Losing valuable employees is both disheartening and costly. Fortunately, it is possible to steer the company's employee turnover in the right direction by gaining insights into what it looks like and why.
What is Employee Turnover?
Let's start by defining employee turnover and understanding its origins. In simple terms, turnover measures the number of employees who leave or are replaced within an organization during a specific period. This is often expressed as a percentage of the total workforce. It's beneficial to measure turnover for the entire company and particular departments or units to gain a more nuanced perspective. Different Types of Turnover Whether it's higher salaries, new career opportunities, dissatisfaction with management, or colleagues – when an employee chooses to leave for any reason, it's considered a voluntary turnover. Factors influencing voluntary turnover, such as retirement or relocation, can sometimes be beyond the employer's control. On the other hand, involuntary turnover occurs when employees are forced to leave the workplace due to layoffs or dismissals resulting from misconduct. While high turnover is generally problematic, there are instances where a certain level of mobility can be positive. In an ideal world, the organization always has the right person in the right place. In reality, however, some employees may underperform, lose motivation, or spread negativity. In such cases, when these individuals move on and are replaced by enthusiastic talents, it can significantly boost team morale and productivity. Moreover, some degree of mobility can bring new, valuable perspectives and knowledge to the group. In summary, turnover is a broad concept covering various circumstances. Monitoring and analyzing turnover based on its causes gives the company the best chance to navigate it in the right direction and retain valuable employees.
Why Monitoring Turnover is Crucial
It goes without saying – the staff is the heart of a successful company, and bidding farewell to skilled employees is never enjoyable. However, there are several compelling reasons to proactively manage turnover. Let's delve into them! Firstly, there's the price tag. The more employees an employer loses, the higher the recruitment, onboarding, and training costs. Secondly, there's a record-high skills shortage in Sweden (article in Swedish), making it challenging for employers to find replacements with the right skills when a talent leaves. Additionally, it takes time for a new colleague to settle in. During this period productivity and quality may suffer, putting an extra burden on the team. Lastly, staff departures can negatively impact the dynamics, motivation, and cohesion of the entire team. If not addressed promptly, a domino effect of resignations may occur.
Calculating Turnover
To proactively manage turnover, the company needs to understand its magnitude – you need to do the math. There are various models to calculate turnover, but a common method involves determining the number of employees who left during a specific period. Divide this by the average number of employees during the same period, and multiply the result by a hundred to get the percentage. A straightforward formula for turnover is: Number of employees who left / average number of employees *100 For instance, if a company had an average of 100 employees during the measurement period and 5 employees left, the turnover would be 5% (5/100 x 100). Remember, there are alternative methods of measurement. Some companies may consider both the number of departures and new hires in relation to the average number of employees. It can also vary which categories of employees different companies choose to include. For example, it’s usually recommended to separate turnover for seasonal staff from permanent staff for a more nuanced view. Various calculation models can serve different purposes. Therefore, the model you choose is not the most crucial aspect as long as you ensure clarity in how measurements are conducted and adhere to your definitions for meaningful comparisons over time.
What Constitutes Normal Turnover?
The acceptable level of turnover varies, depending on the industry and profession. For example, statistics from Statistics Sweden (in Swedish Statistiska Centralbyrån) indicate that turnover tends to be higher in occupations with low educational requirements compared to more qualified positions. A turnover rate of 10% (calculated based on employees leaving) is often considered a benchmark. This can be compared with the average for Swedish government agencies, which, according to The Swedish Agency for Government Employers (article in Swedish), is around 12%.
Reducing Turnover – What Can Employers Do?
Stay or leave? Several factors influence an employee's decision to seek opportunities elsewhere, and resignations are always challenging to predict and prevent. However, as an employer, there's much you can influence. Surveys indicate that over half of all voluntary resignations could have been avoided. But how? Here are six strategies that have proven effective in retaining employees and reducing turnover: 1. Ensure competitive salaries and attractive benefits. 2. Offer ample career and development opportunities, allowing employees to grow within the company. 3. Embrace flexible schedules and working conditions to foster a healthy work-life balance. 4. Hire the right person from the start – evaluate and quality-check your recruitment process. 5. Assess team dynamics – encourage social activities contributing to a positive workplace community. 6. Dissatisfaction with leadership is a common reason for resignations – prevent this by providing continuous training and coaching for your managers. Read more: How to Retain Your Employees.
Ask Your Employees!
Another effective way to gain control over turnover is to understand what is expected of you as an employer and how well you meet those expectations. And who is best suited to provide this insight? That's right – your employees! The most successful employers rely on annual performance reviews and ensure that feedback is a recurring element in day-to-day operations. Regular one-on-one meetings between managers and employees, group discussions, anonymous surveys, and pulse measurements are just a few possibilities. Lastly, when a departure is imminent, conduct a thorough exit interview to gather as much information as possible about how the employee experienced their time with you and why they chose a different path. What insights can you glean to minimize the risk of similar situations in the future?
Want to Work Proactively with Employee Turnover?
Ready to take control of employee turnover? Smart tools make the job easier! With our HR dashboard, you can quickly get a snapshot of turnover and other crucial metrics presented in a clear and visual manner – allowing you to take the right actions at the right time. Interested in learning more about the dashboard or any of our other tools in our comprehensive Flex HRM solution? Feel free to reach out!
