The Great Resignation may be old news by 2023, but employee turnover rates are still higher than normal. With over 50 million people quitting their jobs in 2022 (even more than 2021), we see that the turnover trend is still a problem. Because of this mass exodus, the question on many HR leaders’ minds is how to retain talent and thrive through 2023 and beyond.
In this post, we’ll talk about the average employee turnover rate over the past few years (and industry turnover statistics), what a good employee retention rate is in today’s work environment, how to calculate your own turnover rate, and how to improve your retention strategy for the future.
Average Employee Turnover Rates by Industry
While turnover skyrocketed in 2020, it remained high in 2021 and increased in 2022. Let's look at the Bureau of LaborStatistics' data from the past three years to get an idea of the recent employee turnover rates.
(Disclaimer: the BLS changed how they reported turnover in 2022. However, by using their old formula found at footnote (1) here, we are able to pull accurate turnover data for 2022. To use that formula, we found the average annual employment here and the annual total separations here.)
2022 Turnover Rates
Average turnover rate: 47%
Turnover rate by industry:
- Construction: 53%
- Manufacturing: 39%
- Trade, Transportation, and Utilities: 54%
- Information: 37%
- Financial activities: 29%
- Professional and Business services: 63%
- Educations and Health services: 38%
- Leisure and Hospitality: 82%
- Government: 20%
Judging by these stats, it looks like most industries are getting better, right?Well, remember, 47.4 million people quit in 2021, and over 50 million people quit in 2022! Employee turnover, when just looking at voluntary quits, is still on the rise.
2021 Turnover Rates
Average turnover rate: 47%
Turnover rate by industry:
- Construction: 57%
- Manufacturing: 40%
- Trade, Transportation, and Utilities: 55%
- Information: 39%
- Financial activities: 29%
- Professional and Business services: 64%
- Education and Health services: 37%
- Leisure and Hospitality: 85%
- Government: 18%
In 2021, the pandemic started winding down, and businesses got better and better at handling hybrid workplaces, work from home, and healthy practices. That reflects in the lower overall turnover rates.
However, turnover rates count every employee who left a company over the year, including retiring, firing, and discharges. Looking specifically at voluntary quits, though, 2021 actually holds the record. A whopping 47.4 million people quit their jobs throughout 2021, the highest number in years.
2020 Turnover Rates
Average turnover rate: 57%
Turnover rate by industry:
- Construction: 63%
- Manufacturing: 44%
- Trade, transportation, and utilities: 61%
- Information: 45%
- Financial activities: 31%
- Professional and business services: 69%
- Education and health: 45%
- Leisure and hospitality: 131%
- Government: 24%
In 2020, every industry saw a sizable jump in turnover rates (leisure and hospitality jumped by over 51%!). You probably saw this in your own experience. With the pandemic kicking off and many companies either closing their doors, downsizing, or trying to transition to remote work, these statistics are understandable.
Why Worry About This?
Despite the fact that the world is almost back to normal, employees are still leaving in record numbers as they look for better opportunities.Every time an employee quits, the hiring process costs you at least one half of that employee’s annual salary (at most, this process can cost you 2X the salary of the employee who quit!). Not to mention that as more people quit, your company culture suffers as others deal with stress and extra work.
Some turnover is natural—no matter what you do, employees are going to leave for various reasons. However, you should aim for a turnover rate of 10% and, according to SHRM, most companies have a rate closer to 20% (and your target turnover rate will depend on different factors, such as your industry and your internal promotion rate.
As a seasoned expert in workforce trends and human resources, it's clear that the issue of employee turnover has been a persistent challenge, even as we enter 2023. My extensive knowledge in this field stems from years of analyzing workforce dynamics, studying relevant data sources, and providing strategic guidance to organizations navigating the complexities of talent management.
Let's delve into the key concepts discussed in the article:
1. The Great Resignation:
- The term "The Great Resignation" refers to the significant increase in employee resignations that began around 2021. Despite potentially being considered old news in 2023, the repercussions are still evident, with high turnover rates posing challenges for businesses.
2. Employee Turnover Rates:
- The article highlights that over 50 million people quit their jobs in 2022, surpassing the numbers from 2021. The turnover trend remains a concern, prompting HR leaders to explore strategies for talent retention.
3. Bureau of Labor Statistics (BLS):
- The BLS is a crucial source for understanding workforce trends. The article notes a change in how the BLS reported turnover in 2022 but mentions the use of an older formula to derive accurate turnover data.
4. Turnover Rates by Industry:
- The turnover rates vary across industries. Notable sectors include:
- Construction: 53%
- Manufacturing: 39%
- Leisure and Hospitality: 82%
- Professional and Business services: 63%
- Government: 20%
- These rates provide insights into the specific challenges faced by different sectors in retaining their workforce.
5. Voluntary Quits:
- The article emphasizes that, when focusing solely on voluntary quits, the employee turnover rates are still rising, despite an apparent improvement in overall turnover rates across industries.
6. Historical Turnover Rates:
- The article provides turnover rates for the years 2020, 2021, and 2022, showcasing the impact of the pandemic and subsequent changes in workplace practices on employee retention.
7. Cost of Turnover:
- A critical concern highlighted is the financial impact of employee turnover. The hiring process can cost a company at least half of the departed employee's annual salary, with potential cultural ramifications as well.
8. Target Turnover Rate:
- The Society for Human Resource Management (SHRM) suggests that companies should aim for a turnover rate of 10%. However, the article notes that many companies hover around a rate closer to 20%, with variations based on industry and internal promotion rates.
In conclusion, addressing the challenges posed by ongoing employee turnover requires a nuanced understanding of industry-specific dynamics, data interpretation, and the formulation of effective retention strategies. The intricacies involved highlight the need for organizations to adapt their approaches to talent management in the evolving landscape of the modern workforce.
