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What is Turnover?

Turnover refers to the rate at which employees leave a company and are replaced by new hires. This phenomenon is not just about numbers; it reflects the overall health and stability of a workforce.

How is Turnover Calculated?

There are multiple variations of the turnover rate calculation, and your HR system likely has a calculation for this built in.

A Simple Calculation

If not, calculating turnover involves dividing the number of employees who have left by the average number of total employees, then multiplying by 100 to get a percentage.

This can be done for any time period. Monthly, quarterly or annually works best.

Formula

Turnover Rate = Number Of Resignations ÷ Number Of Employees At Start Of Period

Multiply the above by 100 to get a clear percentage.

Good vs Bad Turnover

Not all turnover is detrimental. ‘Good‘ turnover can occur when replacing underperforming employees with more skilled or motivated individuals, potentially leading to enhanced productivity. ‘Bad‘ turnover, however, involves losing valuable, hard-to-replace talent, which can negatively impact organisational knowledge, morale, and productivity.

What is a Good Turnover Rate?

An acceptable turnover rate varies by industry, but generally, a lower rate indicates a healthier company environment. A turnover rate of 0% is unrealistic, instead most businesses should aim for a turnover rate that is below the standard for their industry, as a general rule, aim for below 10%.

Keep In Mind: Your business may experience seasonal turnover. For instance warehousing staff may turnover at higher rates than office staff, and so you may need to break turnover down by area.

How to Correct Poor Turnover

Addressing poor turnover can range from simple fixes of remuneration, to more complex culture changes. In order to find what to fix, a broad approach often helps:

1. Conduct Exit Interviews: Understanding why employees leave is the first step toward improvement. Conduct thorough exit interviews to gather insights into workplace issues.
2. Evaluate and Adapt: Use feedback from exit interviews to address common concerns. This might involve adjusting management styles, enhancing benefits, or improving work-life balance.
3. Employee Engagement: Foster a culture that values and recognizes employee contributions. Engaged employees are less likely to leave.
4. Career Development: Provide clear pathways for advancement. Employees need to see a future within the company.
5. Competitive Compensation: Ensure your compensation packages are competitive within your industry to retain talent.

At Flexistaff, we understand that managing turnover is challenging but critical for business success. We offer comprehensive recruitment services tailored to address the unique needs of each client, whether looking for long-term staff, or temp hires. Partner with us to transform your workforce challenges into opportunities for growth.