What is Employee Turnover?
"Employee turnover is the process of employees leaving a company or organization over a specific time frame, usually measured annually. Business turnover rates must be understood and analyzed as they directly affect workforce stability and overall performance." (1).
Staff turnover can be further classified into voluntary and involuntary turnover. Voluntary turnover occurs when employees choose to leave the organization for personal reasons, career advancement, or better opportunities elsewhere. On the other hand, involuntary turnover occurs when employees leave the company due to layoffs, poor performance, or other uncontrollable circumstances.
Voluntary turnover can be challenging for employers because it is often unpredictable and costly. Losing top talent can disrupt workflow and lead to additional costs in finding and training new employees.
In contrast, voluntary turnover can be both controllable and uncontrollable. Controllable voluntary turnover occurs when organizations fire employees due to poor performance or policy violations. Uncontrollable voluntary turnover includes unexpected events such as death, disability or forced downsizing.
How to Calculate Employee Turnover Rates
Here is a simple explanation of how to calculate turnover
rates using the turnover rate formula:
- Choose a time frame : Employee turnover rates can be calculated as monthly, quarterly, or annually, depending on the desired analysis.
- Determine the numbers : Determine the total number of employees who left the organization during the selected period. Also, calculate the average number of employees working during that time frame.
- Apply the formula : Divide the total number of employees who left by the average number of employees and multiply the result by 100 to get the turnover rate percentage.
For example, suppose an organization has 200 employees, and 35
employees resigned in a month. The turnover rate can be calculated as follows:
Turnover rate = (35 / 250) * 100 = 17.5%
Tracking turnover
data is essential for analysis and improvement. By analyzing average turnover
rates, organizations can identify trends, areas of concern and potential
problems within specific departments or demographics.
This information
helps in strategic planning, budgeting and implementing targeted measures to
address workforce issues.
References :
Terlecki, Ł. (n.d.). Available at: https://future-code.dev/en/blog/understanding-employee-turnover-causes-effects-and-retention-strategies/#retention-strategies.
A very comprehensive article which provides a clear understanding about how can an organization calculate employee turnover by considering the turnover formula. As you mentioned voluntary turnover can be reduced if it occurs due to employee dissatisfaction. I think nowadays most of the IT sector employees in Sri Lanka leave their organization either to be freelancers or be remote workers. What is your opinion about it? Or is there any other reason for it?
ReplyDeleteI appreciate your insightful observation. You've brought up an important topic on the current trend in the IT industry, especially in Sri Lanka, where a large number of workers are quitting their jobs to pursue remote or freelance employment options. Several things can be blamed for this change. One of the main motivators is the desire for more freedom, flexibility, and control over one's work-life balance. In contrast to traditional office environments, freelancing and remote work frequently offer greater freedom in project selection, schedule customization, and location flexibility.
DeleteFurthermore, Sri Lankan experts can access worldwide markets, frequently with greater compensation and a wider range of options, thanks to the global need for IT capabilities. Nevertheless, this trend may also be influenced by other elements including discontent with the corporate culture, a lack of opportunities for career progression, or insufficient recognition. In order to retain talent, organizations must be aware of these reasons and modify their HR strategy. This may be done by providing more flexible work schedules, competitive pay, and an atmosphere that supports the changing demands of IT experts.
The above article is given a clear idea about calculating Employee Turnover in shortform, nice keep doing
ReplyDeleteThank you for the positive feedback! I'm glad you found the article helpful. If you have any specific questions or need more details on any aspect of calculating employee turnover, feel free to ask. I'll continue to provide clear and concise content.
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