If the HR of your company never stopped to pay attention to turnover indicators that it supports, you may be surprised by the result.
After all, a high number of this indicator can be directly related to a series of waste and undue costs that make it impossible for the company to grow. The main turnover indicators are:
- retention indication;
- average turnover rate;
- voluntary turnover;
- involuntary turnover;
- internal talent retention rate;
- turnover costs.
Follow us in this brief and complete reading and stay abreast of 6 turnover indicators to learn how to analyze them effectively!
What are turnover indicators
Turnover is also known, in the corporate sector, as turnover and deals with the average number of dismissals (voluntary or not) and admissions in a given period.
By knowing the turnover rates, you understand the reasons why more layoffs occur than the average considered natural for the renewal of the company. And this is the first step in evaluating the best strategies to reduce turnover.
Only it is worth paying attention to the plural of the sentence here: are turnover indicators. This is because resignations they do not always come from the employee or the company – and the reasons differ widely.
Below, we highlight 6 of the main turnover indicators!
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1. Retention indicator
Do you want to know the general turnover average in your company? Well then, this is the ideal indicator.
Through it it is possible to evaluate the average time that employees remain in the company. To do so, just divide the current number of professionals by the number at the beginning of that period of analysis – and multiply by 100 to obtain the percentage.
For example: let's say that, in December, your company has 50 employees and was composed of 80 employees in the month of January of the same year.
With that, we have 50/80 = 0.62 * 100 = 62.5% is your annual retention indicator.
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2. Average turnover rate
The turnover rate, in turn, goes in the opposite direction from the retention rate. It refers to the number of people who have resigned or been dismissed from the company.
To calculate, divide the number of professionals who were dismissed from the company by the total number of employees in the same period. Following the example below:
There were 50 professionals dismissed in one year, against the total of 120 who were in that period. Thus: 50/120 = 0.41 * 100 = 41%.
This example is exaggerated. But, the average that market experts point out as “Natural”, for turnover indicators, is 5%.
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3. Voluntary turnover
O voluntary turnover it is one of the most important turnover indicators because it helps to measure how many employees have chosen to quit, regardless of the reason.
To calculate it, just divide the number of dismissals by the total admissions in the same period.
4. Involuntary turnover
This turnover indicator measures the number of professionals dismissed by the company.
To calculate it, divide the number of people fired by the number of professionals hired in the same period.
5. Retention rate for internal talent
Important to know if the career path promoted in the company yields results. After all, it is through strategies that talents remain satisfied, motivated and in continuous development – for you and the organization where you work.
To check if this turnover indicator is as planned, previously have a statistical data of how many people obtained the best evaluations.
Then, in a given period (one year, for example), divide the number of employees who left the company by the total number.
6. Turnover costs
Finally, one of the most valuable indicators of turnover is the one that precisely calculates how much the turnover costs for the company's budget.
His importance is almost self-explanatory: if the rates are too high, HR will have quantifiable data on how much the company has invested in firing, hiring, motivational actions it's from integration, trainings etc.
The calculation of this indicator involves the compilation of all costs related to a dismissal – and also a hiring – and dividing them by the total number of dismissals in a specific period.
Thus, it is also possible to identify the causes for these high turnover indicators, such as negative evaluations by several professionals or internal conflicts, and make a comparison between the most economical and effective solutions.
Consequently, the company's turnover is reduced, as well as the costs. And productivity and results are enhanced with this.
How to identify the causes of turnover indicators
It seems obvious, but many are surprised by the answer: with information obtained through continuous monitoring.
For example: the majority of the company's staff has received negative feedbacks, which reduces the company's efficiency and the quality of its service or product.
To this end, HR must always be on top of evaluations, so that managers do not constantly make the habit of firing employees.
The same goes for other examples. After all, turnover indicators are motivated by factors that, directly or indirectly, can lead to this scenario, such as:
- need to renew one or more teams;
- add new talent through the external recruitment;
- absence of a career plan, which is configured in the demotivation of employees;
- lack of challenges;
- Financial crisis;
- omissive, oppressive and / or little aggregating leadership;
- disunity of team members.
Among other causes that cause the company – or the professionals – to trace a costly process of termination and, subsequently, of hiring and integration.
When there is an effort to identify the causes and to evaluate the most efficient measures to overcome the high turnover indicators, everyone wins.
So, was it possible to understand what the turnover indicators are, what are the main ones and how to calculate them to follow the average of each one over time?
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