The employee turnover rate is a vital HR metric to fetch an insight into a certain organization’s employee performance level.

An organization needs to analyze its employee turnover rate for a more in-depth look at the workplace’s analytics. Once calculated and derived the required turnover rate, it will help to evaluate the steps needed to keep the value at a minimum level.

When the employee turnover rate is analyzed in a better way, the organization can make a dedicated talent acquisition team, and it also helps in deriving a retention strategy.


All you need to know

The employee turnover rate is defined by the rate at which employees have left an organization as a proportion of the total employee present during a given period of time.


Types of employee turnover

There are two types of employee turnover that happen in an organization. When an employee leaves the workplace, it could be either voluntary or involuntary.

Voluntary Turnover: Voluntary turnover means when an employee leaves an organization as per his own wish and choice. Generally, this happens because the employee gets an opportunity in another place and leaves the present workplace.

Involuntary Turnover: On the other hand, involuntary turnover means when it does not happen according to the employee’s wish to leave the company. Involuntary turnover occurs when employees are forced to leave the workplace due to some reasons associated with the authority or low-performance level.


How important is the employee turnover rate for an organization

Among the various HR metrics for an organization, the employee turnover rate is one of the most important metrics to understand the business analytics of the company.

Employee turnover affects the organization deeply to a considerable extent. This is because there are high costs associated with high turnover rates.


All about a healthy employee turnover rate

As the expense of replacing employees becomes high, employee turnover affects the company at a high level. But it’s also an important metric to measure the health of an organization when seen from a different perspective.

Sometimes, the rate becomes high due to the scenario that poor performers have left the company. When it’s seen from a different point of view, it can be assumed as a good turning point of the organization so that they can hire new professionals who might be more eligible for the roles. Thus it will help in the future growth of the company.


What is the average turnover rate

Employee turnover rate solely depends on the industry. Therefore it varies from one industry to another one, based on the fields and industry.

In a report by the U.S. Bureau of Statistics, they found the average turnover rate in the U.S. was approximately 12% to 15% on an annual basis ( in the year 2018 ).

According to a LinkedIn report, an average annual employee turnover rate is 10.9% worldwide ( as reported in 2018 ).


How to calculate the employee turnover rate

The employee turnover rate is determined by following a specific formula. To derive the turnover, one needs three essential variables:

  • The total number of employees who left in the given period (including both voluntary leave and involuntary leave)
  • The total number of employees at the beginning of the period
  • The total number of employees at the end of the period

One can calculate the employee turnover rate with this formula:

Divide the number of employees who have left the organization by the average number of employees during a specific time. Then, this number is multiplied by 100 to obtain the required percentage.


Reasons behind employee turnover

There are some factors that cause employee turnover for an organization. If these factors are handled with care from the beginning, then the turnover rate can be controlled with the utmost ease.

Here are some of the reasons:

  • Lack of acknowledgment and recognition
  • Lack in the growth of career path
  • Overload of work
  • Unable to be engaged in the team for decision-making.
  • Facing problems to cope up with the work environment
  • Lack of encouragement to boost the performance level of employees


Ways to improve the employee turnover rate of an organization

This is always an intelligent decision if the company dedicates time to search and reduces the employee turnover rate.

An organization can apply these ideas to decrease the employee turnover rate effectively.

  • Following a thorough recruitment process
  • Hiring an eligible employee
  • Allowing the work-life balance and other flexibility
  • Encouraging and motivating employees to work to achieve a higher level of performance
  • Engaging in group activities
  • Working as a team and solving problems together
  • Understanding the work with more in-depth insight and concentration
  • Consistently work towards the personal improvement of work performance.
  • Gathering more information and experience about work

So, this way, an organization can calculate and determine the employee turnover rate for a given period. Then, it can focus on the factors of how the percentage could be improved. With this process, the organization will become more insightful to the performance level of the employees, and therefore, it will help in enhancing the growth of the company towards a better future.