Employee Turnover

What is Employee Turnover 

The percentage of employees who leave your company in a certain time period is known as employee turnover. Organizations frequently compute their turnover rates on an annual or quarterly basis. They may also decide to compute new hire turnover in order to evaluate the success of their hiring practices.

Importance of Employee Turnover 

Every firm examines employee turnover as a problematic scenario. However, a certain amount of employee turnover is advantageous to the organization because it gives it the chance to learn new skills and gain experience from recent hires.

Current employees have the opportunity to enhance their careers due to personnel churn. It is crucial that organizations keep their staff turnover rates below the desired level. Employee turnover will impact a company's morale, profitability, efficiency, and production if the business is unable to control it (Durbin, 2000). 

According to a 2013 study by the Hay Group, a leading global management consulting firm, and the Centre of Economics and Business Research (Cebr), a leading economics consulting firm in the UK, organizations around the world will struggle with a high turnover rate of workers as a result of the expansion and growth of the labor market. In 2013, Hay Group and Cebr detected and predicted a sharp rise in the global employee turnover rate beginning in 2014.

Top Factors Employee Would Levae

In no particular order, people seeking more money, better benefits, a better work-life balance, more opportunities to advance in their careers, time to address personal issues like health issues or relocations, increased flexibility, or to leave a toxic or ineffective manager or workplace, are the main causes of voluntary turnover.

All departing employees should be urged by HR to participate in an exit interview. In reality, a key component of people management is better understanding the causes of voluntary turnover and identifying solutions to solvable issues. By ensuring employees that their answers would be kept confidential and won't influence how the company responds to requests for references or to confirm employment, HR may encourage employees to be honest during exit interviews.

❎ 69% of workers said they would leave their company for one with higher compensation.

❎ 38% of workers said they would leave their company for a raise or a chance to further their careers.

❎ 21% of workers say they would leave their company if the benefits were greater.

❎ For more flexibility in their working hours or location, 18% of employees would leave their current organization. 

❎ 15% of workers would depart from their company in search of more fulfilling employment. 

More pay

For younger employees in particular, salaries and benefits are a crucial factor in people leaving a company: According to the LinkedIn poll, pay and benefits are the main causes of job switching.

Poor work-life balance

Is often cited as one of the top three reasons employees leave their jobs. Organizations should aim for scheduling flexibility that enables individuals to be as productive as feasible in addition to avoiding the aforementioned issue of overwork. According to Bureau of Labor Statistics data from 2019, 57% of wage and salaried workers had flexible schedules that allowed them to choose when they started and stopped working, and roughly 25% of these individuals were able to work from home at least occasionally. The WFH trend picked up steam in 2020, which is excellent news for those who previously had arduous, time-consuming journeys.

No opportunity for growth or development

The fact that they don't see a future for themselves in the organization ranks strongly among the Top 3 reasons why people quit their jobs. In fact, the Future of Recruiting report from consulting firm PWC discovered that American job candidates are willing to give up to 12% of their income for professional growth chances, including extra training.

Toxic managers

Those that take credit for others' ideas, prefer certain employees over others, or even mistreat their reports—have been extensively discussed in the literature. Additionally, businesses must eliminate these individuals. Less obvious are managers who perform poorly in their positions.

How to Calculate Employee Turnover

Three numbers are all you need to compute the monthly employee turnover rate: the number of active employees at the start and end of the month (B and E), as well as the number of employees who left during that month (L). By adding your starting and ending workforces and dividing by two, you may get your average workforce (Avg) (Avg = [B+E]/2).

The number of departing employees should now be divided by your average staff count. To calculate your final turnover %, multiply [L/Avg] by 100.

However, because it typically takes longer for their numbers to grow to a size where meaningful patterns can be seen, most businesses find that quarterly or annual turnover rate calculations are more useful.

Conclusion

In conclusion, staff churn can have a big impact on a business, both good and bad. On the one hand, turnover can infuse the workplace with new viewpoints and innovative concepts. However, it can also be expensive and disruptive to business operations, especially when star employees quit. Employers should concentrate on fostering a happy work atmosphere, providing competitive pay and benefits, and offering chances for career advancement to reduce turnover. Companies can foster a culture of loyalty and retention that is advantageous to both the company and its employees by investing in their workforce. In the end, lowering staff turnover can boost morale, productivity, and financial results.

Reference Sources

DuBrin, A. J. (2003) Applying Psychology: Individual and Organizational Effectiveness. doi: 10.1604/9780130971159.(Accessed: April 23, 2023).

16 Employee Retention Statistics to Know in 2023 | TrueList (2023) TrueList. Available at: https://truelist.co/blog/employee-retention-statistics/ (Accessed: April 23, 2023).

Pavlou, C. (2016) How to calculate employee turnover rate, Recruiting Resources: How to Recruit and Hire Better. Available at: https://resources.workable.com/tutorial/calculate-employee-turnover-rate (Accessed: April 23, 2023).

Jean (2020) How to Calculate Employee Turnover, Workest. Available at: https://www.zenefits.com/workest/how-to-calculate-employee-turnover-rate/ (Accessed: April 23, 2023).

Jr., O. M. (2017) Employee Turnover in the Public Sector. Routledge (Routledge Library Editions: Human Resource Management Ser.).(Accessed: April 24, 2023).

Vulpen, E. van (2019) How to Calculate Employee Turnover Rate, AIHR. Available at: https://www.aihr.com/blog/how-to-calculate-employee-turnover-rate/ (Accessed: April 21, 2023).

Staff turnover in the civil service | Institute for Government (2022) Institute for Government. Available at: https://www.instituteforgovernment.org.uk/explainer/staff-turnover-civil-service (Accessed: April 21, 2023).