What is Employee Turnover?
Employee turnover is simply a rate at which your company loses your existing employees and hires new employees. Basic tips on how to explain employee turnover rate is actually how much time in general the workforce is likely to stay with the organization. Workforce turnover is usually assessed for particular businesses as well as for their particular sector in general.
In the event that a company is considered to experience a higher turnover comparable to the competition, it indicates that personnel of this organization experience a short average period than the ones from the competition within the very same market.
Higher turnover can be damaging to business efficiency when experienced employees are frequently leaving the organization and as a result there is a high percentage of new employees. Turnover generally varies when measured over various time periods as well as various industries.
Whenever calculating for your expenses and cost of turnover, you will see that the price of employee turnover is extremely higher in comparison to some of your other HR KPIs and metrics. You should identify your direct costs of turnover such as the typical and potential exit costs, substitute costs and organizational change costs and in addition you will incur indirect costs such as potential loss in productivity, decreased overall performance, overtime and reduced employee morale.
Job positions with high vs low turnover
Job positions which don’t require any expertise and skills often times have higher turnover and additionally workers may typically get replaced with no running into any kind of decrease in efficiency. The simplicity, no cost and no risk in substituting these kinds of positions offers almost no motivation to companies to provide better and more competitive work conditions, terms and pay in many cases.
On the other hand, higher turnover of skilled individuals can cause some threat for the business because of the loss by means of expertise, coaching, and information. Particularly, experts, skilled workers and experienced individuals are likely to be hired in the exact same sector which means by your major rivals.
Consequently, turnover of those people adds replacement expenditures for the company and also causes a certain disadvantage and risk for the organization.
Higher turnover can indicate that employees are usually unsatisfied with their work or salary, however it may also suggest risky or even harmful working circumstances, workers do not offer acceptable overall performance, unacceptable procedures are in place, inadequate applicant screening process and insufficient career options, opportunities and development.
Improving and monitoring your employee turnover rate
Lower turnover implies that the workforce is happy and the general performance is certainly good enough for the company. Yet, the particular factors associated with reduced turnover might occasionally be different than those of higher turnover organizations.
Offering an inspiring work environment which will encourage comfortable, inspired and motivated people decreases employee turnover. Offering a work setting which encourages individual and professional development stimulates balance and support on just about all stages, therefore the results, benefits and outcomes will be always noticed organization wide.
Regular coaching and encouragement produces employees that are qualified, reliable, efficient and successful. Starting within the very first working day, offering the person with all the essential abilities to do his or her work is extremely crucial. Even before they start working, it is essential the particular employment interview and employment practice exposes the new employees to really understand the organization, culture, expectations and the job requirements.
How to calculate employee turnover: Employee turnover rate formula
Staff turnover rate or ratio is corresponding to how many employees are leaving the company, divided by the regular number of employees.
Employee Turnover Rate = Number of employees who left the company / Total number of employees
In order to get a percentage ratio for your turnover you just need to multiply this number by 100.
To illustrate, if you lose 10 employees from the total number of all 300 employees in your organization, that provides you with employee turnover level of 3.33%.
Keep in mind that this is your basic or overall turnover however you should utilize this very important HR metric and measure and monitor turnover KPIs for various segments of your business such as calculating turnover of new hires, turnover in different t company locations, teams, departments, turnover segmentation based on skills, age, role… In addition you should compare your numbers with others like benchmarks in your region or country and of course your sector and industry benchmarks.
High turnover is expensive for the business as you need to hire and coach new workers. Approaches for minimizing turnover incorporate selecting the best individuals from the beginning, establishing competitive wages in addition to rewards, cultivating an attractive work place, acknowledging achievements and offering competitive career opportunities.