Given the competitive talent landscape, employee turnover rate is one of the most important HR metrics to track, analyze, and optimize. Job openings have reached record highs, providing strong talent with many job opportunities available to them. The average United States employer spends $4000 and 24 days to hire a new employee, and the total cost of turnover is estimated at 33 percent of the employee’s base pay once everything is factored in.
An average turnover rate around 10 percent is considered healthy to maintain an influx of fresh ideas, but often varies by industry or role. If your organization is facing a particularly high turnover rate, read on to learn how to combat it and start retaining more of your top talent.
How to calculate your employee turnover rate
You can’t optimize what you can’t measure. The first step toward combating a high turnover rate is to measure and track it.
Calculate your employee turnover rate by taking the number of separations, dividing it by your average number of employees, and multiplying that by 100. For example, 100 separations, divided by 1000 average employees, equates to a 10 percent employee turnover rate.
Track your employee turnover rate monthly and annually to uncover trends over time, and potentially help pinpoint events that may have contributed to a high turnover rate. For instance, a manager that left the company, taking a significant portion of the team with them.
Break your turnover rate down by voluntary versus involuntary separations to get a high-level view of why employees are leaving. You may also want to break this down by demographic, manager, department, and 90-day turnover rate to see if you can uncover any other underlying causes of turnover. For instance, a high number of involuntary separations could signal poor hiring practices, while a high 90-day turnover rate could signal the need for better employee onboarding.
Dig deeper to learn your opportunities for improvement
Your quantitative data will only get you so far; now it’s time to dig into your qualitative data to identify trends.
The most obvious source of information is a thorough exit interview. Ask your departing employees why they’re leaving, and if there’s anything you could do to get them to stay. You may also ask questions that pertain to their employee experience, but may not be a core reason for their departure. For instance, “How was your relationship to your manager?” or “Did you feel you had adequate opportunities for professional development?”
Supplement this information with employer reviews from sites like Glassdoor and InHerSight. Employees may feel more comfortable giving negative (and useful!) feedback in a more anonymous manner. They may also share information you didn’t think to ask about in your exit interview.
It’s also useful to consider leading indicators of turnover, so you can potentially prevent it altogether. These may include information from various employee onboarding, pulse and engagement surveys, as well as stay interviews. Ask pointed questions about your employee experience to learn common sticking points. Then fix those issues before they lead to a high turnover rate.
Strategize and prioritize
There’s always room for improvement in every aspect of your employee experience, and you’ve likely uncovered many through your data. Now it’s time to strategize and prioritize the strategies and tactics you will use to reduce your high turnover rate.
There’s no right or wrong way to do this. You may choose to prioritize by:
- Potential impact: Choose the strategies that will make an impact on the biggest group of employees. If your survey data finds that most employees are dissatisfied with opportunities for advancement, for instance, you may choose to prioritize the strategies that will help in that area. Ninety four percent of employees would stay at a company longer if it invested in their careers, so any improvement in this area would likely make a significant impact.
- Alignment with company values: Implement the strategies that most closely align with your company’s core values. For instance, if diversity and inclusion is a core value, and you find that employees from underrepresented groups are leaving at higher than average rates. Analyze your internal survey data to learn if the reasons people from these groups are leaving are different from those of your general population. You may find that compensation is a major sticking point. Men are offered higher salaries than women, for the same role at the same company, 60 percent of the time. When women learn of this discrepancy, 32 percent started looking for a new job. Developing a compensation strategy that addresses any internal pay inequities can help you retain women, while making strides in diversity and inclusion.
- Low-hanging fruit: Pick off the strategies that are easiest to implement, which may vary by organization. For instance, allowing employees to work remotely. Thirty-seven percent of people would switch to a job that allows them to work off-site at least part of the time. This can be especially useful for working parents, who want to spend more time with their children, or disabled individuals, who may face challenges in daily commutes. Offering this perk can help you build a more diverse organization, and provide employees with better work-life balance.
Employee retention is top-of-mind for many People Ops professionals this year, and for good reason. People Ops teams recognize they need for high-quality talent to meet business goals, but the competition for top talent is fierce. Keeping an eye on employee turnover is key to uncovering potential problems before they start and correcting issues as they arise, so they can keep the talent their organizations need to succeed.