How to measure employee turnover and possible reasons for employee turnover?
People come and go in every company. Whether they move to new pastures, start a family or retire, it is a normal part of business life. But if too many employees leave the company on a regular basis, it can become a problem for your business and affect productivity, morale and ultimately the growth of the business.
In this article we look at the issue of employee turnover, how it can be measured and why people leave the company.
Staff turnover is costly. While a certain turnover can be expected, poor management can push normal turnover to an excessive level. According to the US Bureau of Labor Statistics, a company can lose 33% of an employee's total compensation, including salaries and benefits, through employee turnover. However, the impact is not only financial, but also affects employee morale. Although difficult to quantify, low morale leads to a domino effect, which has a negative impact on effectiveness and efficiency.
It is clearly important that companies reduce the turnover rate of their employees. However, to reduce the turnover rate, companies must first understand the main reasons why employees leave their jobs for other positions. The right people are leaving the wrong organisations - they are leaving the wrong managers!
Good employees leave the company for many reasons. Here is a list of the 12 reasons that can be considered for leaving.
Rude behavior. Studies have shown that daily humiliations have a negative impact on productivity and lead to good employees leaving. Rudeness, blaming, slander, destruction and retaliation are all reasons that make employee turnover difficult. Resentment and abuse are not conducive to a good working environment.
Imbalance between work and private life. This imbalance increases with economic pressures, and organizations continue to require one person to do the work of two or more. This is particularly true when an organisation reduces or restructures its workforce, resulting in longer working hours and more weekend work. Employees are forced to choose between their private and professional lives. This situation is not appropriate for today's younger workers and is made worse when both spouses or close family members are working.
The work does not meet expectations. It is all too common for a job to deviate significantly from the original description and from what was promised at the interview. When this happens, it can lead to distrust. The employee begins to ask: "What else are they not honest about? If there is a lack of trust, there can be no real employee involvement.
Misalignment of employees. Organisations should never hire employees (internal or external) unless they are qualified to do the job and are aligned with the culture and goals of the organisation. Managers should not try to force an adjustment when there is none. This is like trying to force a size nine shoe into a size eight shoe. Neither the management nor the employee will be happy, and it usually ends badly.
Feeling undervalued. Everyone wants to be recognized and rewarded for a job well done. It is in our nature. The recognition does not necessarily have to be monetary. The most effective recognition is sincere appreciation. Recognition of employees is not only a nice thing, but also an effective way to convey appreciation for positive performance while at the same time reinforcing those actions and behaviors.
Coaching and feedback are missing. Effective managers know how to help employees improve their performance and offer systematic coaching and feedback to all employees. Ineffective managers postpone giving feedback to employees even though they instinctively know that giving and receiving honest feedback is critical to the growth and development of high performance teams and organizations.
They lack the ability to make decisions. Too many managers manage the details on a small scale. Micromanagers seem unsure whether their employees are capable of getting the job done without the manager taking the lead at every step. Organizations need employees who take ownership of their work and become empowered! Empowered employees have the freedom to make suggestions and decisions. Today, the term "empowerment" seems to be a collective term for many ideas of authority and responsibility of employees. In its broad definition, however, it means that an organization gives employees the freedom to do their work with confidence. Employees in turn face up to this responsibility and accept this trust with enthusiasm and pride.
People's capacities are insufficient. Many managers have been promoted because they have done their job very well and achieved results. But that does not mean that they know how to lead. Managers are not born, they are made. Knowledge of human nature can be learned and developed, but it really helps if a manager has the natural ability to get along with people and to motivate them. Managers must lead by example and be rewarded by action.
Organizational instability. Constant management reorganization, changes in direction and jostling separate employees from the purpose of the organization. Employees do not know what is going on, what the priorities are, or what to do. The result is frustration, which leads to confusion and inefficiency.
Increases and promotions are frozen. Over the years, studies have shown that money is usually not the main reason for leaving a company, but it is a priority when an employee finds a job that pays 20 to 25% more elsewhere. Salary increases and promotions are often frozen for economic reasons, but only slowly recover after the crisis. Companies may not be looking to offer the best salaries in their field, but if they don't, they pay more competitive salaries and benefits and make their employees feel valued! It's a crucial combination.
Faith and trust have been shaken. As more and more is demanded of employees, they see less and less evidence that they will ultimately share in the fruits of their labor. If income and profits increase with the workload, companies should review their total compensation. Employees know when a company is doing well and they expect to be seen as critical facilitators to that success. Companies must stop talking about their employees as their most important asset, while treating them as consumables or something less valuable. If a company wants its employees to be able to deliver quality products at a pace that meets customer demand, they must show their appreciation through action.
Opportunities for growth are not available. Much good talent can be lost if employees feel trapped in a job with no future. Often, talented people are forced to move from one company to another to improve their status and compensation. Top-performing companies find ways to help their employees develop new skills and responsibilities in their current position and position them for future advancement within the company. Employees who see growth potential and comparable compensation are more likely to stay with the company.
What is staff turnover?
Staff turnover is the percentage of employees who leave your organization over a period of time, usually one year.
Staff turnover can be very high and simply represents all employees who have left in a given year.
But it can also be subdivided into several categories, such as voluntary or forced layoffs and reasons for leaving. This information can help employers take steps to reduce staff turnover in the future.
How can I measure staff turnover?
The simplest way to measure your staff turnover is to calculate it as a percentage of your total employee population over a given period of time, for example, on a monthly or annual basis.
The formula is as follows:
(Number of employees leaving over a certain period x 100)/Average total number of employees over a certain period of time
As mentioned above, you can be more specific and break this down into reasons for a more detailed report.
For unplanned separations, you may want to break it down further, taking into account length of service, seniority, employee function, location, etc.
How can the costs of employee turnover be measured?
The cost of employee turnover varies greatly from company to company.
According to a recent study, around £12,000 per employee is required to find and recruit new staff and enable them to achieve full productivity.
For a management position, this loss could be much higher, while for an occasional position the figure is probably not nearly as high.
You can get an idea of the cost to your business by adding things like
- Costs of withdrawal - administrative and personnel costs
- Recruitment costs - advertising, administrative fees for recruitment, time for interviews, agency fees, etc.
- Temporary staff - cost of covering the post during the period of employment
- Catering - hospitality and training costs for your new employee
- Loss of productivity
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