Is Employee Turnover Contributing to Skills Shortages?

Is Employee Turnover Contributing to Skills Shortages

The relationship between staff turnover and skills shortages is complex and multifaceted, so it’s not an easy question to answer. Last year the PWC Workforce Hopes and Fears survey found that nearly a quarter of employees expected to change jobs in the next twelve months, but why? Well, the cost of living crisis has been quoted as one reason, as employees seek higher salaries, with over a third of UK workers, 42% globally, planning to ask for a pay rise in 20231. But, staff turnover statistics have not changed that much in the last 3 years, approximately 13.8% in the UK in 20234 which is down from 14.6% in 2021, so we can’t put it down to this one reason.

There are of course many reasons why employees leave their jobs, and the specific factors can vary depending on the individual, the industry, and the company culture. We can generally split the reasons into two categories; dissatisfied with the job or personal reasons. Dissatisfaction can be:

  1. Feeling underpaid or undervalued, limited benefits or unfair pay gaps
  2. A poor work-life balance with long hours, a lack of flexibility or too much stress. The PWC survey found that 21% of employees feel like they are regularly overworked and that their workloads have been unmanageable over the last 12 months1
  3. Concerns about job security due to company instability. Quarterly insolvency statistics for January to March 2023, revealed there were 5,747 company insolvencies in Wales and England – 18% higher than in the same period last year5.
  4. A lack of career progression opportunities
  5. A lack of training and development opportunities. Last year, in the US, 59% of employees had no workplace training
  6. Boredom or lack of challenge
  7. A toxic work environment
  8. Poor management
  9. Discrimination

When reading this list, we can understandably draw the conclusion that employers could do more to keep their employees. After all it’s common knowledge that good employees are an employer’s greatest asset, so why wouldn’t they make greater efforts to keep them? Many employers do; however, some employers do fall short in their employee retention efforts, but there are various reasons why, and it’s not always as simple as it would seem. Despite the fact that hiring and training new employees is expensive, so retaining valuable talent makes sense in the long run, investing in employee retention takes time and resources. Some employers prioritise short-term profits and might view retention efforts as unnecessary costs.

In the 2023 Workplace Learning Report2, 93% of organisations said they were concerned about employee retention and their view was that the number one way of working to improve retention was going to be by providing learning opportunities. It also reported that three of the top five things that people look for in a new job are challenging and impactful work, opportunities for career progression and learning and developing new skills. So why are employers facing skills shortages?

Well, there is a direct impact when an employer loses an employee; the employee takes their skills and knowledge with them. If this is a specialist role with expertise and knowledge that has been learnt and developed over time, it can be extremely problematic for the employer to fill the gap quickly. The gap that the employee has left needs to be filled either with existing staff taking on increased workloads or by recruiting. As increased workload can lead to burnout and reduced quality of work, further exacerbating the skills gap, this is not the best option.

An indirect impact for companies with a high staff turnover is not only a negative brand reputation, but also skilled candidates are not keen to work for them, especially if their skills are in demand. In a tight labour market, employers face fierce competition for skilled workers and simply offering competitive salaries and benefits isn’t always enough.

Last year the Federation of Small Businesses found that 78% of small businesses in England faced difficulties recruiting applicants with suitable skills in the previous 12 months3. 82% said that it was mainly down to a lack of candidates with relevant qualifications, skills and experience. This is especially the case with digital skills as employers embrace rapid technological changes, making it harder to find candidates with the right skills. It isn’t surprising that candidates with digital skills are hard to find when almost 60% of workers say their employer has never provided them with training to improve their digital skills8. If you combine this with the fact that 48% of small business owners say that technical skills are important to achieving future growth3, then the issue of skills shortages is only going to worsen without interventions.

So, it absolutely makes sense for employers to invest in training. For many years there has been robust evidence showing that investment in training and development can mitigate the impact of staff turnover. It can be a powerful tool for encouraging employees to stay with their employer; impacting their motivations and perceptions on a multitude of levels, including:

  • Equipping them with new skills and knowledge, making them more proficient in their current roles and opening doors to new opportunities within the company. This growth fuels a sense of accomplishment and keeps them engaged in their work.
  • Providing them with a sense of commitment from their employer to progressing their career growth. By aligning training programs with career development paths, employees see a future within the company and feel valued for their long-term potential.
  • Boosting their confidence and feeling in control over their work, which leads to increased job satisfaction and motivation.
  • Providing them with the capabilities to tackle complex challenges and adapting to changing needs, such as enhanced innovation and technology advancements.

To maximise employee training and development, and to demonstrate the employer’s commitment to their career growth, the employer should align training with the employee’s needs and aspirations. They should conduct employee training needs analysis, TNA, (free TNA template available for download here), to ensure training programmes cater to the employees specific interests and career goals. Then track the effectiveness of training programmes and share feedback with employees to demonstrate the value of their investment in learning.

By providing effective training opportunities, companies can foster a culture of learning and growth, leading to a more engaged, skilled, and satisfied workforce. They will gain a strong brand reputation and attract and retain a talented and dedicated workforce, ultimately boosting the organisation’s success.

Author: Carolyn Lewis, Head of Business Development.



The multi award winning eLearning Marketplace is the UK’s largest provider of immediate access online training with customers in over 50 countries. Courses range from compliance and professional development to vocational qualifications up to Level 7. We work with subject matter experts and large e-learning publishers to bring our customers a unique catalogue of over 3500 online courses with a price match guarantee. Customers have free private use of cloud based software to track, manage and evidence staff training, allocate licences to users and run sophisticated reporting.

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