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April 2019

Why Do Some Industries Have High Turnover Rates?

Why Do Some Industries Have High Turnover Rates?

In the cutthroat world of business, some industries experience higher turnover rates than others. Even with the help of top executive recruiting firms, some businesses simply can't catch a break. More often than not, company culture is to blame. But what is high turnover rate and why do some industries suffer more than others?

Here are some of the reasons a business may experience a high turnover rate -- and how to stop it from happening in your company.

Turnover: What is it?

Employee turnover is defined as the rate at which employees are replaced. It can also be defined as the percentage of full-time employees who leave the company within a year, whether or not this was a voluntary decision. You can calculate your business's turnover rate by dividing the number of employees who left by the average number of employees who work within your company. Then multiply that number by 100 to get a percentage.

A business with a high turnover rate will need to replace employees more often. Some employers with a low turnover rate will only need to replace employees every couple of years, such as government workers. According to LinkedIn, the turnover rate across all industries is 10.9%, but the technology industry is among the industries with the highest turnover rate at 13.2%. It is followed by retail at 13% and media/entertainment at 11.4%.

Why is tech turnover the worst?

There are a number of contributing factors that could affect turnover in the tech industry, but the ebb and flow of startups could be one of the most significant. Along with that, particular jobs within the tech industry lead to higher rates of employee turnover. For example, jobs that have a high-demand right now, such as experience designers, may be subject to higher turnover rates due to competitive wages offered by rival companies.

This isn't just an issue of looking for the next big thing, either. Evidence supports that almost half of tech employees who jump jobs are going to remain in the same sector. It truly rests in high levels of competition within the industry, not whether or not you're relying on top executive recruiting firms.

How to stop high turnover within your company

Identifying why your company is suffering from high turnover can be a great jumping off point when you want to create careers within your industry, not just jobs.

Why are employees leaving? Is it because they're unhappy? Establishing an employee recognition program could be key. In fact, 86% of companies cite an increase in worker happiness when they utilize a recognition program. Is it because they want higher wages? You might want to take a second look at the books.

When you've made your company a better place to work, don't hesitate to contact a career placement agency with experience in the tech industry. Top executive recruiting firms can match your job with top candidates in your field. When you want to contact HR executive search firms, rely on Frederickson Partners to partner you with the best employees around.