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Turnover is when employees leave jobs that need to be filled. Turnover rates and their costs can impact a company's profit and loss. Employers and human resources professionals should know how to calculate turnover in order to make the best decisions for a business.

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EditSteps

  1. Calculate Turnover Step 1.jpg
    1
    Know why calculating turnover is important.
    • Turnover leads to additional costs, including time spent recruiting, interviewing and training.
    • Costs take away from profitability.
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  2. 2
    Divide the number of employees who leave a position by the total number of employees in a company to know the employee turnover.
    • Often, employee turnover is based on annual figures, but larger companies may prefer to calculate monthly turnover rates.
      Calculate Turnover Step 2Bullet1.jpg
    • For example, a business with 120 employees loses 18 employees in a year due to retirement, changing employers and firing. This business has 15 percent turnover (18/120 = 0.15).
      Calculate Turnover Step 2Bullet2.jpg
  3. 3
    Calculate turnover within your industry (regionally or nationally) to see how your business compares.
    • Industry organizations often keep information of this type. So does the Society for Human Resource Management.
    • For example, if there at 22,100 respiratory therapists in your region and 4,125 changed employers within a year, then there is an 18.6 percent turnover rate for respiratory therapists in your region.
      Calculate Turnover Step 3Bullet2.jpg
  4. 4
    Total the costs of employee separation. This may include:
    • Costs of continuing COBRA benefits.
    • Any unemployment compensation or compensation for "time owed" such as unused vacation time.
    • Costs of any exit interviews (multiply the hourly salary of person doing the interviews by the time spent on conducting interviews and processing paperwork).
      Calculate Turnover Step 4Bullet3.jpg
  5. Calculate Turnover Step 5.jpg
    5
    Estimate the turnover costs of hiring new employees to replace employees who leave. List:
    • Cost of advertising for a position.
    • Cost of time for people to interview, check references and process paperwork (multiply hourly salary by the number of hours required to complete these duties).
    • Cost of training new employees (multiply the hourly salary of people doing the training by the number of hours spent training new hires).
  6. Calculate Turnover Step 6.jpg
    6
    Add turnover costs of employees exiting and hiring new employees for calculating turnover costs.
    • If calculating turnover costs leads to $1,585 per employee, then annual turnover costs for 18 employees is $28,530.
  7. 7
    Analyze employee turnover for new employees to understand the role that new hires play in your turnover rate.
    • Divide employees who leave within a year of employment by the total number of employees who leave during the year.
      Calculate Turnover Step 7Bullet1.jpg
    • If 10 of the 18 exiting employees worked for less than a year, then the turnover rates for new employees is 55 percent (10/18 = 0.55).
      Calculate Turnover Step 7Bullet2.jpg
    • If new-hire turnover rates are high, this tells an employer to concentrate on hiring and training issues in order to affect the turnover rate.
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Article Info

Categories: Buying & Forming a Business

In other languages:

Русский: рассчитать текучесть персонала, Português: Como Calcular Rotatividade de Pessoal (Turnover)

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