How to reduce a high employee turnover rate

Employee turnover is a natural part of the employment lifecycle and something that all businesses will have to manage. But what if you have a high turnover that is costing your business money, minimising your profits, and resulting in lost talent and staff shortages? In this article we give best practice advice and top tips to reduce your turnover rate.

5 minute read
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about 1 year ago

What is employee turnover?

Employee turnover is the outflow of people from a business and is usually expressed by the proportion of employees who leave within a specific timescale. This is typically measured annually but can also be monthly or quarterly.

Turnover includes both voluntary and involuntary leave (such as an employee leaving due to personal reasons, for a new employment opportunity, or retirement) and those whose employment has been terminated due to poor performance or behaviour, or redundancies.

Benefits of a low employee turnover rate

A low employee turnover rate can: 

Increase stability

When employees stay with a company for a long time, it leads to stability and continuity within the organisation. 

Reduce costs

High employee turnover can be costly as it requires resources to recruit and train new employees. With a low turnover, these costs are reduced. 

Enhance reputation

A low turnover rate can boost your employer brand making it easier to attract and retain top talent. 

Increase morale

When employees see their colleagues are happy and content with their jobs, it can boost morale and job satisfaction. 

How to reduce a high turnover rate

Every company will have some degree of turnover and the optimum levels will vary from business to business and sector to sector.

If your employee turnover rate is high for a long period of time and uninfluenced by the changing market, you need to consider internal factors that may be affecting your retention rate.

Here are some ways you can reduce high turnover:

Hire the right people for the job, first time!

This may sound like an obvious tip, but many businesses struggle with this, especially when they need to find staff quickly to minimise impact on existing employees and projects. This has become even more challenging in recent years as the lack of available talent on the market means organisations are having to streamline their recruitment process to secure professionals – giving them less time to thoroughly assess suitability and fit.

It is vital that even a streamlined recruitment process is effective. Having an initial telephone interview can quickly reduce your longlist into a shortlist of those who meet the minimum requirements. Following this up with a virtual interview is a great way to assess a candidate’s suitability, and virtual interviews are more convenient - and quicker - to plan and organise.

Ensuring all job adverts accurately describe the role requirements, as well as the company culture, benefits and rewards, and salary on offer, is another way to attract the right applicants. And be sure all hiring managers have the interview skills needed to effectively assess candidates – jobseekers are provided with many tools and techniques for interviewing, but hiring managers are often left to fend for themselves. Successful interviewing requires proper training to know how to ask the right questions.

Closely monitor employee satisfaction

Employee satisfaction and engagement are essential to the success of any organisation. To raise employee satisfaction, organisations should treat employees with respect, recognise their effort and achievements, encourage autonomy to inspire greater fulfilment in their role, clearly outline expectations, and provide suitable training and development to ensure growth. 

To achieve this, organisations need to be willing to ask for employee feedback at regular intervals – and act upon it. For more information on how to improve employee satisfaction in your organisation, download our free guide ‘Employee satisfaction: building a happier workforce’.  

Be vigilant with toxic workplace practices and employees

You may have heard the phrase ‘people don’t leave bad jobs, they leave bad managers’. Well, the same can be said for toxic employees and practices. Does your company have a blame culture? Is there a lack of openness and trust? Are employees not given the support they need to grow? All of these can indicate a toxic workplace culture and if not addressed, can lead to an increase in turnover.

Offer a competitive salary and benefits package

In today’s climate – where candidates are scarce, and the cost of living is high – offering a competitive remuneration package is essential to retaining staff. While there are many factors that motivate people at work, most work for the money – and when times are hard, they will look to their employer to support them. If you are failing to properly compensate your employees with a comfortable wage and meaningful benefits, you may find more people leaving and looking elsewhere.

Reed’s 2023 salary guide are a great tool for effectively benchmarking salaries against the regional average, covering 14 sectors from accountancy and finance, to technology and human resources.

Conduct exit interviews

Exit interviews are a valuable tool for reducing employee turnover by providing employers with valuable feedback and insight into why staff are leaving the company. By actively listening to the reasons behind an employee's departure and addressing any underlying issues, employers can identify patterns and make changes to improve employee satisfaction, retain top talent, and reduce future turnover.

Take time to invest in your employees, consider the reasons why people are leaving, and put steps in place to make sure your organisation is a positive workplace. A high employee turnover leads to increased costs in recruiting and training, decreased productivity, and reduced morale. It also results in the loss of both valuable knowledge and time as new hires learn the ropes and integrate into the company culture. It can reflect poorly on your organisation too, making it harder to attract talented professionals. Combined, all these factors can negatively impact your company's bottom line, making it essential to strive for a lower turnover rate.

Are you looking for a talented professional to join your team, get in touch with one of our specialist consultants today.

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​Our 2024 salary guide looks at average salaries in Hungary and benefits across 10 sectors. The guide uses data from jobs posted in Hungary to outline key trends and insights, enabling you to benchmark average pay for your employees, find out what to aim for in a new role, or what your current one should be offering. Download our free guide now to compare average salaries and benefits across Hungary.

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Rolling Wireless recruits software development team

The challenge

Rolling Wireless, a global supplier of 4G and 5G modules for the automotive market, first chose Reed to help them fill a director role in 2021, which was swiftly done. The employer has offices around the world and was planning to open another in Hungary, led by their new Software Platform Director, Lajos Rancz, who was placed by talent scout, Anna Böröcz, Senior Recruitment Consultant at Reed. She explained: “After we found the ideal candidate in Lajos, we started working together to build the Hungarian software development team around him.” 

Lajos was looking to create a department of some 20-30 people and was keen to have Reed’s support and specialist tech knowledge. He said: “In the past, we tried to work with freelance head-hunters, but it was not very successful.” 

Anna was sure her team could provide the help Lajos needed, tailoring the service to the company’s budget and requirements. 

The solution

Anna sourced candidates mainly on LinkedIn, managing the hiring process with typical Reed professionalism: providing regular updates to all parties, careful to maintain “a quick reaction time and continuous feedback”.   

Hungary’s tech labour market has seen greater demands from jobseekers in terms of higher pay and the ability to work from home. Other than that, the search was straightforward, according to Anna: “I told prospective candidates the expectations of each role in detail, the tasks, and made sure they had similar experience to what was required.”  

Lajos added:

“We have now been working with Reed continuously since last autumn, recruiting the Hungarian development team, and have several Reed candidates working for us. We are happy with them, and they are a very good team.  

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The results

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Of the outcome, Anna said: “Rolling Wireless is pleased with our service, which I am very happy about – I also really like working with them. The candidates are fitting in well and like their new workplace.”  

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Redundancy letter templates & examples
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Redundancy letter templates & examples

​Making redundancies is never a pleasant experience, but it’s sometimes unavoidable and employers need to ensure they navigate the process with sensitivity and professionalism, and adhere to the law, or they may face employment tribunals and unfair dismissal claims.

A redundancy letter is a written communication from an employer to an employee that informs them of their job loss due to a reduction in the workforce. To help employers manage this process and ensure they provide employees with clear and concise information, we have compiled a selection of adaptable redundancy letter templates for the various stages of the redundancy procedure.

When would you need to write a redundancy letter?

Employers may have to write redundancy letters in the following circumstances: 

Economic downturns

During a time of economic decline or recession, businesses may experience a reduction in revenue, leading to reduced demand for their products or services. In such circumstances, businesses may look to reduce their workforce to cut costs. 


Companies may need to restructure their operations, departments, or teams due to changes in the market, mergers and acquisitions, or changes in leadership, which could lead to redundancies. 

Technological advancements

With advancements in technology, businesses may require less manual labour, leading to a reduction in the workforce. Employers may have to make employees redundant where their jobs have been automated or outsourced. 

What is the difference between voluntary and compulsory redundancy?

Voluntary redundancy is when an employer offers an employee the option to leave their job in exchange for a financial package, which could include a lump sum payment, extended notice period, and other benefits. Employees who accept voluntary redundancy do so voluntarily, and their decision is not influenced by their employer.

In contrast, compulsory redundancy is when an employer selects an employee to leave their job due to a reduction in the workforce, restructuring, or other reasons. Employees who are made redundant involuntarily do not have a choice in the matter and may be entitled to statutory redundancy pay and other benefits.

What are the stages of a redundancy process? 

The redundancy process can be broken down into stages and logical steps that employers can follow. The stages are: preparation, selection, individual consultations, notice of redundancy, appeals (if applicable), and termination.

Stage one: Preparation

During the preparation stage, you will assess whether redundancy is the only option and is completely necessary before beginning the process. If you are concerned with your employee’s performance or behaviour, then you should go down the disciplinary route instead.

Redundancy is a type of dismissal where the employee’s job is no longer required. Ensure that you have covered all alternative options and if you have concluded that redundancy is essential, establish a time frame and prepare the relevant documentation.

Stage two: Selection

At this stage, you will be selecting the people who are under consideration for redundancy. You’ll need to determine the criteria for selecting those employees which should be objective and fair across the workforce.

Additionally, now is the time to inform employees of the upcoming redundancies. This should also include those who are not under consideration. You should explain that there is the risk of redundancy, the reason why it’s necessary, roughly how many redundancies you're considering, and what will happen next.

Stage three: Individual consultations

The consultations stage is a hugely important part of the redundancy process, and it’s essential that employers look at this as an open discussion with the employee, rather than using this time to just inform them of their potential redundancy.

You should explain why they have been selected and discuss alternative employment in the company. Employees will have the chance to make suggestions as to how the business can retain them and these suggestions should be considered fairly, or the employer may face unfair dismissal claims.

Note: there are legal time frames regarding consultations, so make sure you adhere to these.

Stage four: Notice of redundancy

Once you have finished consulting with everyone and made your decision, you should meet with each at-risk employee to discuss the outcome. Ideally, do this face to face, but if this is not possible, organise a phone call.

Those who have been selected for redundancy should also receive confirmation in writing, by letter or email. We have included a redundancy notice letter template for your ease.

Stage five: Appeals

If an employee feels they have been unfairly chosen for redundancy or if they think there were discriminatory issues in the process, it is essential to offer them the opportunity to appeal within a reasonable time frame after they have received their redundancy notice. This could be, for instance, five days. The employee should submit their reasons for appeal in writing. Once you receive an appeal, you should arrange a meeting with the employee as soon as possible.

If it becomes clear that the employee was selected unfairly but you still need to make the role redundant, you must manage the situation with great care. This could mean ending the employment of another employee who was informed their job was secure. It is important to communicate clearly and openly with your staff, rectify any issues with the process, and ensure a fair selection procedure is carried out. If serious problems are identified, you may need to repeat the entire redundancy process.

If you decide to reject the appeal, the employee's redundancy dismissal, notice, and pay will continue as before.

Stage six: Termination

This is the final stage of the redundancy process where the employment contract is terminated. During this stage, you should be supportive and give your employee reasonable time to find another job while they work their notice period.

All employees who have been with the company for more than two years qualify for a statutory redundancy payment. Provide the employees with a written record of how the statutory redundancy payment has been calculated and what they will receive.

What should be included in a redundancy letter?

The redundancy letter to the employee should clearly state the reasons for the employment termination and the terms of their departure. Here are some key pieces of information that should be included in a redundancy letter:

  • Reason for redundancy: The letter should clearly state the reasons for the redundancy, such as economic downturn, restructuring, or technological advancements.

  • Selection criteria: Employers should explain the selection criteria used to determine which employees are being made redundant. This could include factors such as length of service, skills and qualifications, and job performance.

  • Notice period: Employers should provide details of the employee's notice period, including the start and end dates, as well as any entitlements to pay in lieu of notice.

  • Redundancy pay: The letter should provide information on the employee's entitlement to statutory redundancy pay, as well as any additional redundancy pay provided by the employer.

  • Benefits: Employers should explain what happens to the employee's benefits, such as healthcare, pension, and life insurance, after they leave.

  • Support: Employers should offer support to the employee during this difficult time, including assistance with finding new employment opportunities and access to training programmes.

To help you navigate this challenging process, we have put together a selection of redundancy letter templates that can be used at various stages throughout the process. These include:

  • Redundancy consultation letter

  • Redundancy consultation outcome letter

  • Invitation to redundancy outcome meeting letter

  • Notice of redundancy letter