Meaning & Definition
Employee turnover, often referred to as staff turnover or attrition, is a measure of the rate at which employees leave an organization over a specified period, typically expressed as a percentage. It is an important human resource metric that reflects the movement of employees in and out of the organization. High turnover rates can be a concern for organizations as they can lead to increased recruitment, training, and administrative costs, as well as potential disruptions in operations.
Employee turnover can be categorized into two main types:
- Voluntary Turnover
This occurs when employees choose to leave the organization voluntarily. Reasons for voluntary turnover can vary widely and may include seeking better career opportunities, dissatisfaction with the job or work environment, personal reasons, or retirement.
- Involuntary Turnover
Involuntary turnover is when the organization initiates the separation, often due to performance issues, violations of company policies, layoffs, or downsizing. It typically occurs when the employee does not want to leave.
Calculating employee turnover involves dividing the number of employees who left during a specific period (whether voluntarily or involuntarily) by the average number of employees during that same period. The result is multiplied by 100 to express the turnover rate as a percentage.
Turnover Rate=(Number of Employees Who Left Average Number of Employees)×100 Turnover Rate=(Average Number of Employees Number of Employees Who Left)×100
A high turnover rate may indicate potential problems within an organization, including issues related to:
- Employee dissatisfaction with job roles or work conditions.
- Inadequate compensation and benefits.
- Poor management or leadership.
- Limited opportunities for career advancement.
- Unresolved workplace conflicts or dissatisfaction with company culture.
- Excessive work demands and stress.
- Inadequate training and development.
- Recruitment issues or hiring unsuitable candidates.
Consequences of high employee turnover can include increased recruitment costs, reduced productivity, loss of institutional knowledge, decreased morale among remaining employees, and potential damage to the organization’s reputation as an employer.
Conversely, low or controlled turnover can be a positive indicator of an organization’s ability to retain and engage its workforce. It can lead to cost savings, a more stable work environment, and increased employee morale.
Managing employee turnover effectively requires organizations to address the root causes of turnover, provide opportunities for career development, offer competitive compensation and benefits, ensure fair and supportive management, and continuously monitor and address workplace issues. A well-managed human resources strategy can help reduce unwanted turnover and promote employee retention.