An employee turnover rate also known as attrition rate of employees would be defined as the replacement of one employee with another employee should you ask human resources. This is also known as labour turnover by some. HR generally has a predefined set of calculations known as the company’s retention rate and turnover metrics.
The HR departments consider these calculations of their labour force and staff turnover ratio as holding most importance for many reasons. Primarily due to the fact that the effects of high employee turnover are very costly to the company. Often times it is the role of HR to determine the factors around these numbers so as to find a cure or means of correcting them.
How to calculate turnover rate
It is not a head count that is used to track turnover but rather a percentage rate. Specifically, it is the percentage of employees that have left the company over a set amount of time, typically, a one year time span (either calendar year or a fiscal year). This percentage rate is what is referred to as the turnover rate. Before one can calculate the turnover it is important to classify the types of turnover as some hold more weight than others in the overall dynamics or impact.
Four turnover types
Although there are only four types of employee turnovers there can be hundreds of reasons in which they happen to occur. These reasons can be anything from the employee dying to being terminated and every reason in between. The four types below also give a clearer casting as to the affects each hold and how they often affect the company when they occur.
- Voluntary – This is the employee that elects to quit for various reasons. This affects the company but not as drastically as the dysfunctional employee loss.
- Involuntary – This is the employee that has been let go from their employment position.
- Functional – This is an undesired employee that when talking of leaving is encouraged to do so thus saving the employer from involuntary dismissal paperwork.
- Dysfunctional – This is the employee that hurts the company when they select to leave employment as they are the top performers. These employees hurt the numbers, reputations, and overall image of the company they are leaving.
Staff Turnover Calculation Formula
It is only now that one can begin to calculate the turnover within the company. This calculation is more accurate when it has analysis and breakdown reports that come with them that show and demonstrate the type of loss in each of the four types that we highlighted above as well as notes or charts displaying the overall job length of each loss. Once all these join together it allows for a clearer more defined image as to the situation and potential areas of concern that govern employee loss and retention.
To determine the percentage based number for the turnover rate the following formula has been being used the most dominantly. This method has one take the number of employees at the year’s start and add the number of staff at year’s end then divided by 2.
This gives you the average number of employees. Next you take the number of team member who left and divide by the average number of employees to gain the turnover. There are warnings with this methods however in regards to long term employees that data may not divide out properly.
Employee Turnover Research Models
The first research model in regards to the turnover came to be back in 1958. The model was known as the March and Simon Process Model of Turnover. Since that edition there have been at least eleven other models released and more studies as well, however, none have yet to clear up the questions or find a model that works just right.
Calculating Existing Employees
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