Understanding Employee Turnover

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In this webinar you will develop an understanding of how to calculate employee turnover, as well as learn why employee turnover is an important metric in managing your employees. We will cover how to develop and implement employee retention strategies in order to protect you from high turn over costs.

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Understanding Employee Turnover

  1. 1. Understanding Employee Turnover Laura Moody, SPHR G&A Partners
  2. 2. Before we get started… • I am not an aDorney • This is not legal advice, nor should the presentaGon be subsGtuted for experienced legal counsel
  3. 3. What to Expect • Understanding employee turnover • Calculate employee turnover • Strategies for employee retenGon
  4. 4. Employee Turnover -­‐ DefiniGon • Employee turnover is the number or percentage of employees who leave a company and are replaced by new employees
  5. 5. End of Employment • Employees leave an organizaGon for many reasons, including: • ResignaGon • ReGrement • Layoff • Dismissal • Leave of absence • Death
  6. 6. Turnover – Voluntary & Involuntary • Voluntary – When an employee chooses to leave the company • Involuntary – When the decision for an employee to leave is made by the company and not the employee
  7. 7. Why is Turnover Important to Measure? Turnover can indicate: • Employee saGsfacGon within the organizaGon • EffecGveness of the recruiGng process • Insight into how well managers are interacGng with employees • OrganizaGonal culture
  8. 8. What is Employee Turnover? • Turnover is normally calculated using a formula that tracks the number of separaGons and the total number of employees per measurement period
  9. 9. Employee Turnover -­‐ CalculaGon Turnover Rate = # of SeparaGons X 100 Average # of employees
  10. 10. Turnover -­‐ Example #1 • For example, a company has 98 employees at the start of the year and 102 employees at the end of the year. During the year, 8 employees quit and 6 are laid off Voluntary Turnover: 8.0 % = 8 X 100 (98+102)/2 Involuntary Turnover: 6.0% = 6 X 100 (98+102)/2 Total Turnover: 14.0% = 14 X 100 (98+102)/2
  11. 11. Turnover -­‐ Example #2 • For example, a company has 100 employees and 17 employees quit. Assume 5 employees leave in February, 3 leave in June, 4 leave in August and 5 employees leave in November Monthly turnover: January 0.0% May 0.0% September 0.0% February 5.0% June 3.0% October 0.0% March 0.0% July 0.0% November 5.0% April 0.0% August 4.0% December 0.0% Annual turnover: 17.0% = 17 X 100 100
  12. 12. New Employee Turnover -­‐ Example • For example, a company has 30 employees who leave during the measurement period and 12 of them had been with the company for less than one year Employees with less than 1 year X 100 Total employees who terminated 40.0% = 12 X 100 30
  13. 13. What is the Cost to the Company? • Turnover is costly, disrupGve and impacts the morale of the remaining employees
  14. 14. Turnover Cost as % of Annual Base Salary Posi/on % of Annual Salary Entry Level Non-­‐skilled Worker 30 – 50% Service/ProducGon Worker 40 – 70% Skilled Hourly 75 – 100% Clerical/AdministraGve 50 – 80% Professional 75 – 125% Technical 100 – 150% Supervisor 100 – 150% Source: Taleo Research White Paper Profitable Talent Management
  15. 15. Cost of Turnover • SeparaGon costs • Replacement costs • ProducGvity losses
  16. 16. SeparaGon Costs • Severance pay • Benefits conGnuaGon • Impact on unemployment insurance • Exit interviews • AdministraGon for recordkeeping, payroll, and benefits • Investment in employee for training and development
  17. 17. Replacement Costs • AdverGsing • RecruiGng • Interviewing • Background checks/ Drug tesGng • OrientaGon • Training
  18. 18. ProducGvity Losses • Temporary labor • Replacement training • Lost producGvity • Lost experGse • Lost revenue
  19. 19. CombaGng Turnover
  20. 20. Variables Leading to Turnover • Why do employees leave or say they would leave? • Lack of opportunity and career development • CompensaGon • Benefits • Management style • Working condiGons • Other variables affecGng job saGsfacGon
  21. 21. Ways to Learn Why Employees are Leaving • Ask current employees • Employee aotude surveys • Focus groups • Structured interviews • Informal feedback • Terminated employees -­‐ Exit interviews
  22. 22. Employee RetenGon -­‐ DefiniGon • Employee RetenGon – is the ability to retain talented employees in the organizaGon
  23. 23. Employee RetenGon Strategies • Growth and potenGal opportuniGes • Ensure you are offering a compeGGve compensaGon and rewards package • Foster a learning environment • Engage your employees • Promote diversity
  24. 24. Employee RetenGon Strategies Cont’d • Implement recogniGon and/or reward programs at all levels of the organizaGon • Ensure that the performance management system is working • Have fun at work
  25. 25. Employee RetenGon Plan • Understand employee turnover • Decide how to proceed • ImplementaGon • EvaluaGon
  26. 26. Summary • Measuring and tracking turnover is valuable • Reducing the cost of turnover through employee retenGon strategies is essenGal
  27. 27. QUESTIONS? G&A Partners info@gnapartners.com (800) 253-­‐8562 *This webinar has been recorded and will be posted on the G&A website by Friday HRCI Cer/fica/on Credits: "This webinar has been pre-­‐cerGfied for 1 hour of general recerGficaGon credit toward PHR, SPHR and GPHR recerGficaGon through the HR CerGficaGon InsGtute. We will send out a confirma/on e-­‐mail to all those that are confirmed as aBended with the program ID code to note on your HRCI recer/fica/on applica/on form. The use of this seal is not an endorsement by the HR CerGficaGon InsGtute of the quality of the program. It means that this program has met the HR CerGficaGon InsGtute's criteria to be pre-­‐ approved for recerGficaGon credit."

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