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Excessive turnover can cripple an otherwise healthy organization.

While all organizations have to accept some level of turnover, too much of it can significantly affect performance. Not only can replacing an employee cost 33% of their annual salary, but watching people leave constantly can tank morale for everyone else. That’s why knowing what a turnover rate is and keeping track of it is important for HR departments.

But tracking, managing, and lowering this metric isn’t as simple as it seems. Here’s what you need to know the ins and outs of turnover.

Turnover Rate 101

At its simplest, your organization’s turnover rate shows how many employees you’ve lost over a specific period as a percentage of your total workforce. It turns feelings and impressions (e.g. “I feel like we’re constantly losing people”) into hard facts you can compare to industry benchmarks (e.g. “Our turnover rate is twice the industry average.”). Since employee retention is part of HR’s responsibilities, calculating and managing turnover rates falls on them, too.

Calculating Turnover Rates

You can calculate your organization’s turnover rate with this simple formula:

Turnover % = (Employee Departures / Total Number of Employees) x 100

Note that turnover rates are usually calculated on a monthly, quarterly, or annual basis. Often, organizations will use an average number of employees over that period rather than an absolute number to help account for variations.

Want to learn more about calculating turnover rates? Check out our guide here.

Regrettable vs. Other Types of Turnover

Not all turnovers are the same, and usually only some types of turnover will factor into your turnover rate. You could include all types to get an idea of your workforce’s overall attrition rate, but HR departments are usually concerned with regrettable turnover—meaning turnovers that either hurt the organization or represent a high-performer choosing to leave.

Other types of turnover include:

Involuntary turnover

Voluntary turnover

Avoidable turnover

Healthy turnover

Retirement

Whether you include them in your turnover rate depends on what you’re trying to calculate.

5 Factors That Influence Regrettable Turnover

People leave for all sorts of reasons, but when it comes to regrettable turnover, there are some usual suspects:

Poor compensation: Nearly two-thirds of employees who quit do so because their pay is too low. Money isn’t everything, but when job markets run hot, you may see an increase in turnover rates.

Lack of career development opportunities: Everyone needs opportunities for growth in their career, but this is especially true for top performers. If your employees feel like there’s no way to move up, they’ll move out.

Ineffective management and leadership: More than half of employees who leave do so because of their manager. But poor decisions from leaders higher in your org chart can also cause top performers to leave.

Poor work-life balance and burnout: The vast majority of job seekers say work-life balance is more important than a high salary. There are likely quite a few employees at your organization right now who are on the lookout for a chance to improve their work-life balance.

Alignment with organizational values and mission: Some employees just aren’t a good fit, no matter how well they perform. Eventually, that misalignment can lead to them moving on to a new opportunity.

Not every factor contributing to regrettable turnover is within your control—for example, you can’t force an employee to change their values. But there are some things you can do to reduce your turnover rate.

Strategies To Decrease Regrettable Turnover

No matter the kind or size of your organization, common strategies can drastically reduce your turnover rate. Don’t try and implement them all fully at once; try one or two and scale up as needed. Now here are some of the best strategies.

Implementing effective onboarding programs: While many organizations tend to exclude new hires from their turnover rates, the way you onboard employees can affect their performance throughout their entire tenure.

Offering professional development and growth opportunities: Your top performers will rarely want to stay in the same role for long. Even if you can’t offer them a promotion, try to give them opportunities to learn new skills or take on responsibilities they’re interested in.

Enhancing communication channels between employees and leadership: Getting the pulse of your workforce, especially after tough leadership decisions, is crucial for reducing turnover. If employees feel like their leaders are giving down commandments from a mountain, you’ll likely see an increase in turnover.

Creating a positive workplace culture and employee experience: This should go without saying, but putting effort and resources into building a healthy company culture and maximizing positive experiences is crucial to reducing turnover.

Keep your compensation package competitive: To hang on to your top performers, you need to make your organization a great place to work and a rewarding one.

Monitoring and Adjusting Employee Retention Strategies

No single strategy can single-handedly reduce high turnover rates, especially when it’s first implemented. Always think about the next iteration of your employee retention strategy. Making the right improvements means monitoring whatever data you have access to and opening yourself up to feedback.

Both data and feedback are crucial for gauging the impact of your efforts. And there’s only one way to do that without creating extra work for yourself.

Leveraging Technology for Turnover Prevention

Managing turnover rates is incredibly important, but it’s a lot of work, piled on top of everything else on your to-do list. That’s why so many HR teams turn to technology for this, and performance management platforms like 15Five are the best option.

A performance management platform plays two primary roles in turnover prevention and employee retention. It centralizes the data you need to know exactly how engaged employees are while empowering every aspect of turnover prevention.

Centralizing Data

There are two common problems with HR data:

It’s scattered all over the place.

It’s based on intuition, impressions, and gut feelings.

Whether it’s numbers coming out of spreadsheets or a “vibe” a manager sends you over Slack one day, HR data can be tough to access and work with. A performance management platform lets you centralize it and turn it into something that makes sense while being widely usable.

Driving Employee Retention From a Single Platform

When working out of spreadsheets and meeting notes, it can be tough to know where to start to prevent regrettable turnover. A platform like 15Five helps you at every stage of this process, from helping manage 360 performance reviews to matching employee performance with OKRs and even training managers.

No matter how you decide to tackle turnover prevention, a performance management platform is going to be an essential tool.

Make your workplace the best place to work

Turnover rates allow HR departments to calculate exactly what percentage of an organization’s workforce has left over a specific period. When it comes to measuring and reducing your turnover rates, keep these things in mind:

There are many types of turnover, with most organizations tracking regrettable turnover rather than retirement and new hires.

Regrettable turnover is impacted by many factors, including poor pay and lack of career advancement opportunities.

Reducing regrettable turnover depends on addressing its root causes.

Performance management platforms like 15Five are an essential asset for your employee retention strategy.

Want to keep turnover from affecting your organization’s performance? Find out how 15Five can help you do just that.
The post What is a Turnover Rate? appeared first on 15Five.
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19/01/2024 – 00:02 /Genevieve Michaels
Twitter: @hoffeldtcom