How to Calculate Your Employee Turnover Rate
Currently, the unemployment rate is at a near 50-year low. It’s more important than ever for employers to recruit and retain employees, particularly when you consider the fact that more than one-third of U.S. employees are actively searching for a different job.
There are trends in companies which have retention issues. These include:
- Lack of opportunity for advancement: 32% of workers are looking for another job so they can move forward in their career. Employees who feel they have opportunities to advance in their career are 20% more likely to stay with the same business for more than one year.
- Feeling undervalued by employers: 68% of workers would consider leaving their job if they felt that their employers didn’t value their contributions to the company. Employees who do not feel that their good work is recognized are more than twice as likely to start looking for a new job.
- Inadequate benefits: 73% of U.S. workers report that a company’s health and wellness program is an important consideration when deciding to work for them. 81% of employers who offer adequate health benefits agree that this increases employee’s job satisfaction.
- Poor managerial performance: 40% of employees who consider their supervisor’s performance to be inadequate have interviewed for a different position within three months. Bad employer performance makes workers four times more likely to resign.
- Lack of flexibility in the workplace: 80% of workers would turn down a job that does not offer flexibility in the workplace. These days, workers value a choice of flexible work location more than working for a prestigious company.
- Poor work/life balance: Employees who enjoy a good balance between their work life and their personal life are 10% more likely to remain loyal to their company. Employee burnout is a significant factor impacting employee turnover.
The Cost of High Employee Turnover
High employee turnover is financially injurious for your company. On average, an employee exit costs 33% of their annual salary. Why does it cost so much? Because your company has to focus a lot of time and money planning for a suitable replacement. Costs include:
- Recruitment agencies
When you lose an employee, you are not just losing valuable talent, you are also losing your company’s ROI. Obviously, the best thing to do is to hold on to your employees by ensuring their job satisfaction, health and wellness, and overall happiness. One of the first steps to retaining employees is to determine their rate of turnover.
How to Calculate Employee Turnover
The term “employee turnover” refers to the percentage of workers who leave your company during a designated period of time. This includes dismissals, resignations, and retirements. In order to calculate your employee turnover, you need three pieces of data:
- The number of employees at the beginning of the designated period (usually one quarter)
- The number of employees remaining at the end of the period
- The number of employees who left during that period
You can then calculate the average number of employees by adding your initial and final employees and dividing this number by two. Then you will need to divide the number of employees who left your company by your average and multiply this figure by 100. The result will be your turnover percentage. You can use this figure to compare it with the average turnover rates within your industry. If you find that your company’s turnover is higher than your industry’s average, it’s time to reassess your management.
How to Analyze your Turnover Rate
To assess your employee turnover rate, there are three things you need to consider:
- Who is leaving: Even if your company’s employee turnover rate is lower than your industry’s average, it’s important to know which employees are leaving. If you are losing some of your best talent, you need to make changes very quickly, or you’ll soon find that your whole company is suffering. On the other hand, if your under-achievers are leaving, you could improve your retention rates by improving employee engagement and productivity.
- When are they leaving: Taking note of when employees are leaving can help you understand whether or not your recruitment methods need to be improved. If you discover that a high percentage of new employees are leaving, this may be a sign that aspects of their job were different from what they were expecting. If this is the case, you will need to review your job descriptions and your onboarding procedure.
- Why are they leaving: It’s important to learn why your employees are leaving as this will allow you to adjust any areas of company management which will help you retain more employees. You can find out why people are leaving by conducting exit interviews, which are a valuable source of information. You will also be able to see if there are any common reasons why people are leaving and ask employees if they can offer any
Tips for Retaining Employees
You can encourage employees to remain loyal to your company by investing in your workforce with a solid strategy that encourages financial stability and overall employee wellness. Such investments may include:
- Benefits: Offering employee benefits such as paid vacation time, retirement, and life insurance can help you increase employee loyalty and engagement.
- Financial health awareness: A financial health program can help employees deal with debt issues and to improve their financial wellness.
- Healthcare: A health insurance program can help employees feel secure that if they or their family members get sick, they will be able to afford treatment and not have to deal with financial stress on top of health issues.
- Mental health awareness: Raising mental health awareness in the workplace is a good way to develop a culture of care and make employees feel more comfortable.
- Employee loan programs: By offering an employee loan program, you can show employees that you care about them and help them to avoid predatory lenders.
- EAPs: An Employee Assistance Program (EAP) is a confidential, work-based program which can help workers and their families resolve personal or work-related problems, relieve stress, and increase employee wellness.
- Upward mobility: Allowing employees opportunities to advance their career will mean they remain loyal to your company, rather than seeking future advancement elsewhere.
- Open communication: It’s important to encourage feedback up through the ranks, to build employee loyalty.
How True Connect Can Help You Retain Employees
TrueConnect is an innovative voluntary benefits program. It enables employers to provide their workers with financial assistance when they are most in need. This unique solution can provide employees with loans up to $3,000, which they can repay through small, payroll deductions over twelve months.
TrueConnect offers a unique solution because it protects employers from any financial risk. For employers who qualify, the TrueConnect financial package is completely free to offer. It is also easy to manage. Each TrueConnect loan is funded by Sunrise Banks, which is federally chartered by the U.S. Treasury. TrueConnect is committed to helping employers retain their workers by helping them recover from and prevent financial difficulties.
High employee turnover rates can quickly have a negative impact on your company’s productivity and profits. They can also reveal hidden issues within your corporation. Calculate your turnover rates, review your recruitment and onboarding procedures, and implement benefits and compensation plans. By taking these proactive measures, you will strengthen your company and retain valuable employees.