Employee turnover, managing voluntary turnover, managing involuntary turnover, managing employee retention

3. Presented to:
Ma’am Wardah
Presented by:
1. Mehwish Riaz (Roll no: 12)
2. Tabinda Arshad (Roll no: 24)
3. Alveena Attique (Roll no: 20)
4. Samra Mehreen (Roll no: 03)

4. Content
1. Employee Turnover
1.1. How to calculate Employee Turnover?
1.2. Managing Voluntary and Involuntary Turnover
2. Managing Voluntary Turnover
3. Managing Involuntary Turnover
4. Managing Employee Retention
4.1. Techniques for Managing Employee Retention

5. 1. EMPLOYEE TURNOVER
 Turnover is the rate at which employees leave the firm _ varies
markedly among industries. For example, turnover in the
accommodation and food services industry in chronically
high, with over half the industry’s employees voluntarily
leaving each year. In contrast, voluntary turnover in
educational services is about 12%.
 Employee turnover, or staff turnover, is a measurement of how
many employees are leaving a company. It’s a way to track
whether a company has more employees leaving than is
typically expected. This includes employees that either quit,
were let go, or retired. However, companies that measure
their employee turnover often separate these to manage
each type of turnover.

6. 1.1. How to Calculate Employee Turnover?
 For example, if a car dealership separates the turnover rate among
the salespeople and mechanics, it will be better able to isolate the
issue. Another useful way to segment employees is by experience
with the company or in the industry. This could show that
a company needs to do a better job training new hires, or it could
show a problem retaining the most experienced employees
because of poor benefits.
 Once you segment the company’s employees into useful groups, a
simple calculation finds the turnover ratio or percentage. The
calculation is the number of employees who have left divided by
the total number of employees in that segment (# left in time
period/# total employees in segment.) For example, if Company 1
lost one of its fifteen employees in one year, its
annual turnover would be 6.67% or 1/15.

7. 1.2. Managing Voluntary and Involuntary Turnover
 To maintain an environment that supports employee satisfaction and
engagement, organizations must try to ensure that good performers want to
stay with the organization and that employees whose performance is
chronically low are encouraged – or forced – to leave. Both of these challenges
involve employee turnover, that is, employees leaving the organization. When
the organization initiates the turnover, the result is involuntary turnover. Examples
include terminating an employee for theft or laying off employees during a
downturn. Most organization use the word termination to refer only to a
discharge related to a discipline problem, but some organizations call any
involuntary turnover, a termination.
 When the employees initiate the turnover, it is voluntary turnover. Employees
may leave to retire or to take a job with a different organization, particularly in
competitive labor markets when employees have many options should they
become unhappy with their current job or employer.

8.  In general, organizations try to avoid the need for involuntary turnover and to minimize voluntary
turnover, especially among top performers. Effective human resource management can help the
organization minimize both kinds of turnover, as well as carry it out effectively when necessary.
Despite a company’s best efforts at selection, training and compensation, some employees will
fail to meet expectations or will violate company policies. When this happens organizations need
to apply a discipline program that might ultimately lead to discharging the individual.
 For a number of reasons, discharging employees can be a very difficult but potentially important
way to maintain a high performance and engaging work culture. The decision also has legal
aspects that can affect the organization. Historically, if the organization and employee do not
have a specific employment contract, the employer or employee may end the employment
relationship at any time.
 Employers have a right to terminate workers for reasons other than for “just cause”, however they
must provide notice, termination pay, or severance pay as prescribed in the relevant
employment/ labor standards legislation.

9. 2. Managing Voluntary Turnover
 In reducing turnover, the logical place to start is by measuring the
number of employees (particularly top performers and high
potentials) who leave the company.
 SHRM recommends computing turnover as follows: “First calculate
turnover for each month by dividing the number of [voluntary]
separations during the month by the average number of employees
during that month and multiplying by 100. Then calculate the
annual turnover rate by adding the 12 months of turnover
percentages together.”
 However, identifying why employees voluntarily leave is not so easy.
People who are dissatisfied with their jobs are more likely to leave,
but the sources of dissatisfaction are many and varied.

10. For Example,
 Employees who aren’t interested in their jobs, sense that
they’re not suited for their jobs, or feel under-compensated
are more likely to leave. Employers can address such issues
only by instituting effective and coordinated talent
management (recruitment, selection, training, appraisal, and
compensation) practices.

11. 3. Managing Involuntary Turnover
 In employment, turnover refers to any time a current employee leaves the company
and is replaced by a new employee. Involuntary turnover is one type of turnover that
occurs when an employee is terminated from a position. Employees may be let go for
a wide range of reasons, including unsatisfactory job performance or inappropriate
behavior, often called counterproductive work behavior (CWB).
 Many of the issues that cause involuntary turnover can be minimized by administering
pre-employment tests in the hiring process. For example, one of the main causes of
involuntary turnover is that new employees do not digest and apply the training they
are given in a satisfactory manner; aptitude and skills tests can predict learning ability
and the likelihood that an applicant will successfully complete training.
 Similarly, certain personality tests can be used to assess how likely an employee is to
engage in counterproductive work behaviors that can negatively affect an
organization. Some examples of counterproductive work behaviors include theft,
tardiness, fraud, and time-wasting. Integrity tests can be administered to assess if an
applicant is likely to be a productive, reliable, and conscientious employee who is
less likely to engage in inappropriate behavior in the workplace.

12.  Involuntary turnovers are inevitable. Even under the best conditions, the
employer will have to let some employers go when jobs are restructured, or
when competitive pressures necessitate reductions in force. However,
dismissals due to poor performance are sometimes avoidable. As with
voluntary turnover, performance-based dismissals may stem from
breakdowns in the employer’s talent management system. Therefore, here,
too, reviewing and improving one’s recruitment, selection, training,
appraisal, and compensation/incentive plans can reduce dismissals by
addressing the reasons for performance.

13. 4. Managing Employee Retention
 Employee Retention is a process in which the employees are encouraged to remain
with the organization for the maximum period of time or until the completion of the
project. Employee retention is beneficial for the organization as well as the employee.
 Employee retention is the overall strategy or ability of an organization to retain its best
employees and hence maintain a lower turnover. An organization is able to achieve
this by adopting various employee retention programs. Employee retention is and
should be one of the main focus areas of the human resources department in any
organization.
 Employee retention defined as the organizational goal of keeping talented
employees and reducing turnover. Employee retention is normally measured as a
percentage. For example, an annual retention rate represented at 70% indicates that
the organization kept 70% of its employees in that period and had a 30% attrition.
Employees that were lost could have been from natural means like retirement or it
could have been through resignation, termination of contract and other similar
reasons. Regardless, turnover costs and employee disengagement are costly to an
organization and an effective employee retention strategy is encouraged for
organizations.

14.  Managing for employee retention involve strategic actions to keep employees motivated
and focused so they elect to remain employed and fully productive for the benefit of the
organization. A comprehensive employee retention program can play a vital role in both
attracting and retaining key employees, as well as reducing turnover and its related
costs. All of these contribute to an organization’s productivity and overall business
performance.
 Retention of productive employees is a major concern of HR professionals and business
executives. It is more efficient to retain a quality employee than to recruit, train and
orient a replacement employee of a same quality.
 Fairness and transparency are fundamental yet powerful concepts that can make a
lasting impressions on employees. According to SHRM’s Employee Job Satisfaction and
engagement: The Doors of Opportunity are Open research report, Employees identified
these five factors as the leading contributors to job satisfaction:
1. Respectful treatment of all employees at all levels;
2. Compensation/Pay;
3. Trust between employees and senior management;
4. Job security; and
5. Opportunities to use their skills and abilities to use their work.

15.  Employee job satisfaction and engagement factors are ingredients of employee retention programs.
The importance of addressing these factors is obvious, but actually doing so takes time and these
tasks are often left for another day. However, the payoff of focusing on employee retention-in terms
of increased performance, productivity, employee morale and quality of work, plus a reduction in
both turnover and employee-related problems is well worth the time and financial investment. The
bottom line is that by managing the employee retention, organizations will retain talented and
motivated employees who truly wants to be a part of the company and who are focused on.
contributing to the organization’s overall success.
 Key reasons a focus on reducing turnover makes sense;
 Turnover is costly.
 Unwanted turnover affect the performance of an organization.
 As the availability of skilled employees continues to decrease, it may become increasingly difficult to
retain sought after employees.
 Turnover costs can have a significant negative impact on a company’s performance; however, not
all turnover is harmful. For example, a new replacement hire may turn out to be more productive or
more skilled than his or her predecessor.

16. 4.1. Techniques For Managing Employee
Retention
 Managing employee retention has several benefits, including preserving the
company culture and keeping personnel costs low. In a 2008 study, the Society for Human
Resource Management estimated that the minimum cost to a company in recruiting,
training and lost production for employee turnover is 50 percent of the salary for a given
position. To avoid having to incur these extra costs, our company needs to use the top
techniques to manage employee retention.
 Feedback
Encourage our staff to give feedback at all times on their development, company issues
or any work-related topics. Employ an open-door policy that helps employees to feel their
opinion is important.
 Recognition
To help enhance employee salaries and incentive pay programs, develop recognition
programs that publicly acknowledge employees who go above and beyond their job duties.
Publicly recognizing employee performance makes employees feel appreciated for the work
they do and is top technique in retention management.

17. Time Off
Our company should also offer extended unpaid leaves to employees who
need time off to attend to personal matters but do not want to lose their jobs.
Giving employees the time they need to keep their personal lives in order is an
important tool in managing employee retention.
 Fair Treatment
Create disciplinary polices that are fair, and make certain that the polices are
applied equally to the entire staff. Management and executive staff also should
be subject to discipline to maintain the sense of fair treatment.