Employee turnover is the percentage of your employees leaving your organization and being replaced by new ones. This metric is helpful in understanding how employee-friendly your company is. Companies that are market leaders are always looking for innovative ways to reduce their employee turnover and maximize employee retention. There is always a tussle between employee attrition or turnover and employee retention. Before we move further and understand how to minimize employee turnover, let’s first learn to calculate it.
Is the employee attrition the same as employee turnover? While many experts say that they are synonymous, there are people who say that both terms aren’t so identical, after all. Employee attrition happens in the following cases:
- Death of employee
- The job that an employee is filling becomes redundant.
- When an employee retires, and the job isn’t filled later on
Employee turnover is of two types:
Voluntary turnover refers to employees leaving companies on their own. Perhaps they do not like the workplace, the policies or the job itself, or they find a job much more interesting in terms of content and/or salary.
Involuntary turnover happens when the employee is fired because of performance issues or moral turpitude. Contrary to voluntary employees’ resignation, involuntary turnover does not happen from the worker’s end. Involuntary employee turnover happens because the employer isn’t happy with the now-terminated employee.
Employee turnover is calculated in many ways. However, the article focuses on the simplest way. Assume that a company hires 100 people in a calendar year. Due to various reasons, 10 employees leave the company in that year. So, your employee turnover is 10%. However, on a closer look, it is found that 5 people left the company in January, followed by 2 in May, and 3 in November, then there will be different monthly employee turnovers.
For the month of January, it is 5/100, which is 5%. For the month of May, it is 2%, and for November the employee turnover would be 3%. On average, the monthly employee turnover of this organization would be 3.3%.
So, essentially the simplest way to calculate employee turnover is to take the ratio of employees who left to the number of total employees of the company. The percentile format of this ratio is the employee turnover of that.
Understanding employee turnover is important because it helps in lowering hiring costs. It also helps in making us more competitive in the market place. There are several companies, which help in minimizing employee turnover. To understand more about this subject, visit this website. There are various ways to reduce employee turnover and here, we shall focus on the 5 most effective steps towards that.
- Employer branding: Make your company desirable to your potential employees. Employer branding places your organization as a favourable employer. Some of the biggest employers in the world like Unilever present themselves as employee-friendly organizations.
- Make Human Resource Department a critical part of your decision-making process: The HR team should not be relegated to just hiring and recruitments. Staffing people is a critical activity and should be treated as a strategic intervention.
- Empower your employees: There are at least a hundred reasons why empowering your employees is good for your business. Not only does it help your reputation as a boss, but it also gives your people more reasons to keep their loyalties vested in your mission. Employees, when made the centre of business, feel motivated to excel. Delegate authority to your employees wherever it is possible. Make them a part of your decision-making matrix.
- Reward your performers: Separate the wheat from the chaff. Identify your performers and give them important assignments. Make your organization a place where performance is appreciated and valued.
- Jot down the Key Performance Areas as clearly as possible: Last but not least, be specific and clear! Write them down and ask every employee to understand it. Many organizations assume that their employees understand their respective KRAs. Nothing could be farther from the truth.
If we follow at least the above-listed tips, we can expect to reduce employee turnover significantly. At the same time, one should also understand that employee turnover is not just a statistic, it also tells the market about how our inner circuit works.