Here’s a Shock: Turnover’s Still High
Even in a tough job market, a surprising two-thirds of firms have exit numbers above 10%. Has corporate loyalty become a “losing battle?”
It wasn’t long after the pandemic, and the HR department was overwhelmed by a constant stream of empty seats to fill: logistics positions. Frontline workers. Call-center staff. Healthcare workers. When the much tougher job market of recent years came along, experts predicted an end to the churn.
To a surprising degree, HR leaders are still asking the same question: Does anyone stick around in a job anymore? To be sure, job-hugging remains common among workers anxious about the job market or AI. But recent data shows that baseline turnover rates, now 13%, are holding steady for the second year in a row. At large companies, this means tens or hundreds of thousands of employees are leaving their jobs annually, keeping HR departments permanently on their toes. Experts say it may be the new normal. “I suspect it’s kind of a losing battle,” says HR expert Ron Porter, senior partner at Korn Ferry. “The connections between employees and companies have loosened.”
To be sure, a voluntary turnover rate of 13% is not tragic, even if most firms would prefer to land under 10%. But after 2022, when post-pandemic turnover hit 22%, economists had expected rates in some fields to drop back into the single digits. Amid the sluggish economy, turnover has instead come down slowly. Sub-10% turnover rates have emerged in rare corners: For instance, in the insurance industry, the overall rate is 8.2% and executive turnover is at 5.2%. "We're still leveling off from post-pandemic right-sizing of organizations, and genAI adoption," says Janet Mertens, managing director for research at Korn Ferry's AMS business. Industry- and skill-specific numbers reveal both variation and nuance. "There truly is some bumpiness and stabilization."
Meanwhile, turnover in the rank-and-file remains quite high in some fields—the rate is 26.7% in retail, for example, pulling up the average—as well as within a narrow band of sought-after specialists who are job-hopping for better offers. “A big piece of this is employees cherry-picking for specific roles in certain industries,” says Dennis Deans, global human resources business partner at Korn Ferry. Overall, two-thirds of firms have turnover rates north of 10%, according to figures from insurance broker Gallagher.
To improve retention, experts say, firms should reach for the levers they can control, beginning with compensation. “When a company says that its pay is competitive, is it really competitive?” asks compensation expert Tom McMullen, senior client partner at Korn Ferry. The phrase “competitive pay” has no agreed-upon definition, and at some companies, it might mean within 10% to 15% of the average—which really means “average,” not “competitive.” “Compensation has a big impact when turnover is higher,” says McMullen.
Experts suggest reframing rewards more broadly, to include career development. Do managers know what employees’ ideal careers at the company look like? Does Joe want to continue in his job for a decade until retirement, or is he anticipating some career growth? It’s all about showing interest in employees, says Porter. “It’s understanding employee interests, and helping them see how they can develop them within the organization—without having to go externally.” A firm might pay less than its rivals, but rewards including sabbatical, transfers abroad, and internal career development, as well as the ability to work at the forefront of the field, are considered highly valuable. “It’s about perfecting the marketing of that employee brand,” says McMullen.
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