Explore The Benefits Of Calculating Employee Turnover Rate

Calculating Employee Turnover Rate

When you run a company, large or small, one of your main concerns will be the job satisfaction of your employees. Their loyalty to your company will make all the difference in terms of consistency, building a solid office culture, and having a reliable team of experts.

So, today, we will discuss employee turnover, explain how to calculate this figure, and look at the benefits of this calculation. Then, we will touch on methods for avoiding a high turnover and why employee retention is essential for business success.

By the end of this guide, you will know why and how to calculate the employee turnover rate and encourage staff loyalty to your company.

What is Employee Turnover?

Employee turnover is how frequently employees leave a company in favor of a new job. On average, the employee turnover rate is around 47%, which might seem quite high to some.

There are good and bad things about employee turnover – it is not a purely negative phenomenon. When your company hires new employees, it is an opportunity for change, growth, and introducing new perspectives into the workplace.

On the other hand, you do not want a super high employee turnover rate, as this can lead to you spending excess amounts on hiring and training new staff and lacking consistency in the company.

Moreover, a high turnover rate can suggest that your employees are not satisfied in your organization, which is an issue going forward.

If an employee leaves due to “pull” reasons, which are unavoidable personal circumstances, this does not reflect badly on your company. But if they leave for “push” reasons, such as poor company culture, this does reflect on you.

How to Calculate Your Employee Turnover Rate

The first step is to calculate your average number of employees over a given year. To do this, you add the total number of employees on January 1st to the total number of employees on December 31st and divide by two.

Then, when calculating your turnover rate, you divide the total number of people who left the company by the average number of employees that year and multiply by one hundred. You should consider the context of this figure to get more out of the data.

For instance, some industries have much higher turnover than others, such as hospitality. Moreover, consider the reasons why employees leave; are they “pull” or “push” reasons?

If you identify a time of the year when more employees leave or a common reason given for leaving your company, you should work to reduce the turnover due to this factor.

The Benefits of Calculating the Turnover Rate

It is important to calculate your turnover rate so you can assess how well your company is doing with employee engagement and satisfaction. As we have discussed, some employees will leave your organization due to factors outside of your control.

However, a higher turnover rate does imply that your HR department has some work to do.

Try to implement positive changes that make your company more appealing to the workforce. The more you know about your employee turnover rate and patterns, the better you can shape the future of your company.

Calculating your company’s employee turnover rate can help you to become a better leader and a more thoughtful and compassionate boss.

How to Avoid High Employee Turnover

To avoid the expenses and effort of constantly recruiting, hiring, and training new employees due to a high turnover rate, you need to work on your employee retention. Incentivize employees to stay at your company by treating them like valued, supported, and trusted members of the organization.

This will reduce the “push” reasons that employees give when they resign due to a lack of job satisfaction and other company-related issues.

Workers who feel like an invisible part of the corporate machine will not have job pride, company loyalty, or satisfaction in their professional lives.

Moreover, anyone who does not feel safe, protected, or engaged at work will not have any desire to remain in the organization for years. So, your company needs to keep employees happy and productive to avoid a high turnover rate.

Use tactics like team-building exercises, financial incentives, and office social events to keep your employees entertained, driven, and loyal.

Employee Retention and Business Success

Employee retention is key for business success as this means you can develop a core team of expert, loyal and well-trained workers who are dedicated to your company.

Your day-to-day business will run much more smoothly with the help of a team of employees who have all been at the company for a while, know all the ropes and feel valued by the organization.

When employees feel well looked after by a company, they are more likely to stay and work hard to give back to the organization that supports them. So, make sure your employees’ wellness and job satisfaction is a key concern for you as you run your business.

Moreover, your public image will be better if you are known as a company whose employees are loyal and dedicated. Businesses that are constantly hiring are generally associated with lower pay and poor working conditions.

If you want to develop a positive company culture and public perception, employee retention is important. This will help you to become a desirable employee with a great reputation.

Employee Retention

So, when it comes to employee turnover rate, you want to have a fairly low figure. Some turnover is, of course, healthy and normal. People come and go from companies all the time and having new perspectives and ideas can be rejuvenating for a business.

However, you want to avoid a high turnover, as this wastes money and time and suggests your company is not supportive of staff. Now you know how and why to calculate the employee turnover, you can start to assess your organization’s ability to retain its staff.

Remember that employee retention will increase your efficiency, public image, and company culture. So, do your calculations and try to implement positive changes with your employees at the heart of your decision-making.


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