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Employee turnover, in simplest terms, is the number of employees hired to replace those who left or got fired during a 12 month period. This basic definition will work for some metrics, but, many reasons are there that employee turnover can occur. There are two types of separations – Voluntary Separation and Involuntary Separation. Retirements, even transfers to other divisions are voluntary separation whereas dismissals for unprofessional behavior or poor performance are all involuntary separations. But for voluntary separations, you may not be required to change anything about the way you manage talent. However, involuntary separations is an entirely different thing. Here, selection procedure and employee welfare need to be revised.
How to calculate Employee Turnover?
The formula to calculate employee turnover is relatively simple. If your organization has 100 employees and 20 employees got fired or quit then your turnover is 20 %. Most companies use more precise calculations to resolve what underlies turnover. Assume 4 employees leave in March, 5 employees leave in June and 1 employee leaves in October. Your annual turnover rate is 10%, and 8.3% is your average monthly employee turnover.
Why it matters?
- Recruitment and training of new employees is an expensive process. Here are few steps of recruitment and training which are high-priced
- Expense of advertising and marketing in different sector for recruitment and candidate acquisition procedure.
- Interviewing costs.
- Administrative expense increased due to processing paperwork during an interview.
- Cost of trainer and trainee.
- Cost of training material.
- Labor costs for exiting employees, including separation benefits as well as overtime and other costs to manage the open position during the transition time.
How to reduce it?
According to research from Willis Towers Watson, over one-quarter of employees are at a high risk for turnover. If the turnover percentage is high, then it holds the natural growth of your company. Reducing employee turnover is dependent on the total work environment of your company and mentality of your employees. If you choose right employees and work culture of your organization is constructive, then employee turnover will reduce automatically.
- Select the right people in the first place through psychometric test. A psychometric test assesses your candidates that they will fit your work environment or not, but your prime focus to selecting the best employees is to resolve how well they can follow the job description.
- At the same time, don’t skip to hire people with the inborn talent, ability, and smarts to work in any position. Choose the proper people, so you can find to reduce employee turnover.
- Present skill will be outdated in future, and a new one takes place. So, prefer those who have great learning ability and shift them to appropriate employees of your organization.
- Offer an attractive package with components such as insurance, medical support and flexible hours.
- Provide opportunities for people to share their knowledge at training sessions, presentations, instructing others and team assignments. Employees like to share what their skill and teaching other means own learning.
- Show respect for employees at all times. Listen to them seriously and use their ideas. Value them by using your communication.
- People want to enjoy their work. Turn the work pressure into work pleasure. Engage and employ the special talents of each.
Contact us or sign up today to organize any assessment to pick the right people from mass to reduce your employee turnover.