Turnover rate. It isn’t fun. It isn’t sexy. And most unfortunately, it doesn’t have anything to do with delicious handheld pies. That said, if you know anything about balancing the science of running a business and the art of having employees, you know it’s a vital measure of your company’s overall health and culture.
Before we get too much further, let’s be clear that there’s something in this for everyone. For the rookies, we’re going to cover the basics, including how to calculate turnover rate for your company. We’ll talk about how turnover rate pertains to the health of your business and nail down an answer to the question: What is a high turnover rate? And for the seasoned veterans in the audience, we’ll talk through how to reduce turnover rate with employee retention strategies.
Still there? Great—glad we didn’t lose you to a pie recipe. Let’s get to it.
What Is Turnover Rate?
Employee turnover rate pertains to the percentage of your employees who leave your company over a specific amount of time. Think about all the people who quit voluntarily, get fired, or choose to retire—that’s what you should factor in when calculating your company’s turnover rate. Why is it so important to keep that pulse? Because you need to keep track of when and why employees “turn over,” not just wave goodbye and hope you can replace them as quick as possible.
How to Calculate Turnover Rate for Your Company
Ugh. As if employees leaving wasn’t painful enough, now we have to do math. Most companies want to know their employee turnover rate on a quarterly or annual basis, by the way. Why? It just takes that long for anything meaningful to show out of it.
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Here’s how to calculate turnover rate:
What Is Considered a High Turnover Rate?
Of course, the question every leader wants to know when it comes to turnover is: What is a high turnover rate? And the answer is that it depends on the business. You’ve got to calculate it over time, combine that with what you know to be true about your specific business and industry, and factor in your understanding of your employees.
Look, nobody wants to be in a bad spot with employee turnover. It’s a huge, expensive pain in the butt that takes a ton of time and effort to fix. That said, a high turnover rate usually happens because of a combination of things: company culture, compensation, benefits, job market conditions, employee stress . . . the list goes on.
But the essential thing to know is that a high turnover rate typically isn’t a good thing. If you want to compare your business’s turnover rate to national averages, the Bureau of Labor Statistics is a great place to start. Beyond that, the most effective way to reduce turnover rate is to take a long, hard look at how your employees experience working at your company.
How to Reduce Turnover Rate
Truly understanding where your employees are coming from and what they’re dealing with is like having a silver bullet to solve all your company's retention problems. OK, not quite. But it’s close to it.
It’s also vital to have a firm grasp on the competitive hiring landscape. What’s that mean? It means knowing where you stand in the marketplace and not being behind the times—or your competitors—with what you’re offering employees.
While conventional benefits form a good base, today’s employees want and need more than just the basics. They need life-changing benefits to justify staying in one place for more than a few years. And your company stabilizing its turnover rate for the long term depends on it.
But recruiting isn’t just about hiring new employees. You’ve got to be continuously doing things that build your culture and make your employees want to stay with your company. And that means your employee retention strategies—your culture, compensation and benefits—need to be on point.
It’s Make or Break
Look, your company’s employee turnover rate doesn’t have to spell doom for your business. There is hope! Having a healthy employee turnover rate is possible. And it doesn’t take a complex process to get it there—it really just comes down to adding value to your employees’ lives. By doing that, you’ll be giving your employees what they truly want and need.