Is employee retention too high? The risks of low turnover
CHROs probably think most about the dangers of high employee turnover, but low turnover can be a problem, too. Learn what metrics can indicate an issue.
A low level of employee turnover at a company might seem good, but a lack of employee departures can actually lead to some issues. CHROs should be aware of the potential problems associated with a low turnover rate so their company can avoid them.
Maintaining an effective workforce is a continuous improvement process. CHROs might believe their company should have a low turnover rate, as employee departures can lead to issues if organizations have not carried out succession planning. However, organizations should receive fresh infusions of skills and experience to stay competitive.
Here's more about potential issues that can come from low turnover as well as metrics that CHROs and their subordinates can examine.
Low employee turnover can signal other problems
High retention can be a problem because new employees are not bringing in supplementary skills and experience. The world is constantly changing, and any organization can benefit from new viewpoints.
A high retention rate might also indicate other problems. For example, employee skills can atrophy as workers become complacent. Employees who have stayed at the same company for a long time can sometimes become too comfortable and unmotivated, and the organization might be relying too much on them.
Internal mobility might also stall. A lack of departures means that workers can't be promoted to new positions.
Turnover metrics that CHROs should examine
Certain metrics can indicate that employee retention is in a danger zone.
Overall turnover rate is obviously important. Numbers vary by industry, but in general, a company with between 10% and 15% employee turnover is likely in the right place, according to the Work Institute.
The overall turnover rate includes both voluntary and involuntary turnover. The average rate for voluntary turnover in the United States is 13%, according to the "2025 US Mercer Turnover Survey."
CHROs and other leaders should also calculate the number of high performers who left voluntarily, as companies want to retain their top workers, of course.
How to use analytics to examine retention
Looking at other metrics can give CHROs a better understanding of their company's high retention rate. For example, dividing departing employees into groups -- e.g., date of hire, age group, manager -- could be helpful. If an organization has a high retention rate, but its departing employees are all under 30, HR staff should investigate the situation further.
Other metrics worth considering for low employee turnover are employee engagement metrics and training participation. What are the trends in employment reviews? For example, a company should not have a high retention rate and low employee performance review scores.
Metrics such as increases in absenteeism and unused vacation time are indicators of employee burnout. They could also indicate that the retention rate is high but that employees are not performing well.
How CHROs can address a low turnover rate
CHROs can take action or instruct their subordinates to carry out plans to help decrease their company's retention rate.
First, HR leaders should analyze the trends and determine whether the current turnover rates are optimal. Then they should create manager training for departments with retention rates that are too high. Managers should be trained on how to improve employee engagement and identify underperforming workers.
CHROs should also ensure that proper training is taking place. Since a high retention rate can indicate a lack of motivation from employees, HR staff should confirm that workers possess or are improving at certain skills. For example, HR could make certain trainings required instead of optional.
CHROs should also ensure their company is offering competitive compensation. If some employees end up leaving and a company begins posting job ads for those positions, pay and benefits must be competitive enough to bring in desirable candidates.
After a company has carried out these steps, CHROs should ensure that HR leaders are continually checking metrics related to employee retention to ensure the problem has been addressed. For example, a company might raise its overall turnover rate to 12%, only to have it go back down to 4% the following year.
Scott Robinson is an enterprise data architect at New Era Technology, a global digital transformation firm. He is an IT veteran with more than 25 years of experience, a social scientist and the author of Modern Data-Centric Architecture.
