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Employee turnover is a basic human resource metric that determines how many employees leave a company during a certain time period. Calculating employee turnover involves dividing the number of employees who have left the company by the average number of employees for that specific time period. Best tips for calculating employee turnover include computing a company wide and department metric, asking employees why they chose to left and calculating total direct turnover costs. This provides more information than a basic turnover rate. Attaching an actual cost to this metric can help a company focus on how to retain employees.
An example for calculating employee turnover only requires two numbers. A company has 15 employees who left the business in the last month. The company had an average of 90 employees during this same time period. The employee turnover rate is 17 percent for this time period. Companies often need more information to better understand and assess this human resource metric.
Using a company wide and department metric helps a company determine why or where a large portion of employee turnover exists. Using the previous example, five of the 15 employees were from the production department. The production department had 20 employees overall. Therefore, calculating employee turnover for the production department indicates in a 25 percent turnover rate, well above the company’s total monthly percentage. The company’s management team may need to review what conditions led to this excessive turnover in the production department.
Many companies offer or require exit interviews. This allows the employee to air grievances or discuss why they chose to leave the company. In other cases, the company can ask specific — albeit generic — questions as to why the employee left the business. When calculating employee turnover for both the entire company and individual departments, human resource managers can review the answers given by employees. Any trends or other significant issues that are consistently found in employee answers may indicate a problem in the company.
Computing direct turnover costs is another beneficial process when calculating employee turnover. Common costs in this process include job advertisements to bring in potential employees, costs to interview candidates, time and money spent on new employee orientations or training and money spent on administrative costs, such as processing paperwork. Another cost that may have inclusion is the separation costs of previous employees, such as separation pay or overtime by other employees picking up the slack. Companies can multiply the total costs by the number of employees leaving the company. This adds a further level of understanding when calculating employee turnover.