Turnover is the number or percentage of employees who voluntarily or involuntarily leave your employment in comparison with the number or percentage of employees who stay in your employment over a certain period of time, generally a calendar year. Your turnover ratio is a useful measurement, a finger on the pulse of employee satisfaction within your organization.
Turnover is also a testimony to how effectively the recruitment process you employ is functioning. Turnover rates give you insight into how well your managers are interacting with employees. Turnover is a window into your organizational culture, the environment you provide for employees in your workplace.
As you measure turnover, differentiate between employees who leave for reasons you could not impact versus employees who leave your employ by choice. Employees who involuntarily leave your employment through layoffs or termination count toward your turnover numbers, too. But, it is important to differentiate among the reasons for employee turnover. This differentiation will enable you to address the various causes of employee turnover separately and effectively.
The University of Wisonsin offers a turnover worksheet that is comprehensive and useful for calculating your turnover ratio and the costs to your organization of turnover. The same article offers a national average turnover rate of 12% if you are interested in comparing your organization's turnover to the national average.
Turnover is expensive, disruptive, and impacts the morale of the remaining employees. Turnover is often preventable when an employer offers market driven compensation, better than average employee benefits, and a workplace culture that appreciates and engages employees. Turnover is occasionally not preventable, but with attention, reducing voluntary and involuntary turnover is a solid and achievable goal.
In the economic climate of the past few years, turnover has not been significant for many employers. But now that some experts believe that the economy is improving, all of the dire predictions I've received over the past couple of years about turnover may come true, if you believe the pundits. Turnover will increase if you do nothing to prevent it. Reducing turnover will save employers costs and employees energy and distraction.
Four Tips to Reduce Turnover - Quickly
Preventing turnover is a long term goal in most organizations. These are the four areas in which you will want to concentrate your efforts now for best results in preventing turnover.
- Examine your compensation, both salary and benefits, to make sure that your employee compensation has not fallen behind the market during the past couple of years of frozen or lower wage increases. Especially for employees with scarce skills, compensation in this job market has advanced and your company may need to catch up to retain valued employees.
- If you subjected your employees to austerity measures and cancelled traditional perks, events, and motivational employee activities, consider gradually reinstating the missing opportunities. Perhaps you used to buy employees an occasional lunch or provide free drinks at work. The lunch doesn't have to be elegant or cost a lot of money. Pizza is not expensive. Schedule brown bag lunches for employee development and employee engagement.
- Create small wins with employee recognition. Write personal thank you notes. Award a $100 gift card for an exceptional employee contribution. Say "thank you" more frequently. Make sure that you exhibit interest in and demonstrate that you value each employee. Sincere employee recognition is always a win - for you and for the employee.
- Hold a quarterly performance development planning meeting. Focus your main discussion on the employee's personal and professional development goals and aspirations. Yes, business goals are important to clearly communicate, but never underestimate the impact and value of the career development aspects of the PDP.
Find more information about the causes and prevention of of employee turnover including 18 ways you can reduce turnover in your organization.