How to Calculate Staff Turnover – Staff Turnover Calculator
Staff turnover has a significant impact on the operating costs of all businesses. Indeed, there is a recruitment cost associated with replacing people who leave their jobs for whatever reason. When you’re talking about an SME with only a few employees, the departure of one or two people in a year can equate to a churn rate of up to half or more of the total number of registered workers. on the payroll. . Even in large organizations that will inevitably see people coming and going, higher employee turnover rates lead to significant overhead. It is therefore in the interest of all commercial organizations to tackle this. Therefore, knowing how to calculate your current employee turnover rate is something that all HR departments need to establish.
What is an employee turnover rate?
A company’s employee turnover has nothing to do with its financial turnover. The latter refers to the sum total of all its sales during a given period, regardless of their profitability or not. Instead, employee turnover refers to the number of workers who have stopped working for an organization during a certain period, usually a fiscal year, quarter, or month. This is the bald figure of people who have been fired, fired, left for another job, quit or retired. People who go on parental leave and who have the legal right to return to work later are not counted in staff turnover.
Needless to say, companies with hundreds or thousands of employees will necessarily have a higher turnover than smaller companies with only ten people on the payroll. Therefore, HR managers and business leaders really need to know how important their turnover rate is to the number of employees they have on their books. This is where a calculation is needed. Don’t worry, because the calculations are quite simple.
How to use a staff turnover calculator
Any staff turnover calculation can be done very simply with pen and paper or with a formula in a spreadsheet. Remember that the idea here is not to calculate how many people left in a given period, but to determine the exit rate versus the size of the workforce. Thus, an SME with about twenty employees can directly compare its turnover rate with a multinational that has hundreds of employees.
To do this, take the total number of people who left your company over a given period. Say, for example, in June your company had five retirements, six people quit, and you had to lay off one employee. That would be a turnover of 12. Then you need to divide that number by the average number of employees you expect to have on your books at any given time. Companies with seasonal employment rates should take an average figure based on a full year of activity if calculating the turnover rate for the last month.
So in this example, if your business had an average of 160 employees in the summer months but only employed 80 workers in the winter, the annual average number would be 120 employees. To calculate the employee turnover rate, take the number of people who left — in this example, 12 — and divide it by the average number of workers on payroll, 120 in this example. For the avoidance of doubt, the number you would arrive at in this case would be 0.1. To express this number as a percentage, simply multiply it by 100 to get 10%.
If the following month, the same company laid off 30 employees but maintained its average number of workers at 120, the calculation would give a percentage of 25%. This would indicate that recruitment costs are likely to increase in the coming period and that appropriate measures should be taken.
What can you do to reduce staff turnover rates?
Understanding what drives people to leave an organization with increasing turnover will help decision makers take the right steps to turn the situation around. According to WorkBuzz, a website employee feedback platform service provider, simply paying people more to retain them is often not enough to combat rising employee churn rates. Modern companies need a more nuanced approach to assessing things like employee well-being, worker engagement, inclusivity and diversity in workplace culture and how members of the staff feel valued in a larger context that goes beyond what they see in their payroll records. Only by asking their staff what they really think can administrators make such assessments.