The Impact of Regrettable Turnover on Your Business

Every organization experiences turnover. As much as you might want to keep top performers, train leaders up from within, and build better teams, people will eventually leave. But there are two key differences between regrettable turnover and other types of turnover: who leaves and whether you can do anything about it.

With regrettable turnover, you lose a top performer because of something firmly within your control. Maybe you didn’t choose them for a promotion, and they left for a better role elsewhere. Maybe you changed your policy around hybrid work, and that top performer decided to look for a fully-remote opportunity with a competitor.

Whatever the cause, a top performer left, and you’re feeling the impact of their departure.

That impact can be massive, depending on who’s leaving. A leader’s sudden departure can cause disruptions to your overall business strategy or leave important teams rudderless as they navigate challenges. An individual contributor’s departure can cripple an essential project or bring important initiatives to a halt as you struggle to replace them.

A key employee retention plan allows organizations to proactively identify the top performers they want to retain, predict when they might be thinking of leaving, and work to retain them.

Key takeaways:

• With regrettable turnover, key contributors leave for reasons within your control.
• Non-regrettable turnover describes departures that don’t have negative impacts on your organization or happen for reasons beyond your control.
• Calculating your regrettable turnover rate as a percentage lets you measure the effectiveness of your employee retention efforts.
• A key employee retention plan will help your organization reduce regrettable turnover.

What is regrettable turnover?

Regrettable turnover describes any instance where a top performer leaves your organization for a reason within your control. It’s considered “regrettable” for two reasons:

• The top performer’s departure will have significant impacts on your operations.
• You could potentially have avoided it with the right initiative or retention efforts.

Some turnover is inevitable, but regrettable turnover, being both avoidable and impactful, means it’s important to measure. HR teams calculate and track regrettable turnover rates in order to ensure they’re not seeing periods of excessive turnover.

Top performers can leave an employer for a number of reasons, but in regrettable turnover cases, it’s usually due to one of the following:

• Lack of career growth: If a top performer doesn’t see any opportunities to grow within your organization, they’re likely to seek those opportunities elsewhere.
• Company culture: This can be due to serious issues with your company culture or just that it doesn’t match a top performer’s preference. 
• Leadership challenges: Top performers who’ve been with your organization for a long time might have had a few different leaders. Sometimes, a new leader’s perspective isn’t compatible with a top performer’s, leading to friction that can eventually lead to their departure.
• Inadequate compensation: Top performers often take on more and more responsibility over their tenure. But if their compensation doesn’t match the amount of work they’re doing, they’re likely to start looking somewhere else.

No matter why a top performer leaves, your organization is going to feel their absence. Not only are the projects individual contributors work on affected, but a significant amount of regrettable turnover can have lasting effects on the organization as a whole.

Company culture can be significantly affected as the top performers who should have been champions of your culture keep leaving. Teams start to feel dysfunctional as they have to relearn to collaborate with new arrivals as turnover increases. 

There’s also a significant financial cost associated with this kind of turnover. Important projects and initiatives can take a major productivity hit, potentially causing ripple effects throughout the company. Then there’s replacing the person you lost. According to Gallup, replacing an employee can cost 50%-200% of their salary. That’s a conservative estimate, however, and replacing top performers can easily surpass that amount.

That’s why getting a handle on regrettable turnover is so important.

Regrettable employee turnover vs. non-regrettable turnover

Preventing regrettable employee turnover is quite different from preventing other types of turnover. Before diving into these methods, let’s clearly identify what non-regrettable turnover is and differentiate it from more regrettable instances.

Non-regrettable turnover refers to instances of turnover that a company doesn’t necessarily want to prevent, usually because they wouldn’t have a major negative impact. Examples of this type of turnover include:

• Low performers leaving: Whether they leave on their own or are let go for performance issues, turnover from low performers is rarely a concern for organizations.
• Layoffs and other involuntary terminations: While a wave of layoffs can have a significant impact on company morale and short-term performance, it typically doesn’t have the same impact as a top performer leaving unexpectedly.
• Cultural misalignment: Not all employees are a cultural fit, no matter their performance. The friction caused by this kind of misalignment can eventually lead to them leaving. This rarely poses serious problems as working around that misalignment can often cause more productivity issues than simply allowing the employee to leave.
• Retirement: There’s little an organization can do to prevent an employee from retiring. While losing a top performer to retirement can have negative impacts on your organization, you can usually see it coming from far enough away to plan ahead and mitigate these impacts.

Regrettable turnover often comes as a surprise and involves employees who have a serious impact on your organization’s operations. That means their departure will disrupt important projects, often until they’re replaced. Those disruptions, and the cost of replacing the employee you lose, can affect hiring budgets, revenue, company morale, and more.

Non-regrettable turnover rarely has such outsized impacts. Sure, a wave of layoffs will affect morale, but a single case of non-regrettable turnover typically has negligible impacts on projects, departments, and operations.

That’s why most organizations with a dedicated employee retention plan focus their efforts on regrettable turnover rather than their overall turnover rate. Not only does regrettable turnover have significant costs, from lost productivity to recruitment costs and institutional knowledge loss, but it’s typically within your HR team’s control. By addressing the causes of turnover you can control, you maximize the impact of your retention efforts.

How to calculate regrettable turnover within your organization

With a simple formula, HR teams can calculate their regrettable turnover rate, allowing them to compare their rate to benchmarks in their industry and track the impact of their retention efforts. Here’s the formula:

Regrettable Turnover Rate = (# of Regrettable Departures / Total Employees) x 100

Usually, the Total Employees figure will be an average of the number of employees you had throughout the period you want to calculate your turnover rate for. For a yearly turnover rate, for instance, you’d take the number of employees your company had each month and average it all out.

Here’s an example calculation for the yearly turnover rate of an organization with over 1,000 employees.

First, we calculate the average number of employees the company had over that year. To do that, we take the number of employees the organization had for each month:

• January: 1100
• February: 1085
• March: 1200
• April: 1190
• May: 1175
• June: 1201
• July: 1199
• August: 1150
• September: 1105
• October: 1176
• November: 1155
• December: 1180

By adding all these employee counts and dividing the result by 12, we get an average number of employees for the year: 1160.

We’ll also assume the organization saw 150 instances of regrettable turnover. With these two numbers, we have everything we need to calculate this organization’s yearly turnover rate.

Regrettable Turnover Rate = (150 / 1160) x 100

Regrettable Turnover Rate = (0.129) x 100

Regrettable Turnover Rate = 12.9%

Benchmarks for turnover rates can vary depending on factors like industry, company size, and market conditions, but generally, an overall turnover rate of 10% or less signals a healthy workforce. But that’s for all types of turnover. At 12.9% the regrettable turnover rate is pretty high for this organization!

To properly calculate your regrettable turnover rate, you need to track employee departures and identify which ones qualify as regrettable. You can do this by holding exit interviews. In these interviews, managers and HR professionals sit with employees who’ve given notice—or are showing other signs of imminent departure—to find out why they’re leaving and if there’s anything the company can do to retain them.

These interviews won’t just prevent cases of regrettable turnover, they’ll also give you the data you need to identify and address turnover trends.

Developing a key employee retention plan

A key employee retention plan is essential for identifying key employees and potentially preventing their departure. It’s your best resource for addressing regrettable turnover, since it allows HR teams to be proactive about the common causes of this kind of turnover. Key strategies to include in this plan include:

• Competitive compensation and benefits: Not only do compensation packages need to be competitive, but they should be regularly reviewed so they stay competitive. You should also explore opportunities for creative benefits that make your company stand out.
• Career development opportunities: Top performers and leaders need to know that they have opportunities to grow with your company. Otherwise, they’re likely to stay on the lookout for opportunities elsewhere. Those opportunities might involve promotions, but not necessarily. The ability to develop new skills and take on new responsibilities can bring its own satisfaction.
• Engaged leadership: Companies with engaged leaders are a better place to work than environments where leaders stay at arm’s length. When leaders regularly recognize the impact of top performers and ask for their opinion, those top performers are less likely to leave.
• Strong company culture: Company culture is one of the single best assets you have for preventing turnover. A collaborative, supportive culture built on transparency makes employees feel valued.
• Regular employee feedback: Top performers are among your best sources of feedback, and they can help guide important initiatives and close valuable projects. By keeping feedback channels open, you can make employees feel heard, eliminating one of the core causes of regrettable turnover.
• Employee engagement initiatives: Employee engagement measures how excited employees are about your mission and how aligned they are with your culture. Employee engagement initiatives, like engagement surveys and feedback sessions, can keep top performers engaged.
• Work-life balance and flexibility: For some employees, nothing is more important than a healthy work-life balance and the ability to work from more locations than just the office. Exploring these options can help you nip regrettable turnover in the bud.

A key employee retention plan can greatly reduce your regrettable turnover rate, minimizing the impact of important contributors leaving at the worst time.

No regrets

Calculating and tracking your regrettable turnover rate is essential. It’ll give you the data you need to ensure your workforce remains engaged and committed, preventing the negative impacts that come with this sort of turnover. Because regrettable turnover is always caused by elements within your control, a key employee retention plan is essential, and your regrettable turnover rate is the best metric to know how successful your plan is.

By being proactive in analyzing your turnover rates and building initiatives to reduce them, you’ll lose fewer top performers, retain more institutional knowledge, and grow more sustainably.

Are your current HR tools not cutting it? See why 15Five Engage is the best platform for retaining your top performers.