Using Reward and Recognition to Reduce Employee Churn

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Attracting and retaining employees is one of the biggest challenges for any business. Employees will leave for various reasons that can accumulate over time, causing low staff morale. A high staff turnover can destabilise the company, ultimately causing damage to its reputation, performance and profits.

Here at Ovation Incentives, we've been helping international companies retain their top talent through reward and recognition programs for over 20 years. In this article, we'll dive into the causes and effects of employee churn and how you can use reward and recognition as part of your employee retention strategy.

What is Employee Churn?

Employee churn is when employees leave their jobs within a certain period. The churn rate (aka. attrition rate) is how we measure the employees who leave your company. This includes resignations, retirements and terminations.

Churn, attrition, turnover – what's the difference?

Churn, attrition, and turnover refer to the number of employees who leave in a certain period, usually one year. The difference is that churn and attrition do not account for any new employees hired to replace the outgoing personnel, whereas turnover does include incoming personnel.

A high employee churn rate means many of your staff are leaving for whatever reason, which can be highly disruptive to the organisation. High churn rates result in your organisation investing more time, effort and finances into recruiting, hiring and training new staff. The estimated cost to replace a staff member is around 6 to 9 months of their annual salary. Not only this, but you are at risk of losing the valuable expertise of your top talent. The danger here is that you'll enter a vicious cycle where your company will lose its competitive edge as the business development slows down, which only adds to the pressure on the existing workforce. As a result, you're even more likely to see more staff leave, and you'll fail to attract the right employees as your brand's reputation suffers.

How to Calculate Employee Churn Rate?

If your employee churn rate is high, you'll need to take steps to improve your staff retention. Before we explore how you can reduce your churn rate, you need to understand the current situation within your company.

To calculate your monthly churn rate, you should divide the total number of departing employees by your average number of employees in a month. Then, times the total by 100. The number left is your monthly staff churn as a percentage. 

For example, if an employer with 500 employees has 5 employees leave in a month, their monthly churn rate would be 1% (5/500 x 100 = 1%).

Staff Turnover Rates by Industry

Once you've calculated your churn rate, you may be wondering if that's high, low or somewhere in-between. According to Monster, the UK average employee turnover rate is approximately 15% annually, but this doesn't tell the whole story. Some sectors, such as sales, will naturally have higher turnover rates as they're highly competitive and attract talent with bigger bonuses. Comparing your churn rate to others in your sector can give you a more accurate idea of how well you're retaining your staff.

Here are the average employee turnover rates by sector, as revealed by XpertHR in 2019.

Industry / Sector

Sales and Marketing

General Management and Admin



Media and advertising

Contact and call centres




Property and Estates




Average Turnover Rate (%)














The Great Resignation

Amid the COVID-19 pandemic, employees quit their jobs in record numbers. This is what's referred to as the "great resignation". According to the Bureau of Labor Statistics, this reached a high of 4.4 million people in the US in September 2021. In the UK, a survey of 6000 workers discovered 69% felt confident about moving to a new role in the next few months, with 24% planning a change within three to six months. The usual rate expected was 11% each year.

Many studies have found that resignation rates were highest amongst mid-career employees, and the industries most affected were technology and healthcare.

People have various reasons for quitting at the best of times. However, the pandemic made people reassess what they wanted from their personal and professional lives. These reasons include:

  • Lack of adequate child care facilities
  • Stress / mental health concerns
  • COVID-19 and other health concerns
  • Feeling overworked or unsupported
  • Low pay
  • Poor company benefits
  • Lack of recognition
  • Poor company culture
  • Dissatisfied with management
  • Availability of better opportunities
  • Embarking on self-employment
  • Improved work/life balance
  • More flexibility
  • Not wanting to return to the office

How to Reduce Employee Churn

If your business is at risk of losing its top talent, you'll need an effective staff retention strategy to minimise the costly staff turnover process. Here are ten ideas to help you reduce your employee churn.

Gain feedback and address concerns from your staff

Prevention is better than cure. Make sure you create an environment where employees are open to giving honest feedback to express their concerns. Especially for those common reasons listed for the "great resignation". Addressing their concerns shows you value their opinions and help develop trust and respect in your relationship.

Conduct exit interviews

When employees leave, make sure to sit down and talk candidly about their reasons for leaving. As we know, there can be many reasons why each employee quits. This is your chance to gain valuable feedback from the person departing, which they may not have felt comfortable expressing during their employment. Just listening to feedback itself isn't enough. You'll need to take action and address their concerns. Although they've already decided to leave, this can help improve things for your remaining employees and possibly prevent another departure.

Hire the "right" people

Recruitment is one of the biggest challenges for any company. As well as making sure candidates have the necessary skills, you'll also want to make sure they fit your company culture and that they'll stick around. Ask them about their values. Try to get a sense of who they are as people and how they react if challenged. Are they defensive or combative? This response could be a red flag that they may be challenging to work with for your current employees.

Identify and address toxic behaviour

Toxic behaviour can be severe, such as racism, sexism, bullying, or harassment, which you should have a zero-tolerance policy towards. Any matters of this nature should be dealt with swiftly and have serious consequences. Toxic behaviour in the workplace can sometimes be more subtle. Gossiping, absenteeism and making excuses are examples of harmful behaviour at work which can negatively impact team morale, stress and employee churn.

Offer competitive salaries and benefits

If you've looked at any job listing, then you're bound to have seen this listed. But to make sure the salaries and benefits you offer are indeed competitive, you'll need to do some research and find out the going rate for the role. Is it comparable with what your competitors are offering? If it's below, then attracting the top talent will be near impossible.

Establish an effective staff reward and recognition program

To prevent your employees from leaving, make sure they are happy and feel valued. Showing your appreciation now and again can work wonders on staff morale. Reward and recognition programs are a sure-fire way to achieve this and can be genuinely cost-effective, especially when considering how much it might cost to replace them.

Improve work / life balance

Along with the "great resignation" came what I like to call the "great realisation". During the pandemic, more people worked from home and found a better work/life balance. Instead of wasting time on their daily commute, many people spent extra time with their families, hobbies or looking after their health. This may have changed the world of work forever. Offer your employees the flexibility of working from home or coming in just a few days a week (hybrid work). This isn't for everyone. Some people prefer 'going to work', so don't ditch the office just yet!

Prioritise health and wellbeing

With the pandemic came greater mindfulness for looking out for each other's physical and mental health. This shouldn't stop in a post-pandemic world. After all, you'll want your employees to feel safe, healthy and happy if you want them to stick around. Offering employees private health insurance, meditation app subscriptions, and gym memberships can help make them feel their best and get back to work soon if they have any health issues. 

Have a clear development path

People won't stay in their jobs if they feel it's a dead-end. Ensure to provide opportunities for professional development, training, mentorships and career progression within the company. Not only can this be an excellent way for long-term professional success, but it can also be hugely beneficial having people grow with the company.

Focus on company culture

Creating an inclusive environment where people are engaged and happy to work towards a clear company vision or ethos is hugely attractive to top talent. Most people want to feel like what they do matters. Creating the right environment and company culture can work wonders here, but it isn't easy. You'll need a strategic plan, clear communication, and lead by example, but the benefits can be huge.

What can we learn from churn

It's been a tough time to try and keep hold of your valued employees. But this has shone a light on the problem which many employers may have ignored for far too long. The good news is that you can take steps to make your work environment an enjoyable and attractive place to be. You can identify the churn rate, but the real work is creating a viable staff retention strategy with small, actionable steps to improve the professional lives of your employees.

Contact us or book a demo to find out how we can help you reduce your employee churn through our reward, recognition and employee engagement solutions.