Turnover means different things to different industries. In business, it refers to the amount of money a company takes in over a particular time period from the standard business activities. It differs from profit, which is turnover less expenditure.
What is Turnover in Staffing?
Turnover is also used to define the rate at which businesses gain and lose employees. And it will be the focus of this article. A certain level is perfectly acceptable, but if it is too high, it can easily ruin an organization.
Employees will always leave the workforce, go back to school, move away, or retire. This amount of turnover is not only unavoidable, but also can be highly beneficial. It can help bring in new people into the organization with a fresh perspective and new ideas.
Types of Turnover
Voluntary and involuntary are the two main types of turnover. Voluntary turnover is when employees decide to leave the organization for a variety of reasons. Involuntary turnover is almost always a result of layoffs and other similar actions where the organization makes the decision for the employee to leave.
Voluntary turnover is generally used as a measure for discussing and comparing employers. Front line supervisors have a significant impact on voluntary turnover. Involuntary turnover, which is a result of layoffs, can be the long-term consequence of high levels of voluntary turnover.
What is the Turnover Rate?
The turnover rate is a calculation of the number of employees that have left an organization. It is usually expressed as a percentage of the total number of employees. While the turnover rate is typically reported and calculated as an annual percentage, it can be calculated for different periods. The average turnover rate in the United States is about 6.4 percent.
How is the Turnover Rate Calculated?
It is calculated by dividing the number of employees that left the organization by the total number of employees at the start of the period. It is expressed as a percentage. The total turnover, voluntary turnover, and involuntary turnover are the types of turnover you can calculate.
What Can Be Done About Turnover?
The best thing an organization can do when it comes to involuntary turnover is ensure proper management, so that fewer layoffs are necessary. Obviously, some things may happen unexpectedly that put the organization in financial difficulty and laying off employees is a possible solution.
The first thing should be to focus on better financial and strategic planning, so that there are fewer of the “unexpected” issues. The second thing is to realize that layoffs are never a permanent fix, are detrimental to the organization, and should only be a last resort.
The best thing an organization can do to reduce voluntary turnover is to make it more painful to leave than to stay. The direct supervisor is the single greatest influence on employee satisfaction. And so organizations should thus ensure that supervisors are properly trained to improve employee engagement. As a result, reduce the involuntary turnover of their most valuable resource, good talent.
The Bottom Line
It is in the best interests of an organization to keep the turnover low. Running the organization will much easier as less time and resources are wasted training new hires that replace the employees that quit. It saves the organization money since there are no direct costs involved in finding and hiring new employees.
