How to Measure and Mitigate Employee Turnover
Publié le 5 September 2022
Company leaders in all industries need to learn how to measure and mitigate employee turnover to maintain a satisfied and productive workforce.
Employee turnover is a fact of life in the world of business. Employees choose to join or leave companies for a vast number of reasons: new opportunities, moving locations or even changing vocations completely, just to name a few.
While a certain level of employee turnover is inevitable, a high level of turnover might indicate that there’s something wrong with your company culture, making your people leave quicker than they should. This is why it is important for business leaders in all industries to learn how to measure and mitigate employee turnover.
What Is Employee Turnover & Employee Turnover Rate?
What is employee turnover? It’s when employees leave the company. So an “employee turnover rate” is the measurement of employees who leave the company during a certain period of time, quarterly or annually for example. Businesses should aim to have a low employee turnover rate, as having a high turnover rate is a sign that something might be wrong internally with the company.
The good news is that there’s a proven formula you can use to measure employee turnover.
You can then compare this rate against national or sector averages to gauge an understanding of whether your rate is high or low compared to other companies in your sector or area.
Why Is Calculating Employee Turnover Rate Important?
Before we get into how to measure employee turnover, let’s first take a closer look at why you should strive to always have an accurate understanding.
A high employee turnover rate spells trouble for a number of reasons, including:
- A high employee turnover costs your company a lot of money. The Society for Human Resource Management (SHRM) found it costs a company roughly six to nine months of an employee’s salary to replace them.
- It takes time to onboard new employees so that they’re familiar with your processes and workflows, which drains resources that could be used on more meaningful work.
- When employees don’t stick around for a long time, this can harm your employee culture, hindering collaboration and communication.
- The unsteadiness associated with a high turnover rate can hinder business growth, making it harder to strategize and plan for the long term
As you can see, a high employee turnover rate spells trouble for your business. So, how do you know if your turnover rate is above or below average? Let’s take a look below.
Employee Turnover Measurement
Calculating your employee rate is pretty straightforward. You simply divide the number of employees who left your company within the last year by the average number of employees within your company. Then, times this number by 100 to get a percentage rate.
To get your average number of employees, add the number of employees who you had in employment at the beginning of the year by the number of employees at the end of the year and divide this result by two.
The average number of employees is calculated by adding the number of employees the company was employing at the beginning of a certain period and the number of employees the company was employing at the end of a certain period, and dividing the result by two. Now you know how to complete employee turnover measurement.
What is considered a healthy employee turnover rate?
It’s difficult to give an exact figure for a healthy employee turnover rate, as the statistics vary widely by industry. Broadly speaking, employees in hospitality, for example, have a higher turnover rate than those in biomedical sciences.
Saying this, HR academics generally agree that a figure between 10% and 15% per year is considered healthy. If your turnover rate is less than this, then well done! You’re outperforming and likely have a good company culture.
If your employee turnover rate is edging above 15% and into the 20’s or 30’s, then you might need to reconsider how you approach the employee experience.
Are companies to blame for a high employee turnover?
A high employee turnover rate shouldn’t be looked at as a blame game. As we’ve noted, your turnover rate will depend a lot on the industry you operate in.
Research from McKinsey also indicates that employees handing in their letters of resignations is a global issue right now. It found that 53% of employers are experiencing turnover at an all-time high.
One of the major reasons for this could be the fact that the pandemic changed how we work. As Cloudwards’ collection of remote work statistics notes, in 2021, 91% of people who worked from home said they would like to continue to work remotely in the future. Remote and hybrid working arrangements remain very popular with workers, and companies who fail to adapt to this paradigm shift can expect to lose high-performing employees who do not have to give up this increased flexibility.
However, just because some employee turnover is a given, that doesn’t mean you should rest on your laurels. You want to keep employee turnover as low as possible, which means taking an honest look at your workplace practices and policies to see if you’re creating a place where people want to work.
Doing so can not only help keep your employees in their jobs for longer, but can improve employee morale and your company’s performance as well. As the Harvard Business Review notes, “Engaged employees perform better, experience less burnout, and stay in organizations longer.”
Simple changes like enabling flexible working, using better project management software and taking a more structured approach to career development can make a world of difference.
How to mitigate employee turnover
With that in mind, here are some essential tips on how to mitigate employee turnover and create a better workplace culture.
- Offer fair salaries and compensation: There’s a global cost of living crisis in 2022. Across Canada, people are looking for jobs with competitive salaries and good workplace benefits. So, take a look at what the average Canadian salary is for the role you’re offering – and ensure that you match – or exceed this – for your employees. Remember, too, that rewarding and recognizing top performers can be a great incentive that entices people to stay with your company and mitigate employee turnover.
- Embrace hybrid working: We know that employees today want to be able to work where they want – be it the office, home or even a coffee shop. If you’re one of the companies that brought people back into the office five days a week as soon as you could, your employee retention rates might have suffered. While some vocations require being onsite at all times, many office jobs can be done remotely – and employees appreciate companies that trust them to work from home.
- Encourage work-life balance: Microsoft research found that one in five people believe their employer doesn’t care about their work-life balance. If your company encourages employees to work late or on weekends, you should reconsider your approach. Employees who don’t feel valued or cared for are less likely to feel loyal to a company. This means that, if a new opportunity comes up, they’ll be more likely to leave. On the flipside, if you show your employees that you care about their well-being, you’ll foster a sense of community, which can improve retention rates.
- Listen to your people: Employee engagement is a measure of how fulfilled and invested your employees feel at work. Make it a habit to regularly check in with your employees about how they’re feeling about the workplace investment. You can do this through standardized surveys or even in management check-ins. If employees give you feedback and input on things that could be changed, take these into consideration. Ultimately, you want to create a workplace where people want to come to work everyday, not dread it, so do what you can to nurture the workplace environment.
- Offer career development opportunities: Do you have a standardized performance review process in place, so employees know that there’s a ladder of progress for them to climb? If you don’t, you just put one in place ASAP! Career development opportunities and performance reviews are vital to helping your people to stay motivated at work. Make sure that you take a goal-centric approach to review, focused on what the employee can do to improve at work, rather than focusing on what they’ve done badly. This is because criticism and negative feedback can impact your people’s self-esteem and make them feel unappreciated.
Mitigating employee turnover is crucial to business success!
Ultimately, your employee turnover rate directly correlates with how people feel about working at your company. Company leaders need to learn how to measure and mitigate employee turnover, reduce turnover rate as much as possible, and create a place where people feel empowered to show up to work every day and be their best selves!
Start today by taking a few simple steps to improve your company culture and create a workplace where employees feel loyal and committed to your mission.
