on word of mouth and anecdote, while relative small numbers use focus groups (4.5%) and online feedback (4.34%). About the same proportion (4.73%) have no measurement methods.

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[email protected]

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