The employee turnover rate is the most important and a commonly used people metric.
Employee turnover typically has a negative connotation because high turnover is expensive and can indicate culture or leadership challenges.
Based on The Society for Human Resources Management (SHRM), direct replacement costs can reach as high as 50-60% of an employee’s annual salary, with total costs ranging from 90-200% of annual salary.
Some turnover is good.
A healthy rate will vary based on the industry and specific roles. Seasonal peaks, retirements, life events, economic downturns, and escorting underperformers to their intersection of choice are all a part of a successful people strategy.
We know that attracting and retaining professionals who enhance our culture with relevant technical and leadership skills is at the forefront of every organization’s success. That’s why we have created a turnover cost calculator for you to calculate your real costs of turnover. It includes direct costs, such as the cost of background checks, as well as indirect costs, such as lost productivity or issues with morale. The calculator lists your “Green Money” or the actual costs of turnover and the “Blue Money” or the softer costs of turnover.
Here are the three variables you need to calculate your company turnover rate:
- The number of employees who left the company or department in a specific period. (I recommend using voluntary and involuntary separations.)
- The number of employees the company or department employed at the beginning of a specified period.
- The number of employees employed at the end of the same time frame.
Divide the number of employees who left by the average number of employees and multiply by 100 to get the employee turnover rate.
We hope you find this tool helpful as your people strategy continues to evolve.
Stay safe and stay healthy.
Chris Carlson, Managing Director
Chris is an experienced executive in the staffing industry. She has developed operational analyses, implemented programs /compensation plans, and has assisted hundreds of firms streamline processes and upgrade the competencies of their workforce. Finding innovative ways to generate new business, isolate top talent, and build teams is her passion. She has designed and executed many successful strategic marketing /recruiting plans and promotions. Chris began her career at Aureus Group, a full-service professional recruiting firm, in 1994 and currently serves as the Managing Director of Aureus Group specializing in the Finance and Accounting, Information Systems, and Executive Leadership roles in all industries including; Healthcare Administration, Banking, Finance, Insurance, Commercial Services, and Manufacturing.
In addition, Chris is a Certified Professional Consultant, and has an Executive Masters of Business Administration degree from the University of Nebraska at Omaha.