What is employee turnover?

Employee turnover is an HR metric that measures the rate at which employees leave their jobs, voluntarily or involuntarily, over a specific duration of time. Turnover reflects the quality of the employee experience; a high turnover rate often reveals an undesirable work environment, while a low turnover rate generally correlates to successful practices and a thriving organization.

How to calculate employee turnover rate?
The formula to calculate employee turnover rate is:

What is employee turnover? - Employee-turnover-calculation.jpg

Why should HR leaders care about employee turnover?

An excessively high turnover rate can lead to a decrease in morale, productivity, and, due to limited resources and staff — burnout. Moreover, replacing a considerable number of skilled employees burdens a company with significant recruitment and training costs.

Employee turnover rate has increased by a troublesome 88% since 2010. In 2018, more than 77% of employees voluntarily left their jobs. The staggering increase is, however, avoidable, and HR leaders can step up to reverse the course of this distressing trend.

What can HR do to ensure low employee turnover rate?

HR leaders can make positive changes by implementing these practices:

  • Listen to leaving employees. Departing employees offer a wellspring of valuable information. Through conducting an exit interview, HR can learn what factors fueled employees’ decisions to leave. Was it a poor onboarding experience, a heavy workload, or a lack of opportunity for career development? Or, perhaps a toxic culture and lousy management? Discovering the motivators and demotivators of the company’s departing talent provides HR with clues to direct them towards improving the employee experience. 
  • Teach managers to engage. According to the Gallup business journal, managers can impact 75% of the causes of voluntary turnover. Because managers hold a crucial role in employee churn, it’s a priority to equip them with the skills necessary to build positive relationships with employees, based on trust and respect. 
  • Emphasize quality over quantity. Sometimes turnover can be positive– creating competition, raising the talent level, and infusing fresh energy into the company culture. Yet, the departing of highly skilled employees can negatively impact employee morale, and replacing them is costly. Offering career development options to promote motivation and engagement can reduce the turnover of talented individuals.
  • Build a work community.  Nurturing community, virtually or in the workplace, can support meaningful relationships and improve employee engagement and retention. An inclusive culture that celebrates employees’ accomplishments and welcomes their contributions can decrease turnover by imbuing the workplace with camaraderie.

How can low employee turnover rate improve company culture?

Employee turnover rate reveals a company’s internal state of health and its ability to attract employees. Perhaps an organization offers competitive compensation, beneficial options for learning and development, or its management is exceptional. A low turnover rate contributes to employee morale and reflects an upbeat company culture of engaged and motivated individuals.