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8 Employee Turnover Metrics to Measure

Numbers are crucial to your business survival. So if you aren’t measuring any of these employee turnover metrics at your company, you should start right away!

People Strategy
Leadership
Employee Experience

Leen Sawalha

VP Product & Growth

Friday, May 13, 2016

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Turnover metrics and calculations are arguably some of the most important in HR management. They are particularly useful in providing you with the initial view of how your team, department, or organization is doing.

Turnover metrics will provide you with investigation-prompting data. If your metrics are poor, then you’ll need to dig deeper and find out the cause. If your metrics are good, then you’ll need to find out why they are so great, and leverage those strengths.

Whether you’re a wiz with numbers or someone who hoped they’d never have to look at a single formula after high school, whip out your calculators and start measuring these 8 crucial turnover metrics.

1. Overall Retention Rate

Your overall retention rate can provide you with great insight on the health of your team, department, or organization as a whole. The basic question you’re asking here is: “how many employees stay within my team, department, or organization, over a given period of time?”

Overall retention rate can be calculated by dividing the current number of employed individuals by the number of employees at the start of your measurement period, multiplied by 100.

You are free to choose the length of your measurement period, but many organizations opt to do this annually.

2. Overall Turnover Rate

Your turnover rate is the opposite of your retention rate, and can also give you an indication of the health of your team.

Overall turnover rate can be calculated by dividing the number of individuals who left over a specific period of time, by the average number of employees over that same period, multiplied by 100.

Many people use turnover rate and retention rate interchangeably, but the Society of Human Resources Management makes a great distinction between the two that I highly recommend you read.

3. Voluntary Turnover

Voluntary turnover occurs when an employee chooses to resign and leave the team or company. This type of turnover usually occurs because the employee is unhappy at work, whether because of conflicts, improper compensation or management, or even because they weren’t the right fit for the job, team, or company.

4. Involuntary Turnover

Involuntary turnover occurs when an employee is forced to leave the organization, usually because of low performance or, again, for lack of fit between the employee and the job, team, or company culture.

Voluntary and involuntary turnover are great indicators of problems within teams, in management approaches, or even in the hiring process, so make sure you give these metrics the attention they deserve. You can find great formulas to calculating these metrics here.

5. Retention Rate of Stars

Stars aren’t just your high performers, but also those that have the right attitude and motivation to continue to excel and encourage others around them. And let’s face it, it is not easy to find or develop true “stars” within an organization, so when you have them, you want to be sure they stay with you.

Calculating your retention rate of stars will help you assess your work environment and processes. Are you providing them with the right challenges to keep them engaged and motivated? What about your compensation package? Leadership? These are all good places to start when trying to improve your stars’ retention rate.

6. Retention Rate of Low Performers

High retention rate can seem great until you realize that the majority of those you’re retaining are low performers. This metric will allow you to ask yourself important questions, such as “what is it about the job, team, or company, that low performers are attracted to?”

Once you’ve identified the reasons why you have such a high retention rate of low performers, you’ll be able to target the areas in your businesses that require the most improvement.

7. Manager’s satisfaction with retention rate

How satisfied are managers within your company with their team’s retention rate?

This question can be incredibly beneficial not only at identifying what needs to be improved, but also at identifying strengths that can be leveraged. But don’t just stop with that question, dig a little deeper:

What is the reason behind a manager’s dissatisfaction with their retention rate? Is because ineffective recruitment couldn’t yield a good candidate pool? Or maybe the selection process failed at selecting the best employee for the position? Maybe it wasn’t the hiring process at all, but a lack of proper onboarding and training that didn’t prepare the employee well enough to be a high-performer. Other reasons include a lack of compatibility amongst employees, improper compensation, or even a lack of fit with the company culture.

But what if your manager are satisfied with their retention rate?

  • What is it that led to that satisfaction?
  • Was the hiring process excellent?
  • Were the onboarding and training programs on point?
  • Maybe the employee was just the perfect fit with the team?

Pinpoint the factor(s) that lead to such a high satisfaction rate, and try to replicate it throughout your organization and over time. After all, you may be doing something extraordinarily well and not even realize it!

8. Turnover costs

Last on our list, but certainly not least: turnover costs. How much is turnover costing you?

The reason why this metric is important is simple: businesses want to be effective and efficient, and if your turnover costs are high, then something is wrong. And you can bet that upper management won’t be happy with high costs, regardless of where they come from.

Be sure you measure this metric and, using the other metrics on this list, identify the change that can add the most value and bring your costs down. I know that many professionals try to ignore this metric because its calculations can get really complicated, but you shouldn’t face that much trouble if you have good records. And if you don’t, now is the time to start!

You can check out this article from ERE for formulas to calculate turnover costs.

I also stumbled upon this nifty calculator on bonus.ly that you could find helpful. Just remember to check the “assumptions” that these automated calculators use to make sure they accurately represent your company’s situation.

 
If you regularly calculate some of these metrics then you’re on the right track. Keep it up! And if you don’t keep track of most of these metrics, then I strongly urge you to start right away. It may seem like a daunting task, but trust me, you will reap the rewards tenfold. And if you’re one of those rare shooting stars that actually measures them all, then I applaud you! Just remember to use your data to drive value within your organization.

Are there any other turnover metrics that you measure in your company? Share them in the comments below!

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