Measuring Employee Turnover: What's Good and Bad?

When considering employee turnover, it's quite common to assume that high turnover is bad and low turnover is good. This may not necessarily be the case. In this post, we'll take a closer look at the types of employee turnover, how to measure it, and actions to take to retain good employees. 

When measuring employee turnover, what's good and what's bad?

Types of Employee Turnover

Employee turnover can be examined through two lenses - voluntary or involuntary. Voluntary turnover includes employees leaving for other jobs, internal transfers or retiring. Involuntary employee turnover includes terminating employees due to bad behavior, poor performance, or layoffs or budget cuts. 

Considering these definitions, it's easier to understand that voluntary turnover might be good if it means that your company is growing and employees are moving into higher positions. It could also be good if low-performing employees are leaving to go elsewhere. Involuntary employee turnover or employees voluntarily leaving for other jobs could be bad, especially you're losing high-performing talent.

Measuring Employee Turnover Rate

Monitoring employee turnover, no matter the reason, is a good practice for human resources professionals and hiring managers. To measure the employee turnover rate, use the number of separations and divide it by the number of total employees, then multiply by 100. Use the following formula and visit SHRM to learn more about how to obtain these numbers. 

Turnover Rate = # of Employees Gone/Avg. # of Employees X 100

Preventing Employee Turnover/Retaining Good Employees

Some types of voluntary employee turnover can be prevented and should, especially since SHRM estimates that replacing a salaried employee could cost 6 - 9 months of that employee's salary. Here are some tips for attracting and retaining good employees:

• Create a positive candidate experience, including using online systems such as applicant tracking
• Check references, including background checks as they relate to the job
• Offer training and development and career guidance for employees looking to grow

Making the right decisions for your business means considering your employees as well. After all, they're the face of your company and a representation of your brand. By closely examining employee turnover, you will have a better idea of who's staying with you, and why.