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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

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Employee Turnover 

Employee turnover is the rate of people leaving one or more jobs. It is often referred to as turnover because it refers to the number of people who leave a company or organization in a given period. While some employees may leave for reasons that are out of their control, such as family or financial reasons, others may leave due to dissatisfaction with their job.

Employee turnover can be a costly problem for companies, costing them millions of dollars in lost productivity and damage to morale. It also increases the risk of hiring less-experienced candidates and new employees with high turnover rates. It's typically measured as the number of employees who resign, retire, or are fired from a company over a given period.

What is employee turnover?

Employee turnover is the rate at which a company's employees leave their job. Employee turnover is a crucial indicator of employee satisfaction, job security, and organizational performance. It also has a significant impact on the bottom line.

The higher the turnover, the higher the cost of replacing those employees. Employee churn depends on many factors, including:

  • Compensation levels
  • Job satisfaction
  • Job security
  • The amount of vacation time offered to employees
  • Employee benefits such as pensions, health insurance and retirement plans
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How to calculate employee turnover rate?

To calculate your employee turnover rate, you need to know the average duration employees work in your company. 

The formula used in this calculation is:

Employee turnover rate = (Total no. of employees x Average length of service) ÷ Total number of employees

The resulting number represents the total number of employees who left your company as a result of any reason over a given period. For example, if you have 100 employees who have worked for you for five months, your turnover rate would be 5%.

How to prevent employee turnover?

If you have a high turnover rate among your employees, it could be a sign that your company isn't doing well. A high churn rate can lead to low morale and a negative work environment.

Consider improving it with these strategies:

  • Offer more benefits, such as medical insurance or paid vacation time.
  • Offer training programs on topics relevant to the position held by new hires.
  • Offer flexible scheduling options so employees can balance their work and personal lives.
  • Create a welcoming environment where employees feel comfortable bringing up management concerns.

How to reduce employee turnover?

Turnover is a serious problem for many companies, but it can be addressed. Here are some tactics for reducing employee turnover:

  • Provide a good environment. If your employees have a good work environment, they'll be more likely to stay with the company. This includes providing adequate resources, such as computers and internet access, proper training, and development opportunities.
  • Have a clear vision of what you're trying to accomplish. If there's no clear purpose for people working at your company, they may feel like there's no reason to stay long-term. 
  • Make sure your employees are appreciated. This will help them feel valued and encourage more loyalty.
  • Reward employees for their hard work. This can be done in many ways, but the most common is offering a gift card, a bonus, or a raise at the end.
  • Create a positive workplace culture. Create a fun working environment where people want to be at work every day. Make sure your company culture reflects how important it is for employees to be happy and engaged with what they do daily, so they want to come to work every day!

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How to measure employee turnover?

Employee turnover is measured by calculating how many people leave a company during a certain time (usually one year). 

  • Determine the number of employees leaving your company over a specific period.
  • Calculate the average length of service for each employee who leaves your company.
  • Compare these numbers to the average length of service for all employees in your company.
  • Calculate a percentage rate (or score) for each employee by dividing the number of employees who left by the total number of employees at the end of a period and then multiplying that result by 100 percent.
  • Compare this percentage rate with other companies in your industry or region to see how well you matched up with others in your area, state, or country.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.

eNPS:

eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

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