What is Turnover Rate?? Why is this index necessary in quarterly and annual human resources reports? How much should the Turnover Rate be limited to and what are the ways to improve it?
What is Turnover Rate?
Turnover Rate is a term that refers to the rate of personnel turnover of a business during a measurement period. Turnover Rate is the ratio of the number of employees quitting their jobs calculated on the average number of employees in a month, quarter or many years. This concept can be understood as the turnover rate or the turnover rate of a business's personnel.
This is an important indicator in businesses' human resource reports. It shows the ability of a business to retain talent and satisfy employee requirements. Some businesses divide turnover rate according to two criteria. One is the voluntary job turnover rate, which originates from the personal and psychological desires of employees. Second is the involuntary turnover rate, for example due to moving house, retirement, illness, etc.
Instructions on how to calculate job turnover rate
First of all, collect input data such as: number of employees working at the beginning (B) and end of the period (E) you want to calculate; Number of employees quitting (L) during that period.
Next, calculate the average (Avg) number of employees in the above time period: Avg = [E+B]/2
Calculation formula job hopping rate as follows:
Turnover Rate = (L/Avg) x 100
Example of how to calculate Turnover Rate
At the beginning of the first quarter, the business had 100 employees. At the end of the first quarter, the business had 105 employees. But during the quarter, 4 employees quit. Turnover rate Yours will be: 5/ [(100 + 105)/2] x 100 = 4.9%
Normally businesses will calculate the ratio turnover rate by quarter and year. Because the longer the time period, the more data there will be to measure. And the easier it is for you to compare between times.
Here is the recipe for Turnover rate annual:
So, if you had 45 employees at the beginning of the year and 55 employees at the end of the year and 5 employees left for the year, your annual turnover rate would be:
You can also calculate your employee retention rate by taking your turnover rate and subtracting it from 100 to get the result.
What should the conversion rate be?
Not simply an index for comparison. Employee leave rateHigh or low c will reflect the human resources situation at the enterprise. Dr. John Sullivan - a consultant specializing in Talent Management believes that if Turnover Rate:
| Below 3% | Your business seems fine. Maybe it's the boss's fault. Reconsider your manager's behavior, communication or leadership style. |
| 3 – 5% | There are not many concerns yet. However, businesses should consider their salary system and remuneration policies. Perhaps it is not enough to satisfy employees' aspirations. In addition, the boss's problem is still worth considering. |
| 5 – 8% | There's a bit of a problem here. Besides your boss and salary, your company probably doesn't have many development opportunities. This makes it difficult for personnel to determine their working goals at the enterprise. Investing in promotion and training paths, giving them challenging jobs is a good way to improve this |
| 8 – 10% | Businesses are at a warning level. Dr John Sullivan believes that in addition to the above problems, if you are at this level, there may be a gap in corporate culture. Consider implementing internal activities to increase engagement |
| On 10% | In addition to the above factors, consider external influences such as industry environment, competitors, etc. |
In fact, the above statements are for reference only and are not true for everyone. Therefore, administrators still need to consider all aspects. To ensure you find the right problem and don't miss any weak links.
What is the reason for increasing Turnover Rate?
There are many reasons that influence an employee's job-hopping psychology. Sometimes there are 2 to 3 reasons at the same time. Most of them are due to:
- Personnel cannot find inspiration and motivation
- No development potential is seen
- Employees feel unrecognized
- There is no harmony with surrounding personnel
- Work is too stressful and stressful
Personnel cannot find inspiration and motivation
Most people are most interested in their job in the first 2 months. While they are still getting used to the new environment and work. As they become familiar with the work flow, personnel become more and more frustrated. Especially when one day they just do those topics over and over again.
Therefore, administrators need to find ways to provide more difficult challenges to encourage them to become active. Also, open up to them more. You should be the leader, not just the person assigning tasks. Most employees stay with the business longer because their boss inspires them to work.
" Explore more: 8 Mistakes that make qualified employees leave
No development potential is seen
This is also the main reason why employees leave the organization. This reason is becoming popular, especially among the Gen Y generation. Job hopping is happening more and more because they are ambitious and they know they have the qualities to achieve better things. If businesses or administrators cannot show them the next step on their career path. Or they simply cannot learn any more. Leaving is inevitable.
At this time, businesses need to create specific and public advancement paths. For example, how many years of experience, achievements, and skills does a sales employee need to be appointed to department manager? And then there's the sales manager. In addition, organize training courses or sponsor them to study outside so that employees have the opportunity to improve.
Employees feel unrecognized
Everyone who goes to work wants to be recognized for their efforts. First by managers, then by the entire organization. They cannot work more than 8 hours an hour, try their best, complete the work on time and get nothing in return. In some cases, the recognition may not be worthy of the employee's contributions. That is also the factor that makes them leave.
First of all, make sure the compensation and bonus policies satisfy their wishes. The labor market is very competitive. Employees are willing to change jobs if someone offers a higher salary. Investigate your competitors and the market to determine the most suitable salary.
Next, show appreciation regularly with small gestures. Congratulations when they successfully close the order. Cheer them on with compliments when they complete difficult tasks. This is a very simple way to boost employee morale. Even if they don't do as well as expected, a “Good job. Let's keep going" will also motivate them a lot.
" See more: Build corporate culture healthy
There is no harmony with surrounding personnel
If you notice too many employees quitting their jobs when working with the same boss. Perhaps this is the time to consider that boss's leadership abilities. In addition, a disconnected work environment also makes employees feel lonely.
Don't just make appraisals one-way, meaning only leaders evaluate employees. Get HR input on senior managers. In addition, regularly organize internal communication, teamwork or team building activities to give employees the opportunity to interact with other employees.
Work is too stressful and stressful
Some jobs have high requirements for results. For example, Business, Manufacturing or Banking. Putting too much emphasis on performance can easily make them depressed and tired after work. Instead, give them the opportunity to balance life and work.
Some businesses allow Sales People to work from anywhere, as long as they make sure the work gets done. Or some others allow hybrid work, which means working at the company some days and working at home some days. If you notice your employees are often stressed, give them time to rest and reduce their workload for a while.
Many businesses choose to invest in entertainment areas or support gym packages for employees. They can completely commit to short bursts of time to relieve temporary stress. Or exercise to improve your health and reduce stress after a long day of work.
Effective ways to reduce absenteeism
Listen to personnel more
Managers don't just assign work and get it done. They should become leaders. And to lead well, you need to know how to listen. Motivate employees to share more about difficulties at work.
Usually, very few employees want to quit and quit immediately. This thought needs to be formed over a certain period of time. Because they have to balance the needs of daily life and their own development. Regularly listening sometimes helps you recognize problems sooner. Gives you the ability to resolve it before that thought becomes ingrained in your work ethic.
Choose the right one right from the recruitment stage
Not only about skills and expertise, consider also the corporate culture aspect. Is this candidate a good fit for the organization's culture? This is especially important for positions that require high communication. For example, Account, Sales Staff, Human Resources Administration, Communications.
When conducting an interview, share about the work culture at the company. Let the candidate automatically consider the suitability first, then ask situational questions to consider the candidate's solution. This is an important goal for senior management positions. Because they directly affect the working spirit of the remaining members.
Recruiting correctly not only helps businesses reduce costs turnover rate, but also saves a lot of costs and time when recruiting new people.
Use Humax Recruitment software to make decisions
Humax Human Resources Management Software not only speeds up the business's recruitment process but also helps make the right choice thanks to the candidate evaluation feature.
After automatically collecting CVs from recruitment websites, Humax will classify them by categories such as years of experience, training system, position,... to help HR screen the most suitable candidates.
" Explore more: Top 18 HR management software Best Free 2022
The jury can score candidates during the recruitment process. The scoring coefficient will be set according to the business's criteria. For example, expertise determines 60%, skills account for 30%, and cultural fit accounts for 10%. Or build based on the jury's rank. For example, the director accounts for 60%, the department manager accounts for 40%. Direct grading will provide the most objective and accurate assessments. Avoid forgetting when interviewing many candidates at the same time.
Furthermore, Humax's promotion path building feature will be a great tool for employers. Through Career Path, HR can orient candidates right from the interview round. Help them determine what working at the organization will bring. And self-assess its compatibility with your own development desires. Saving time for both parties and reducing absenteeism are plus points of this feature.
The treatment is truly worthy
As analyzed above, this is one of the main factors that causes employees to "leave". Let's build a transparent and public salary and bonus mechanism. And above all, all efforts of employees in the organization must be recognized. You can consider organizing salary increase reviews at least every 6 months.
In addition to the KPI reward mechanism, hot bonuses when results exceed expectations, many businesses create small awards with encouraging meaning. For example, Outstanding employee of the month, Employee with the highest revenue of the week, Hardworking employee... to show your recognition.
Post-employment interview
Building a survey to listen to opinions from former employees is a good way to find weak links. The departure of personnel will remove previous psychological barriers. They are willing to share more honestly. Because sometimes the reason for quitting comes from internally, from the boss or the surrounding colleagues. These are all sensitive issues that are difficult to talk about while working at the organization.
The interviewer should be HR, instead of the old direct manager. Some questions to interview former employees are as follows:
- General thoughts about your working process here?
- What about your work makes you most satisfied?
- If you could change 3 things about your company, what would they be?
- Is there anything about the company that you wish you had known sooner?
- How do you feel the managers and colleagues around you treat you?
- Do you feel like your contributions have been properly recognized? If not, what should we improve?
- Is there any tool or training that could have helped you work more effectively?
In case the above answers all receive positive comments, HR can ask more questions to determine whether this is a voluntary or involuntary leave of absence:
- Can you share why you quit your job?
- Are you willing to recommend the company to your acquaintances? If not, can you tell me why?
Use technology to predict turnover trends
An employee usually takes at least 1 to 2 months to make a decision to quit. Administrators can apply technology to screen employees with a high likelihood of quitting their jobs.
With Humax Human Resources Management software, assessment and survey features are effective tools for you. Normally, employees who intend to quit will have a decrease in work performance. Because they are no longer interested and are depressed. Managers can base on this sign to talk to that employee. Instead of probing or forcing them to regain performance. Humax allows parallel evaluation of performance and capacity. In addition, the system can be integrated with other ERP or CRM software. Therefore, the assessment becomes accurate, multidimensional and intuitive.
Watch more videos on how to calculate Turnover Rate
In addition, HR can organize continuous surveys on employee satisfaction levels. Clearly divided into each item such as salary and bonus; culture; amount of work; training needs, etc. Through these surveys, businesses soon find problems that increase What is Turnover Rate?. At the same time, know which employees are most likely to quit to have appropriate plans.
Ending
Employee turnover is unavoidable in every business. Through analyzing this index, businesses can easily determine where the problem lies. The above document from OOS Software will help administrators and HR clearly understand What is Turnover Rate?. As well as identify ways you can reduce your turnover rate.
OOS Software has more than 15 years of research and development, is a reliable partner to support human resource management, accompanies many large enterprises and corporations in the market. Contact now to get advice on Recruitment Software for your Business.
