What is Turnover?

‘Turnover’ refers to the rate at which employees leave an organisation and are replaced by new employees. It is a measure of the movement or flow of employees in and out of an organisation over a specified period of time.

Here are key aspects related to turnover:

Employee Departures: Turnover includes both voluntary and involuntary employee departures. Voluntary turnover occurs when employees choose to leave the organisation on their own accord, such as resigning to pursue other opportunities or for personal reasons. Involuntary turnover refers to employees being separated from the organisation due to reasons such as termination, layoffs, or retirement.

Calculation of Turnover Rate: The turnover rate is typically expressed as a percentage and is calculated by dividing the number of employees who leave the organisation during a specific time period by the average number of employees during that same period. The time period can be monthly, quarterly, or annually, depending on the organisation’s preference and reporting needs.

Impact of Turnover: Turnover can have both positive and negative effects on an organisation. Excessive turnover can be detrimental as it can disrupt operations, lead to loss of institutional knowledge, decrease team morale, and incur costs associated with recruitment, onboarding, and training of new employees. On the other hand, some turnover can be beneficial if it involves the voluntary departure of low-performing or disengaged employees, allowing room for fresh talent and new perspectives.

Causes of Turnover: Various factors can contribute to employee turnover. Common causes include limited growth or advancement opportunities, low job satisfaction, poor work-life balance, inadequate compensation or benefits, ineffective management or leadership, lack of engagement or recognition, and organisational culture misalignment. Understanding the reasons behind turnover can help organisations identify areas for improvement and implement strategies to reduce unwanted turnover.

Retention Strategies: Organisations often implement retention strategies to minimise turnover and retain high-performing employees. These strategies can include offering competitive compensation and benefits, providing opportunities for professional development and growth, creating a positive work environment, fostering effective communication and feedback, recognising and rewarding employee achievements, and promoting work-life balance.

Exit Interviews: Conducting exit interviews with departing employees can provide valuable insights into the reasons for turnover and help identify patterns or areas of improvement within the organisation. Exit interviews can be an opportunity to gather feedback, learn from employee experiences, and make necessary adjustments to reduce future turnover.

Monitoring turnover rates and understanding the underlying causes and implications is important for organisations to assess their workforce stability, employee satisfaction, and retention efforts. By proactively managing turnover, organisations can create a more stable and engaged workforce, reduce recruitment and training costs, and maintain productivity and continuity within the organisation.