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Definition of Turnover:

Employee turnover is the percentage of employees who leave a company in a given period, and are replaced by new employees. In simple terms, it is the rate at which employees leave an organization. High turnover rate is detrimental to the company’s health, as it indicates the loss of talent in the company. Measuring the turnover rates can help HRs uncover the reasons and fix them at the earliest. It can help budget the cost-to-hire, revisit the recruitment process, employee engagement and growth, compensation that you offer etc, to help retain the star employees. 


Why should you focus on Employee turnover:

  • Negative impact on the employee morale. As more and more employees leave, it creates a chain reaction, causing loss of productivity and dissatisfaction among existing employees.
  • When experienced employees leave, company’s performance falls on the lesser experienced employees, with lesser capability and knowledge. 
  • It affects the bottom line of the company. Companies end up losing money they invested in their employees and have to spend again on hiring replacements.

Types of Turnover: 

Involuntary Employee Turnover: When employees are asked to leave the organization (hence, involuntary)  due to poor performance, tardiness, or violation of company policy. Layoffs also fall under Involuntary turnover, however, the procedure is slightly different. 

Voluntary Employee Turnover: When an employee chooses to leave the company, either because they accepted a job elsewhere, or due to personal reasons. It is important that HRs identify the reasons why the employee leaves, since it can help uncover problems hitherto unknown. Employees usually provide a verbal or written notice, following which their exit procedure is initiated. 

Desirable Turnover: When a poor performing employee leaves the organization, it gives the company a chance to hire someone who can meet the company’s expectations. After all, poor performance is costly to the company and it is always better to replace it with exceptional performance which can help the company grow.

Undesirable Turnover: When the top performing employees who can help the company reach new heights start to leave, it leads to undesirable turnover.

How to calculate employee turnover:

To calculate the employee turnover, you need to know the following:

  • Number of employees at the beginning of the time period. 
  • Number of employees who left the organization
  • Number of employees at the end of the time period.

Average number of employees = (Employees at the beginning + Employees at the end)/2

Employee turnover rate= (Number of employees who left the organization/Average number of employees) x 100

Causes of employee turnover:

  • Lack of learning and growth opportunities: Learning or training  is not a one-time offer that companies should give during onboarding. When employees do not see career growth or knowledge advancement in their organization, they look for it elsewhere, and leave the company.
  • Undefined company culture: It is important that your employees feel welcomed at their workplace, and be able to identify their personal self with work. That’s where culture ode  comes in. Lack of Diversity and Inclusion is another reason why employees leave the company. 
  • Lack of work-life balance: An employee performs multiple roles in their life apart from being an employee. It is important to be able to manage all the responsibilities that entails in these roles. If the job takes up most of their time, they are likely to leave. 
  • Lack of an efficient recruitment process: When there focus is on quantity and speed of the hiring process, and less focus on the quality, it is a sure shot way to high turnover rates. 
  • Lack of Freedom and micro-management: When employees do not have the freedom to perform their tasks effectively and have to conform to the rules of the upper management, it affects their morale and productivity. 
  • Lack of job clarity: When employees have no clarity on their goals and achievements, and end up doing more than what they were hired to do, it leads overworked employees and dissatisfaction. 
  • Compensation: When employees feel their work and contribution is not getting the deserving compensation and benefits.

How to handle high turnover rates:

  • Retrospect why employees were leaving: Why did your employee leave? This is an important question for which vagueness wouldn’t do. Accepting feedback from exiting employees will tell you about problems hitherto unknown to you. 
  • Set clear expectations: If your employees are leaving in a short time, it could be because they don’t know what they are expected to do. Give clarity on what they are expected to do, and how their contribution will help the company
  • Focus on seamless onboarding: Onboarding will tell you what are your company’s core values, mission, and objectives. It lets the employees know what is valued in the company and how they reward achievement. Additionally, it also talks about what is unacceptable at the workplace, so their employees do not tolerate behaviour that causes discomfort. 
  • Communicate effectively: A team that cannot don’t communicate well can fall apart easily. Is your team working in silos? Do your employees feel that they are talking to a brick every time they have a problem or suggestion? These are some indicators that tell you to prioritise communication. 
  • Help your employees map their career growth: It is important to let your employees know how their career would look like in their company. According to a 2016 Gallup survey, 87% believe that career and developmental growth are important in a job. Provide learning opportunities and invest in employee training and development. 
  • Show Gratitude: Let your employees know that you appreciate their efforts. Show this appreciation in the form of timely promotions, thank you cards, or simple thank you on the email. This will inspire them and give meaning to their work.
  • Prioritise employee well being: Your employees may not feel the same all the time. There are going to be days when they feel tired, feel overworked, or burnt out. In fact, workplace stress is responsible for $190B in US healthcare.  Recognise these early on, and prevent them altogether. Provide compulsory holidays, give space for taking unexpected emergency day-offs, and stop overwork altogether.


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