Employee turnover 101 - Part 1
Pankaj / 02 Sep 2018
Employee turnover is measured with different methods but before we learn how to measure your organisation’s turnover rate, you need to be aware of the types of turnover. Turnover simply doesn’t mean employee leaving the job it also talks about firing, dropping off, retirement, quitting, or any type of event that leads to one less employee at your office.
Turnover is an industry term for employees leaving your company that spreads fear among the employers.
Employee turnover is measured by different methods but before we learn how to measure your organization’s turnover rate, you need to be aware of the types of turnover. Turnover simply doesn’t mean employee leaving the job it also talks about firing, dropping off, retirement, quitting, or any type of event leading to one less employee at your office.
Voluntary and involuntary turnover:
When the decision to stop working for your organization comes from the employee side, it becomes a voluntary turnover. As mentioned earlier, it can be anything from retirement, health issues, personal reasons to a better offering at a different organization.
It becomes involuntary turnover when the company takes action that leads to one less employee. The employee would have otherwise continued to work for the organization if not for the decision to release the employee. This can be due to unsatisfied performance, not fitting into the culture, failing to grow exponentially with the organization, etc.
Healthy and Unhealthy turnover:
In this section, we will talk about the effects of the turnover. Whenever turnover happens, it might come with benefits sometimes.
A healthy turnover happens when an employee who has been underperforming leaves, or a replacement for the employee with a more potential candidate, it is healthy and beneficial for your organization.
At the same time, if a well-performing employee leaves or an expert retires, It is difficult to find a replacement. This situation becomes unhealthy for the organization.
If the turnover rate in your company is more than that of the industry turnover, then you will need to look into the issue as soon as possible and take the necessary steps to solve the issue. Reports say that the healthcare industry has the biggest turnover rate.
Turnover can be calculated monthly, quarterly and annually as well.
The information you will need to calculate the employee turnover rate is,
- Number of employees at the beginning of the period
- A number of employees at the end of the period.
For example, say we have 27 employees at the beginning, 29 employees at the end and 3 employees have left the organization during the year.
Here, out of the 3 employees, 2 were voluntary turnovers and 1 was involuntary.
That makes 2 healthy and 1 unhealthy turnover.
How does it affect the organization?
It can cost a lot of money when turnovers go unnoticed. Yet, it is still not the main concern of many companies. Losing one or two high potential employees can influence the workplace productivity, affect customer happiness and in turn, the revenue.
For every employee leaving the company, the organization has to pull down the turnover rate; whether it is involuntary or voluntary. In turn, calculate the revenue before and after as well. The organization has to be aware of the impact of turnover on a periodic basis.
Now that you know how to measure turnover at your company, learn how to fix the turnover on part 2 of the blog.