Inadequate Total Compensation is the Most Common Driver of Turnover

December 5, 2022

By Heather Nezich, courtesy SBAM Approved Partner ASE

The SHRM Better Workplaces on a Budget Recommendations report reveals the top drivers of employee turnover and offers specific strategies for addressing each of them. Many of these recommendations can be implemented with little to no additional budget.

Key report findings include:

Inadequate total compensation was the most common driver of turnover, as it was ranked in the top three reasons by 74% of HR professionals and listed as the top reason by 39%.
- When asked how much more compensation budget would be required to address the issue, HR professionals generally agreed that 8-10% additional compensation budget would be required.
- The top recommendation for addressing this concern is providing total rewards statements. While this would not raise salaries, it would allow workers to see a more complete picture of what organizations are paying to employ them.
The second-highest reason was lack of career development and advancement, which was listed in the top three by 61% of HR professionals and as the top reason by 21%.
- The top recommendation for addressing this concern is increasing promotions from within and publicizing these promotions to others in the company so workers can see realistic advancement opportunities.
The third-highest reason for turnover was lack of workplace flexibility, which was in the top three reasons for 43% of HR professionals and the top reason for 13% of respondents.
- The top recommendation for addressing this concern is employing a “one-to-one” approach. As different employees are looking for different types of flexible arrangements, organizations should be open to unique and creative solutions.
Fourth on the list was unsustainable work expectations—30% of HR professionals had this in their top three reasons, and 6% listed it as the top reason for turnover in their organization.
- The top recommendation for addressing this concern on a budget is conducting work reviews. For many jobs, there are work activities of lower priority that can be eliminated or reduced to alleviate overload for key employees.
Fifth on the list was uncaring and uninspiring leaders, which was in the top three for 26% of HR professionals and in the top spot for 9% of respondents.
- The top recommendation for addressing this concern is clearly defining expectations for leaders. When organizations are clear in their definitions of proper leadership, they are much more likely to identify and keep good leaders.