It’s important to understand your company’s employee turnover rate. High turnover rates will not only increase costs substantially but also damage employee morale. Get to know each type of employee separation. Analyzing how you hire employees and manage them will help you uncover steps that will cut back the cost of employee turnover.
The following tips are practical and effective in calculating employee turnover rate;
1: Turnover Rate Formula
The formula is Employee Separation For The Period divided by Average Number of Employees In the course of the Period. If you like, you can replace the word “separation” with the word “termination”. Termination and separation simply point to an employee leaving the company either voluntarily or involuntarily.
A typical example of voluntary separation or termination is when a worker resigns or retires. The salient point here is that the employee is the one deciding to leave. On the other hand, involuntary separation or termination happens when the company dismisses an employee due to consistently poor performance.
2: Compute Turnover for Your Company
You should compute the turnover rate for your company. The calculation mustn’t necessarily be for a longer period of time such as annually. You can also do it for a fiscal quarter – three months.
After computing your turnover ate, compare it with the industry rate. This will help you determine whether or not you supervise as well as manage your workers well. Also, the turnover rate impacts your costs significantly.
Here’s an instance; you are probably managing a coffee shop. From your study, the industry annual turnover rate is about 30 percent. If your computation shows that your coffee shop has a 15 percent turnover rate in a year, then you have a much lower rate compared to the industry rate. It’s also an indication of effective staff management.
If on the contrary you have a much higher rate than the industry turnover rate (about 50 percent), it’s a pointer you are probably managing your employees poorly. It’s a sign that something is not working well and needs to be looked into.
3: Find Out Why People Leave the Company
You need to find out why people voluntarily resign from the company. Subsequently, you can take practical steps to cut back your rate of turnover. You will save both money and time in return. For instance, it could be that the dismissed workers were not qualified and as a result showed consistent poor performance. So, make sure you address the issue. So, focus on the separation factors that you can control such as poor performance and perhaps poor salary structure.
Finally, it’s important you take practical steps in improving how you manage your workers. This will in return boost employees’ morale. Also, you should consider outsourcing as a great way to hire a more motivated workforce.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.