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How to Calculate Employee Turnover Rate?Sometimes, employees leave the companies they work for. Thatâs just a factof life. But when too many employees leave citing the same reasons, then thecompany, not the employee, might just be the problem. As a human resourcesprofessional, you have to be wary of high turnover rates because these willdefinitely have a negative effect on the company (more on these later). Inthis article, letâs discuss high turnover meaning and strategies to reduceit. But first, letâs get our definitions in order.â## What is Employee Turnover?Employee turnover is the number of employees who leave your company over aspecific period, typically one year. Although employee turnover usually coversthe total number of employees who leave a company, it can also be calculatedper department or unit in the organization. Employee turnover doesnât justrefer to employees leaving voluntarily from the company. When an employee isfired due to poor performance or a bad attitude, for example, that counts asemployee turnover as well. Only, it is involuntary. Some employee turnover is,therefore, inevitable. A sudden spike in employee turnover, however, is notbecause it can be reflective of the bad workplace environment that promptsemployees to leave in the first place. Companies with high turnover are seenas bad places to work. Consequently, companies with a bad reputation struggleto attract the best talent.â## How To Calculate Employee Turnover Rate?Calculating the employee turnover rate is not hard. Letâs say you want toget the monthly company employee turnover rate. There are three things youâdneed to know first: * Number of active employees at the start of the month (S) * Number of active employees at the end of the month (E) * Number of employees who left during that month (L)Now get your average number of employees by adding the number of activeemployees you had at the start of the month, and the number of activeemployees at the end of the month, and then divide the answer by two. Theformula would look something like this:(S+E) / 2 = Average number of employees for the month (A)To get the monthly employee turnover rate, divide the number of employees wholeft the company during that month by the average number of employees for themonth. Then multiply the answer by 100 so you can get a percentage:(L/A)x100= Monthly employee turnover in percentMost companies use the annual employee turnover rate because the longer periodprovides better insights. The way you do the calculation is the same.â## Industries & Jobs With The Highest Employee TurnoverNow that you know how to calculate the employee turnover rate, your nextquestion probably is, what constitutes a low and high turnover rate? Theanswer will depend on your industry. Itâs difficult to give an idealemployee turnover rate because factors that are industry-specific also affectemployee turnover. What I can give you, though, are the employee turnover jobsand high employee turnover industries. Letâs dive in:â### TechTech had the highest employee turnover rate in recent years. In 2017, it had a13.2% turnover, according to a LinkedIn study. Thatâs 0.2% more than theemployee turnover rate for retail (more on this later). In previous years,retail had consistently been at the top of the list of industries with thehighest employee turnover.â### Within the tech industry, there are industries that have shown the highestturnover rates:Source: LinkedIn â#### ââThere are certain high turnover jobs, too. The job of user experience anddesigner, for example, had a turnover rate of 23.3%. This was followed by thedata analyst post, and the embedded software engineer post, with 21.7% each.But the high employee turnover rates in the technology industry, in general,may have more to do with competition for staff. As competition in the sectorincreases for scarce resources, companies offer more competitive salaries andbenefits to compete, which prompts some employees to jump ship when they findbetter opportunities.ââThe table above from the Radford Global Technology Survey Quarterly WorkforceTrends Report shows that in particular, there has been a spike in the numberof companies looking to hire aggressively, particularly in India, where thetechnology sector is booming. In other words, while there is a high turnoverrate in some fields in tech, these employees leaving still get jobs in thetechnology industry.â### Retail and Consumer Products IndustryThe retail and consumer products industry has historically already had a highemployee turnover rate. According to the LinkedIn survey, within the retailindustry, restaurants had the highest turnover rate, at 17.2%:â> Within the retail industry, retail sales personnel had the highest turnover> rate, at 19.3%, followed by food service professionals, at 17.6%, and> hospitality professionals, at 17.0%.âAlthough itâs hard to say for sure the main reasons for employee turnover inthe industry, the fact that the jobs with the highest turnover are low-leveland seasonal may explain a lot. Also, the rise of eCommerce in retail meansthat fewer people are needed in-store.â### Media And Entertainment IndustryThe employee turnover rates in the media and entertainment sectors areconstant. Whether itâs newspapers, online media, sports, or travel andtourism, the employee turnover rate is basically the same according toLinkedIn: from 13% to 13.2%. The same cannot be said of jobs in the filmsector. Animators have the highest turnover rate, at 25.6%, followed by 3Dartists, with 22.3%. Marketing specialists are in third place, with a 19.8%employee turnover rate. The high turnover jobs based on the data are mostlyproject-based (or have a clear beginning and end, depending on the duration ofthe movie shoot, for example). The high turnover rate could explain the exodusof employees. If that is the case, these statistics should be treated with adegree of caution, as itâs not an accurate measurement of employee turnover.â## Causes of Employee Turnover In The WorkplaceââIâve mentioned that some employee turnover rate is inevitable. Whenemployees retire, for example, thatâs not within the companyâs control.The same can be said of employees making the personal decision to shiftcareers. There are, however, reasons for employee turnover companies can dosomething about. In this section, letâs look at those:â### 1. Lack of GrowthNo one wants to be stuck in the same old job, doing the same old routine. Infact, according to Business2Community, the presence of career developmentopportunities ranks third among the non-monetary company offers that makeemployees stay. If you want your employees to be in it for the long haul, makesure you make it clear to them from the start that they have a future in thecompany if they work really hard. Always remember, your employees are notrobots who have no plans. People have professional goals and want to advancein their chosen careers. If the job they have now isnât helping them attainthose goals, then leaving wonât be as hard.â### 2. Too Much WorkIf you ask former employees of companies with high turnover why they left, toomuch work is probably one of the reasons they will give you. Everyone loves ajob that pays the bills, but not if it leads to stress, and worse, evensickness. Too much work results in burnout and that, according to the HarvardBusiness Review, costs about $125 billion to $190 billion a year in healthcarespending in the US. The real costs on the company, however, can be evengreater, with low productivity as a result of lost talent. In other words, allcompanies should respect their employeesâ time, too. Thereâs a reasonemployees use an employee time clock app to log in and out of work. Once theclock strikes 5 p.m., they can basically do whatever they want. But that alsomeans theyâd have to be in the office at exactly 9 a.m. the following day.â### 3. Lack of RecognitionGiving credit where credit is due is key to employee retention. According toThe Balance Careers, 55% of employees believe employee recognition will makethem feel valued. Of the respondents of the study, 58% also said employeerecognition will improve employee engagement in the company, a crucial elementfor employee retention. Then thereâs the relationship between recognitionand productivity. According to TinyPulse, 69% will work harder if they felttheir efforts were being recognized. That translates to higher companyproductivity overall and increased profit.â### 4. Little Opportunity to Decide Managers should manage their team, but that doesnât mean they shouldâsuffocateâ them. I donât mean that in the literal sense of the word, ofcourse. I meant they shouldnât micromanage employees to the point they canno longer do anything without the managerâs stamp of approval. If employeeshave little opportunity to decide, morale is affected in a bad way. This isbecause they become frustrated with the loss of autonomy, and lose the desireto go the extra mile when given a task. And when thereâs low morale,thereâs low productivity. When employees are given little opportunity todecide, they also become too dependent on the manager, they no longer thinkoutside the box and grow.â### 5. Poor Employee SelectionEmployees sometimes leave companies because itâs just in their DNA to dothat. Although there is nothing companies can do about the DNA of a person,they can still control the people they hire. HR should hire, not just thecandidate with the skills for the job. It should also look at thecandidateâs attitude and values. If they donât match the company values,then even if the candidate is the best for the job skills-wise, might as wellgo for the next-best one who is likely to be happy in your office. Becausewhen that person is happy, that person is more likely to stay.â## How to Reduce Employee Turnover Rate?ââ#### Now that you know the primary reasons for employee turnover, letâsdiscuss the strategies to reduce employee turnover and prevent your employeesfrom leaving:â### 1. Ensure Clear Career Path For EmployeesAs the HR, you should also work closely with the company managers to identifyemployees with potential. Once identified, their immediate supervisor shouldguide them so they can have the necessary skills to grow. The idea is to helpthem comply with the requirements needed to climb the corporate ladder. Onyour part, provide managers and employees with potential the necessary supportthey need. You can, for example, sponsor training and seminars. Organizeevents with senior company officials as resource speakers, and employees asthe audience, too. This way, your employees will know more about how themanagement started out in the organization, and how, with hard work, they gotto grow and reached success.â### 2. Ensure Good Work-Life BalanceDonât make it all about work with your employees. Remind them to take theirlunch breaks. Take them out on company outings once in a while. Organizesocial events in the office. Make it clear to them that while the companyvalues productivity, itâs not at the expense of their health. Make sure youmonitor the workload given to employees, too. If a member of the team isbogged down with work, some of the tasks can be assigned to other members ofthe team who can do it just as well. Delegate, so not one member of the teambecomes overworked and becomes so frustrated the person leaves.â### 3. Give Credit Where Credit Is DueItâs always a good idea to recognize hard work. When companies do this, theymake employees feel valued and motivate employees to work even harder. As theHR, you can, for example, organize a special recognition day for employees whostood out during a given period. For example, recognize in a company- wideÂevent the companyâs salesperson who sold the most products during the firstquarter of the year. Or give extra vacation leaves to that person who wasnever late to work. You can offer monetary rewards if you can, too. Becreative. Look for trends in employee rewards programs and be inspired. If yougive credit where credit is due, you will keep your employees happy andengaged. And leaving the company for them will be out of the question.â### 4. Tell Managers Not to MicromanageDonât get me wrong. Managers who are hands-on are great. What companiesdonât want, though, are managers who are overly hands-on and their co-workers canât get anything done without them. As the HR, brief your managerson how the company would like things done. Although management of the team isnecessary, it shouldnât be to the point the entire workflow gets bogged downbecause the managers need to approve everything. Tell them to give employeessome leeway to decide things. This way, employees will feel they havesomething to contribute. And they develop their decision-making skills.â### 5. Do the Selection Process RightDonât just breeze through the selection process when youâre looking tofill a position in the company. The selection process is there, so companieswill be spared from hiring candidates who are actually not a good fit in thecompany. So take your time and conduct the interview properly with aneffective talent management process. Ask relevant questions. You want to gaugethe candidateâs skills AND the personâs attitude and personality. Hiringsomeone just because that person was the first one with the necessary skillsto apply for the job is never a good idea. You have to wait for the rightperson. Not force one candidate to be the right person just so you canannounce the position has been filled.â## BottomlineHR should monitor employee turnover rate. A low turnover rate is indicative ofa great workplace. A high one, however, should be cause for alarm. The goodnews is, you as the HR have the power to help ensure a low employee turnoverrate. All you need is to do is follow the strategies Iâve outlined here. Thebottomline is this: Place company employees at the heart of any companypolicy. If you do this, thereâd be no reason for them to leave.â#### Looking at your employee engagement rates and building a winning cultureis easy with the vast array of features and data in Empuls. Want to learnmore? Book a demo or start your free trial today.â