Jon Boys, Senior Labour Market Economist at the CIPD, shares benchmarking data on employee turnover and discusses why monitoring this is important for your organisation
At the CIPD we’re often asked for staff turnover data (the proportion of the workforce that leave an employer each year) for benchmarking purposes. As a response to these queries, we’ve put together this blog to help you understand staff turnover and tenure trends in the UK. We’ve used figures from the Annual Population Survey (a continuous UK household survey, provided by the Office for National Statistics).
The average turnover - or churn - for UK workers is 35%. This splits down as 26.9% who move to a new employer and 8.2% who are not working one year later (year 2), which could be due to study, or retirement, for example.
The most common request from members is for industry figures, which are shown in the chart below, for 2020-2021.
An alternative but related concept to turnover is tenure - how long someone has worked for an organisation. National figures are provided in the chart below.
Like turnover, tenure (in the UK) can be broken down by industry and tells an interesting story on its own. Although, as the concepts of turnover and tenure are related, there are naturally some similarities in the data.
But what constitutes a healthy level of churn? High turnover means you lose talent, but if turnover is low, you risk not bringing new ideas into the organisation.
I don’t think there’s a good one-size-fits-all heuristic as churn differs markedly by industry. Hospitality (‘Accommodation and food services’ in the charts above) for example, has the highest rate of churn and the lowest tenure. It has many low-paid and lower-skilled roles, and the youngest age profile of any industry by a large margin. The costs in terms of training someone new, and the loss of firm-specific capital are much lower, and thus a higher churn rate is less damaging for the business.
However, especially where skills are relatively scarce, recruitment is costly or employers have hard-to-fill vacancies, turnover is likely to be problematic. Employees who hold more in-demand or specialist skills, or who have developed strong relationships with customers, will be more valuable to employers and therefore more damaging for the business to lose, particularly if they move to a direct competitor.
Why is measuring turnover important?
People leave organisations for all kinds of reasons: there may be ‘pull’ factors such as the attraction of a new job, or ‘push’ factors, such as organisational change or a perceived lack of career development opportunities. But by monitoring turnover and understanding how it affects business performance, we can identify trends, issues and ensure employees experience good work.
However, CIPD’s resourcing and talent planning survey 2022 found that only 17% of respondents calculate the cost of labour turnover and 12% collect data to evaluate and improve retention initiatives. With current labour market shortages and our recent Labour Market Outlook finding that two in five of employers (42%) have hard-to-fill vacancies, organisations need to do more to measure and evaluate turnover and retention interventions.
For more guidance on measuring turnover and retention, trend analysis and benchmarking data on recruitment, retention and workforce planning, and current labour market trends, see the following CIPD resources:
- Employee turnover and retention factsheet
- Resourcing and Talent Planning Survey | CIPD
- Labour Market Outlook – Spring 2023 | CIPD
Data collection method
The Office for National Statistics (ONS) conduct large surveys of the population. One such survey – the Annual Population Survey (APS) – includes a longitudinal dataset. This means we can see what people were doing at one point in time, and what they were doing one year later. From this, we can calculate turnover figures. The large sample of the APS allows us to cut this data by different attributes such as industry and age.
There is a lag in the data being released which is why we are using the January 2020 – December 2021 data. However, this is the third time we have updated these figures and they look similar each year.
The tenure figures used the latest available APS.
The industry categorisation uses a system known as SIC. A more detailed breakdown of what these broad industries include can be found here.