Jessica Roberts, Lead Analyst, Employment Technologies
Employee turnover rates are a critical metric for organizations, providing valuable insights into workforce stability and overall employee satisfaction. While employee turnover can be reflective of the evolving labor market, high turnover rates can also signal potential issues such as inadequate onboarding practices, poor job fit, lack of career development opportunities, and management issues. Monitoring turnover rates is essential for maintaining a stable, productive workforce and ensuring long-term organizational growth.
The turnover rate is the percentage of employees who leave an organization over a given period, typically calculated annually. This metric includes both voluntary departures (e.g., resignations) and involuntary departures (e.g., terminations).
To calculate your organization’s turnover rate, follow these 4 steps:
Decide the time frame for calculation, usually a year.
Count the total number of employees who left during this period.
Determine the average number of employees during that period. This can be calculated by simply adding the total number of employees at the beginning of the period to the total number of employees at the end of the period and then dividing by two.
For a more detailed analysis, separate voluntary turnover (employee resignations) from involuntary turnover (layoffs or terminations). This enables you to identify distinct causes and solutions for employee departures, improving your overall retention strategies.
Different roles may have different turnover rates. Monitor turnover by job category or department to identify specific areas of concern.
While annual turnover rates are standard, it’s also beneficial to monitor turnover on a quarterly or monthly basis for more immediate insights.
Track the turnover of employees within their first 90 days, known as 90-day turnover or new-hire turnover.
Monitoring new-hire turnover is crucial for several reasons:
High new-hire turnover may indicate issues with the onboarding process, such as inadequate training or lack of support.
It can highlight problems in the recruitment process, such as poor job fit, or unrealistic job expectations set during hiring.
New-hire turnover can serve as an early warning system, indicating potential, broader issues within the organization before they affect the entire workforce.
Recruiting and training new employees is costly. High new-hire turnover leads to increased recruitment expenses and lower return on investment.
Ensure that job descriptions are accurate and realistic, and that the recruitment process effectively assesses candidates’ fit with the job requirements.
Develop a comprehensive onboarding program that includes training, mentorship, and support to help new hires integrate smoothly into the company.
Create a positive work environment with opportunities for growth, recognition, and work-life balance to keep employees engaged and satisfied.
Establish regular feedback channels and maintain open lines of communication to address employee concerns promptly and effectively.
Offer competitive salaries and benefits packages to attract and retain top talent.
To maintain a positive, productive workforce, monitoring and managing employee turnover is essential. Understanding the nuances of turnover, including the critical aspects of new-hire turnover, can help you identify underlying issues, improve hiring and onboarding practices, and create a work environment that promotes long-term employee growth and retention. Regular analysis and proactive strategies will help you reduce costs, achieve a more engaged workforce, and enhance your organization’s overall success.
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