How to reduce employee turnover in your company
Employee turnover is one of the most expensive and silent problems an SME faces. Every person who leaves takes business knowledge with them, forces you to open a new recruitment process and leaves the team overloaded for weeks. And it is no small expense: replacing an employee can cost between 50% and 200% of their annual salary once you add up recruitment, training and the loss of productivity until the new person is performing at their best. The good news is that most departures can be prevented. In this article we review the real causes of turnover and eight concrete strategies for retaining your team.
What employee turnover is (and when it becomes a problem)
Employee turnover is the percentage of workers who leave the company over a given period, usually a year. It is calculated by dividing the number of voluntary departures by the average headcount and multiplying by one hundred.
A little turnover is healthy: it brings in fresh ideas and profiles. The problem arises when people leave too soon, when your best people walk out or when the same role keeps churning through staff. If you consistently exceed 15-20% a year, it is worth analysing what is going wrong. The most common causes tend to be pay that is out of step with the market, a lack of recognition, no professional growth, a poor relationship with the line manager and rigid working hours that leave no room for work-life balance.
1. Create clear profiles for each role
A good part of turnover starts in the recruitment process. When the role is not well defined, you hire the wrong person or set expectations that reality fails to meet, and a few months later the resignation arrives.
Before publishing a vacancy, define the duties, responsibilities, required competencies and who that person reports to with precision. A well-built profile not only attracts more suitable candidates: it also helps the new employee know what is expected of them from day one, which reduces early frustration.
2. Take your workers’ needs into account
Retaining talent means listening. People do not only value pay: they want to feel part of a project, balance their personal life and work in an environment that respects their time.
Talk to your team regularly, run climate surveys and, above all, act on what they tell you. A follow-up conversation every few months picks up on discontent before it turns into a resignation letter. Very often, an employee who leaves had already given warning signs; the problem is that no one was listening.
3. Recognise good work
Recognition is one of the cheapest and most overlooked retention levers. A timely “thank you”, highlighting an achievement in a team meeting or giving visibility to someone who solved a problem well has an enormous impact on motivation.
You do not need a sophisticated incentive scheme: it is enough for recognition to be sincere, specific and frequent. Recognise people at every level, not just the most visible profiles. The person who keeps day-to-day operations running also needs to feel that their work matters.
4. Offer fair pay
No retention strategy survives a below-market salary. If your team can earn 20% more across the street, sooner or later they will leave.
Regularly check that pay is aligned with the sector and the area. With the Salario Mínimo Interprofesional (Spain’s statutory minimum wage) set at 1,184 euros gross across 14 payments for 2025, the pay floor has risen and it is worth checking that your salary bands are still competitive. Beyond base pay, “emotional salary” — flexibility, training, a good atmosphere — carries more and more weight, but it does not make up for unfair pay: it is a complement, not a substitute.
5. Encourage flexibility
Work-life balance has become a decisive factor. Rigid schedules and presenteeism are now common reasons for people to leave, especially among younger, more qualified profiles.
Whenever the role allows it, offer flexible hours, a shorter continuous working day in summer or the option to work from home a few days a week. That said, flexibility has to coexist with legal compliance: remember that the working-time record (registro de jornada) is still mandatory for remote workers too. A good time-tracking software lets you give the team freedom without losing control of the record or breaching the regulations.
6. Foster internal growth
One of the main reasons a valuable employee leaves is the feeling of being stuck. If they see no path forward within the company, they will look for one elsewhere.
Design realistic career plans, prioritise internal promotion over external hiring when a vacancy opens up and offer ongoing training. Making your team feel that growing with you is possible is one of the most effective ways to retain talent over the long term.
7. Look after the working environment
The workplace atmosphere directly shapes the decision to stay or leave. A toxic climate, with unresolved conflicts or authoritarian leadership, drives out even the best-paid people.
Encourage respect, collaboration and honest communication between colleagues and with managers. Pay particular attention to the middle-management role: the relationship with the direct manager is, according to numerous studies, one of the factors that weighs most heavily when deciding to leave a company.
8. Open internal communication channels
Being able to voice problems before they blow up is key. Set up clear communication channels so that anyone can raise questions, suggestions or complaints without fear.
On this point, having a confidential whistleblowing channel (canal de denuncias) not only complies with the regulations that apply to many companies, but also gives you early information about harassment, conflicts or bad practices that would otherwise end up causing departures. An employee who feels they can speak up is an employee with fewer reasons to leave in silence.
How to keep track of employee turnover
You cannot improve what you do not measure. To reduce turnover you need data: how many voluntary departures you have, in which departments, how long people stay before leaving and how absenteeism and absences are evolving.
This is where a human resources software like LapsoWork makes the difference. Centralising time tracking, holidays, absences and staff documentation lets you spot warning signs — spikes in absenteeism, excess hours, a build-up of leave requests — before they translate into resignations. With that information in hand you can act in time: talk to the person, review their workload or fix whatever is going wrong in their team.
Reducing turnover is not about a single grand gesture, but about tending to many small details consistently: listening, recognising, paying fairly, offering flexibility and providing a future. And about relying on the right tools so you are never left chasing problems after the fact.