How do I calculate the Employee Turnover Rate ?

In today’s age of globalization and open markets, companies try very hard to recruit and retain competent personnel. The attrition of key people with sound knowledge and capability is serious cause for concern. In this scenario, it is of vital importance that there be a method that can quantify the number of people that leave the organization and try to take remedial action.

Calculation of turnover rate
The turnover rate can be calculated by dividing the number of employees who have left in a given period by the total number of employees in a given period and multiplying the result by 100.

The turnover rate varies with different sectors of the industry. It is highest for the private sector. The public sector has a relatively lower turnover rate. The turnover rate per se does not indicate a cause of concern. A high turnover rate is not a cause for concern provided there is a pool of labor from which to draw. The turnover rate is a cause for concern when the skills desired are rare. Turnover can also be beneficial in instances where senior employees are replaced by ‘fresh blood’.

While calculating turnover rates, it is also advisable to study the reasons which cause people to leave the organization. Employees can leave their organizations for a number of reasons. There may be positions outside which seem attractive to the employee. These are commonly known as ‘pull’ factors. There can also be factors within the organization which motivate the employees to leave the organization. These include reasons such as demotivating work environment, uncaring management, underpayment, etc. These are commonly known as ‘push’ factors.

Exit interview may be useful to a certain extent. However, they have a reputation for being artificial and not reliable. This happens because the employee who is leaving may not be frank to voice his opinions and his grievances. The employee may feel that future employers may contact the present employer to enquire about his conduct and capability. A better alternative would be to collect feedback from employees who have left about six months later using confidential feed back forms.

There are steps which can be taken to increase retention: 

- Giving the new recruit a proper and realistic picture of the job prevents raised expectations which are not fulfilled later. 

- Line managers should be made accountable for turnover in their departments. Reward line managers who have retained their staff. 

- Create a friendly work environment where work becomes a pleasure. 

- Provide job security and stability in the company. 

- Develop an image of fairness and impartiality in your dealings with the employees