Comparing Employee Turnover Rates: High vs. Low

A comparison of industries with high and low employee turnover rates, including causes and implications for businesses.

March 7, 2023
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A pertinent question among employers and talent management is often - What makes an employee stay at a company for a lengthy period? What industries have the highest to lowest turnover rates and why?

It’s a recurring question because employee turnover is a significant concern for most companies and industries. Employee turnover rates differ across sectors, and companies need to understand the causes and implications of high and low employee turnover rates to thrive.

This article will compare industries with high and low employee turnover rates, explicitly focusing on the airline, restaurant, construction, hospitality, healthcare, and retail industries.

What Is Employee Turnover Rate, And Why Does It Happen?

Employee turnover rate is the percentage of employees who leave an organization and are replaced by new hires. You can calculate it by dividing the number of employees who leave the company by the average number of employees during the same period. 

For example, if a company has 100 employees at the beginning of the year and ten employees leave that year, the turnover rate would be 10%. While an organization typically counts the number of departing workers, turnover can refer to divisions, such as specific departments or racial or ethnic groups.

There are multiple reasons why workers depart from a department or an organization. Although some causes of turnover may be circumstantial and undesirable, a certain amount is anticipated and acceptable. 

Here are some typical causes of employee turnover:

  • Career progression
  • Internal promotion or transfer
  • Feeling overworked or burnt out
  • Having negative perceptions of the boss or management
  • Working in a toxic environment
  • Lack of opportunities for career growth and development
  • Experiencing a family or life event
  • Poor work-life balance

What Occupations Have The Highest Turnover Rate?

The highest turnover rates occur in low-paying jobs that require little education or experience. These jobs include retail salespersons, fast-food workers, and home health aides.

In contrast, occupations that require more education and training, such as healthcare professionals, have lower turnover rates.

What Companies Have A High Turnover?

Companies with high turnover rates are mostly those in the service industry paying low wages and offering limited benefits - Fast-food restaurants, call centers, and retail stores. 

These companies typically employ a large number of entry-level workers who are seeking temporary employment or a stepping stone to a better job. 

A LinkedIn report shows that consulting firms, especially the Big Four, have high turnover rates, with burnout being a major reason for people jumping ships. The technology and media sector had a turnover rate of 12.9%, the second-highest of all industries. Given the high demand for workers with tech skills, engineering employees, in particular, also have a higher turnover rate than average.

What Company Has The Highest Turnover?

Three companies are tied for having the worst employee retention rate. These are the cryptocurrency exchange Coinbase, Avelo Airlines, and fast food outlet Popeyes, where staff stays on average for just 0.8 years.

Unsurprisingly, Popeyes is among these companies, given that fast food outlets have a high turnover rate. Many workers are either students earning extra cash during the summer or seeking temporary employment while looking for higher-paying, longer-term career opportunities.

On the other hand, Coinbase is a well-paying and leading company in a dynamic and innovative industry. At first glance, it may seem like the kind of workplace that skilled tech professionals would never want to leave. However, like many tech firms, its employees receive frequent recruitment offers from headhunters seeking to hire people with tech expertise.

What Job Has The Lowest Turnover Rate? 

Government entities experience the lowest turnover rate, with only 8.4%, compared to the average of 10.6%. This sector encompasses various governmental activities, including law enforcement, firefighting, urban planning, and international affairs.

Average Employee Turnover Rates By Industry 

Employee turnover rates vary across industries, with some sectors having higher turnover rates than others. And we’ve seen that different reasons may be responsible.

We’ve compiled employee turnover rates based on different industries and job intent. 

Let’s jump right in!

  1. Airline Industry 

The airline sector is skilled at looking after its employees. Over half of the top 20 businesses with the best staff retention rates are airlines, which is greater than any other industry. Due to the high training expenses and the scarcity of knowledgeable commercial pilots, airlines have more motive to ensure their employees are content.

The industry also has a highly competitive and demanding work environment, which requires employees to work long hours, deal with jet lag, and face uncertainty in the job market. Additionally, the airline industry relies highly on contract and seasonal workers, contributing to its turnover rate.

  1. Restaurant Industry 

The average employee turnover rate in the restaurant industry is 75%. The industry's long working hours, low pay, and lack of benefits contribute to its high turnover rate. The industry's reliance on part-time and seasonal workers also contributes to its high turnover rate. The cost of employee turnover in the restaurant industry is estimated to be around $5,864 per frontline employee. This cost includes the cost of recruiting, training, and lost productivity. The high cost of employee turnover in the restaurant industry can significantly impact a company's bottom line, making it essential for companies to focus on reducing employee turnover.

  1. Construction Industry 

The construction industry has a relatively low turnover rate compared to other sectors, with an average turnover rate of 21.4%. The industry's high pay, benefits, and job security are the primary factors contributing to its low turnover rate. 

Additionally, the construction industry is highly unionized, which provides workers with job security, benefits, and better working conditions.

  1. Hospitality Industry 

The hospitality industry, including hotels, resorts, and restaurants, is known for having one of the highest turnover rates, averaging between 70% to 80%

The low pay and limited benefits make it difficult for employees to support themselves, leading to high job dissatisfaction. The industry's long working hours, unpredictable schedules, people management, and high-stress work environment also contribute to its employee turnover rate.

  1. Healthcare Industry

The healthcare industry has a high turnover rate, averaging 100.5% every five years. 

Job security, professional development, and growth opportunities are key reasons for the high turnover rate. The average hospital loses $5.2 to $9 million to employee turnover. 

The cause of employee turnover in healthcare may be due to the pressure and psychological impact of the COVID pandemic. The healthcare professionals who were at the frontline during the peak periods of the pandemic spent prolonged periods away from their families, working extended shifts. The conditions they work under have resulted in burnout and emotional exhaustion.

  1. Retail Industry

The retail industry has an average turnover rate of 75.8%, making it one of the highest turnover industries. The industry's low pay, long working hours, and limited benefits are the significant factors that contribute to its high turnover rate. Additionally, the industry relies heavily on seasonal and part-time workers, which increases its turnover rate.

How Can Employers Reduce Turnover Rates?

  1. Find the right talent

Hiring individuals with the necessary competencies and who share your company's cultural and behavioral values is essential. 

One strategy to accomplish this is by posing behavioral interview questions that can help assess a candidate's personality and character. For example, an inquiry such as how they dealt with an unexpected disruption in their daily routine and the lessons they learned from it can provide valuable knowledge about their character.

Another practice is to use a talent assessment tool to find the right fit for your organization and hire with data-driven insights to reduce employee turnover.

  1. Provide Attractive Compensation Packages 

It is crucial to offer an attractive salary and benefits package while keeping track of labor and living expenses to ensure your salary remains competitive. 

Workers typically leave their jobs in pursuit of higher wages. Therefore, it’s ideal to adjust your compensation to reflect changes in the cost of living and inflation and reward employees for performance. 

  1. Maintain an open communication policy

By fostering transparent communication with team members, managers can learn about any problems or worries your employees may have before these issues become difficult to handle. 

A transparent communication policy also creates an opportunity for giving constructive feedback, allowing you to modify the company's offerings gradually.

The Average Cost Of Employee Turnover

Employee turnover is a major concern for most industries, and by understanding the cost of employee turnover, its causes, and implications, companies can implement strategies to reduce turnover and improve employee retention. 

On average, it takes 42 days to find a suitable candidate and fill a vacant position in the United States. After hiring the ideal candidate, it can take six to eight months for them to achieve total productivity. During this period, missed opportunities add up in terms of costs and costs associated with the recruitment process. These costs typically range between $2,792 and $4,425 per employee.

So, reducing employee turnover is essential for companies to maintain productivity, reduce costs, and create a positive work environment. You can do this by offering competitive pay, benefits, and job security. Additionally, you can focus on creating a positive work environment that promotes job satisfaction and employee engagement.

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