Maintaining A Good Employee Turnover Rate
Maintaining a healthy employee turnover rate is an important task for any business. A high turnover rate can be indicative of larger problems in your business and should be addressed quickly and thoughtfully. Hiring and training new employees takes money—an average of $1,500 for hourly employees—and time that could be put to better use elsewhere. Learn how to diagnose employee retention problems and maintain a good employee turnover rate so that your company can grow and prosper.
Need help getting your employee turnover rate under control? Employer Support Services – ESS offers powerful reporting tools to support companies and their HR departments with data-driven decisions to improve your company’s operations and increase productivity. Contact us today and get started.
What Is Employee Turnover Rate?
Turnover rate is the total percentage of employees who leave your company during a specific period of time- typically a year. To calculate your employee turnover rate, divide your average number of employees by the number of employees who have separated from the company in the specified time frame and multiply by 100.
For example, if your company had an average of 10 employees and two employees left over the year, your turnover rate is 20%.
Ex: (2 employees left/10 average employees) x 100
Employee turnover rates are crucial to a business’s success. Calculating, investigating, and decreasing turnover rates are a vital part of an HR department’s duties. High turnover rates can uncover hidden problems within your company and shine a light on areas that could be improved. Knowing and understanding your turnover rates can provide valuable insights, allowing you to develop strategies to increase retention and productivity.
[Related: Improve Benefits Communication]
What’s A Good Employee Turnover Rate?
The average turnover rate varies by industry, but the U.S. Bureau of Labor Statistics reports that the average turnover rate in the U.S. as of September 2021 is around 28%, when only considering quits. We calculated the average turnover rate by dividing the total number of employed Americans (153,680,000) by the total number of quits (4,434,000) in the same month. A rate under 10% is considered a good employee turnover rate.
If you need help creating a retention plan and improving your recruitment process, contact ESS at 225-364-3000 today. We offer powerful HR tools, and our experts have helped businesses in every industry maintain a good employee turnover rate and increase productivity. Contact us today and grow your business.
Why Is A Good Employee Turnover Rate Important?
A poor employee turnover rate can be tiresome. Constantly recruiting, hiring, training, and evaluating new employees is a big stressor on management, HR, and even the entire team. Company culture can take a huge hit when a key employee leaves, which may even lead to more resignations.
If your company doesn’t have a good employee turnover rate, you could see less productivity and worse performance. An abnormally high turnover rate is likely the result of low employee satisfaction, which may lead to mass resignations, a negative work culture, and unengaged employees.
Even more worrisome than the time and stress it takes is the cost of hiring and training new employees to replace old ones. According to a Gallup study, it can cost upwards of two times the departing employee’s salary to train a new hire. Having a good employee turnover rate and retention plan is cheaper and less time-consuming than hiring and training new employees.
[Related: Attracting & Hiring The Best Candidates]
Understanding Your Employee Turnover Rate
You may be tempted to compare your calculated turnover rate with the average turnover rates in the United States to determine if you have a good employee turnover rate. But, in reality, that’s not enough. When your employees leave, you need to understand the who, when, and why.
Who is leaving? Are there repeated departures from the same department or interdepartmental teams? It’s important to recognize trends so you can figure out if there’s a problem within a specific department or team.
When are they leaving? If your employees are leaving before the one-year mark, it could be a failure in your recruitment and training. You may need to work with your management and hiring/recruiting team to create a better plan for new hires.
Why are they leaving? This is perhaps the most important thing to consider when analyzing your turnover rate and reducing employee turnover rate. If you know why employees are leaving, you can adjust and improve your policies and management style or create a better retention plan.
Getting this information is key to improving and maintaining a good employee turnover rate. Perform exit interviews with departing employees to gain insight into your retention strategies and the reasons people leave. ESS offers powerful HR tools to help your company succeed, whether you need to reach or maintain a good employee turnover rate, better your onboarding process, or improve your recruiting & hiring.
Create A Retention Strategy for A Good Employee Turnover Rate
The most powerful method for ensuring your company maintains a good employee turnover rate is to create a fantastic retention strategy. One aspect to focus on is increasing employee engagement, which has been shown to provide good employee turnover rates.
You can decrease your employee turnover rate by crafting a retention strategy that centers on the employee experience and recognition of their hard work. Bettering their day-to-day work lives helps increase productivity and creates an environment where they will be more likely to engage with the business.
Another powerful tool for ensuring a good employee turnover rate is benefits. Recognize the importance of your employees by offering benefits and rewards that meet their needs:
- Employee assistance programs (Access to mental health or gym membership reimbursements)
- Learning and development programs for career advancement.
- Maternity and paternity leave
- Flexible time off or remote work options.
Whether your company needs help reaching a good employee turnover rate, creating an engaging retention plan, or anything in-between, don’t hesitate to contact the experts at ESS. The ESS team can assist you with updating and improving your recruitment processes, updating compensation and benefits plan, and developing and implementing engagement programs. Contact our team today and increase your employee retention.