An Alarming Uptick in Turnover

In one UK firm after another, workers are discovering an alarming trend: their colleagues from a year ago—or even a few months passed—are no longer there.

Despite some pricey post-pandemic efforts to retain employees, a series of shake-ups continue to plague Britain's labor market, new research shows. Experts say the level is high enough to create disruptions in many businesses and potentially increase staffing turnover costs. "Turnover is much higher than leaders would like," says Rory Singleton, Korn Ferry's head of global industrial markets. "Lots of people I talk with have struggled to find replacements, and it's taking far longer.

According to a recent survey of more than 500 companies by payroll/HR company Remote, the attrition rate - voluntary quits, layoffs, and dismissals - at UK companies is forecast to hit 36% this year. That’s up from 26% in 2019. The increases not only will increase talent recruitment costs but also the time and resources spent integrating new staff into the corporate culture. "If you have a constant flywheel of staff turnover, it's a highly costly thing,” says Singleton.

Some of the turnover continues to come from layoffs, particularly among big tech companies, banks, and service firms. The unemployment rate rose to 4.0% in the three months through May, versus 3.8% in the three months through April, according to data from Britain's Office of National Statistics. "There is still a lot of uncertainty in the economy, and business leaders are lightening up on staff," says Daren Kemp, Korn Ferry's chair for the UK and Ireland

Inflation is also still running higher than wage increases, prompting employees to seek better raises by hopping to better-paid positions. Inflation is currently running at 8.7% annually while pay increases are on average up 6.9% Wage increases have fallen short of inflation every month since November 2021, according to data from Statista. "There is pressure on individuals to maximize their earnings in this high cost of living environment," Kemp says

To reduce turnover, experts are advising firm leaders focus on the company's mission rather than the hiccups along the journey. “Keep everybody's eye on the horizon," says Kemp. That approach, Kemp says, can give employees a sense of purpose that adds to the corporate cohesion and a sense that the bosses have your back.

Some employers face a knotty problem in retaining workers. While younger employees want the flexibility of spending at least some time working from home, they also want training that leads to career progress, Singleton says. The challenge is that the two desires can work against each other. In other words, how do you develop the necessary skills without being around leaders who possess essential know-how? "Companies will need to address this issue and find ways to create development opportunities," Singleton says. Indeed, finding a way to provide necessary training is fast becoming mission-critical for companies.

What’s more, some savvy leaders are working hard to communicate better with employees more. Singleton tells the story of a businessman who faced harmfully high attrition but decided to err on the side of over-communication using a combination of live and recorded videos. "It helped people who worked remotely feel together," Singleton says. "It doesn't have to be physical meetings."

Of course, many businesses in these tough economic times will continue to need to make cutbacks. A more careful look at a firm’s workforce and advance planning can help. "The best advice is, know your talent," Kemp says.

Learn more about Korn Ferry’s Talent Acquisition capabilities.

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