Employee Turnover Rate
12 minutes read

Employee Turnover Rate

Monitoring your company’s turnover rate is a crucial factor in determining its long-term success. This metric provides valuable insight into your company culture, recruitment efforts, and employer brand. By keeping track of it, you can proactively address any potential business setbacks. As a leader, it’s essential to familiarize yourself with what employee turnover signifies, how to calculate the rate, and how to interpret the results.

This blog will discuss the topic of employee turnover rate and provide the following points.


What is the Employee turnover rate?

Employee turnover rate is the percentage of employees who leave an organisation within a particular time frame. This metric calculates the number of employees who remain with the company from the start of the period, considering both voluntary and involuntary separation and excluding internal movements like promotions, transfers, retirement, leaves and others.

What is the formula for employee turnover rate?

The formula for Employee Turnover Rate is –

Employee Turnover Rate = Total No. of left employees / Average No. of employees * 100

How to calculate the employee turnover rate?

The employee turnover rate measures how many employees leave a company in a given period, usually a year. To calculate the employee turnover divide the number of employees who left by the average number of employees and then multiply by 100.

Before calculating the employee turnover you can determine the following points such as

  • Define the time frame.
  • Determine the current average number of employees during the period of time.
  • Analyse the total number of employees who left during a certain period of time.
  • Now, you can calculate the turnover rate by applying the formula.
  • Comparison of your rate with organisation standard.

You can consider some formulas to calculate the employee turnover rate:

  1. Monthly turnover rate = (Total no.of left employees in a month / average number of employees in a month) * 100

       2. Annual turnover rate = (Total no.of left employees in a year / average number of employees in a year) * 100

Let’s see the calculation of the employee turnover rate.

  1. Your organisation has 50 employees at the start, 60 at the end and 5 left during the month. Then, what will be the monthly turnover rate?

Monthly turnover rate = (Total no.of left employees in a month / average number of employees in a month) x 100

= (5/50)*10

 = 10%

2. Your organisation has 50 employees at the start, 60 at the end and 5 left during the year. Then, what will be the annual turnover rate?

Annual turnover rate = (Total no.of left employees in a year / average number of employees in a year) * 100

Note: No. of employees at beginning + No. of employee at the end = Average no. of employee

= (5/{(50+60/2})*100

= (5/55)*100

 = 9.09%


How to improve the employee turnover rate?

Improving the turnover rate is essential for a business that wants to retain its talent, save costs and increase productivity. There are effective strategies that can help you to reduce employee turnover and improve employee satisfaction.

The following are the points:

  1. Hire the right employee – To ensure a successful hiring process, it’s important to establish practical expectations, conduct efficient interviews, and offer assistance and independence to new employees.
  2. Communicate regularly – Engage in open and honest discussions with your employees about their goals, obstacles, and strategies. Ensure that their hard work is respected and recognised. Actively listen to their feedback and concerns and take prompt action to address them.
  3. Reward and recognition – Reward employees for their hard work and dedication with either financial or non-financial incentives. This could include bonuses, raises, promotions, gift cards, flexible hours or public recognition of their achievements.
  4. Offer better benefits – Offering competitive salaries, health insurance, retirement plans, paid time off, wellness programs, and other benefits is essential. This can help to create a positive work environment and incentivise employees to stay with your company.
  5. Provide career development strategies – Motivating your employees to expand their knowledge and skills is essential by encouraging them to take on new challenges, attend workshops or training sessions, or pursue higher education. This will help them grow professionally and personally and make them feel more appreciated and valued by the company.
  6. Improve work-life balance – Respect your employees’ time and personal space, avoid micromanaging, and prioritise their well-being by offering flexible work options and support for mental and physical health.
  7. Ensure effective onboarding and training – Ensure that your newly recruited team members have a smooth and positive integration into the organisation’s ethos and their designated roles. Provide them with clear-cut goals, guidance, valuable feedback, and resources to enable their success.


The Significance of the Employee Turnover Rate

The following are the importance of turnover rate:

  1. Employee Hiring Costs – When an employee resigns from the company, the organisation has to bear various expenses to hire a new employee. These costs may include recruitment, advertising, administration, background checks, and interviewing expenses. Furthermore, the company may also lose productivity during the period when the employee is undergoing training.
  2. Declining morale – When a company experiences a high rate of employee turnover, it can have a negative impact on the morale of the remaining employees. This can cause additional stress for those who stay, which may lead to lower productivity.
  3. Improving Brand Image – Organisations that experience high employee turnover rates may face negative perceptions from the public. The fast-food industry, for instance, is often viewed as unappealing due to its well-known high turnover rates.
  4. Decreased Productivity – When employees become demotivated, their productivity decreases. This can also result in existing employees having to spend time teaching new employees how to fit in with the company’s culture and their new role, which can further impact productivity levels.

What will be a good employee turnover rate?

Having an employee retention rate of 90 percent or more will be considered favourable. To maintain a stable workforce, a company should strive to have a turnover rate of 10% or less.

Is a high turnover rate good for an organisation?

High employee turnover may indicate a negative work environment or a difficult manager.

Types of Turnover Rate –

There are different types of turnover –

  1. Avoidable Turnover Rate
  2. Healthy Turnover
  3. Voluntary Turnover
  4. Involuntary Turnover
  5. Retirement Turnover
  6. Regrettable

We have come to the conclusion of our talk on the employee turnover rate. If you have any further questions or thoughts on this subject, feel free to share them in the comment box.

You can rely on us to provide you with the resources, expertise, and procedures needed to make informed decisions and achieve excellent outcomes. Our team is here to help you every step of the way.

Schedule a free demo of Saral PayPack today.

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