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Guide to Employee Turnover

High employee turnover can drive up the company’s costs and lower productivity. There is a high cost of losing employees over a long term period that carries on as a company invests money and time to hire the right people and train new employees. It’s important that HR staff use an employee turnover formula to see what can be done about the turnover in a business.

Calculating Turnover

There is a popular employee turnover formula that most business will use. This is dividing the number of employees lost by the average number of employees on board and multiplying this by 100. Using this calculation you can look at turnover rates for specific jobs, departments, or for employees that report to a certain manager. There is also a strong metric that can be used when you measure turnover by length of service. This is usually applied to specific jobs.

Types of Employee Turnover

Many businesses will classify turnover with reasons for leaving. This helps find solutions and to see which turnover matters the most. There can be subcategories, such as controllable or uncontrollable, or involuntary and voluntary. The thought behind this is if an employee is fired, then this shouldn’t count for turnover.

Employee Turnover Cost

One of the most important costs of employee turnover is the actual dollar cost. A comprehensive turnover cost calculator can measure the direct cost to find and train a replacement and the lost productivity while the job is open and the hiring process is happening. This lost productivity is usually at a great cost to a company.

Cause of Turnover

There are a number of different causes of employee turnover. Non-competitive benefits packages, low pay, poor work/life balance, bad company culture, poor communication, no cross-training, or zero career opportunities can be top on the list of what causes employees to quit their jobs. These are the reasons that are usually given in exit interviews when an employee leaves a company.

Reducing Employee Turnover

Even though employees leave for a lot of reasons, both involuntary and voluntary, the most popular reason someone quits is that they don’t trust immediate managers. These trust issues can occur in different ways, such as favoring one employee over another, poor communication, or no recognition. This means that two different employees can have different views on the organization depending on whether or not they trust their boss. In order to keep employees, it needs to start with managers building trust with their teams. This can conflict with one-size-fits-all programs, such as communication or recognition. Building trust is both personal and professional because employees do bring their entire selves to work every day.