Here are a few observations I would like to make.
When does employee turnover become problematic?
There is no set level of employee turnover above which effects on the employing organisation become damaging. Everything depends on the type of labour markets in which you compete. Where it is relatively easy to find and train new employees quickly and at relatively little cost (ie where the labour market is loose), it is possible to sustain high quality levels of service provision despite having a high turnover rate. By contrast, where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic from a management point of view. This is especially true of situations in which you are losing staff to direct competitors or where customers have developed relationships with individual employees as is the case in many professional services organisations.
Some employee turnover positively benefits organisations. This happens whenever a poor performer is replaced by a more effective employee, and can happen when a senior retirement allows the promotion or acquisition of welcome 'fresh blood'. Moderate levels of staff turnover can also help to reduce staff costs in organisations where business levels are unpredictable month on month. In such situations when business is slack it is straightforward to hold off filling recently created vacancies for some weeks.
Measuring employee turnover
Most organisations simply track their crude turnover rates on a month by month or year by year basis. The formula is simply:
Total number of leavers over period x 100 divided by
Average total number employed over period
The total figure includes all leavers, even people who left involuntarily due to dismissal, redundancy or retirement. It also makes no distinction between functional (ie beneficial ) turnover and that which is dysfunctional.
Crude turnover figures are used by all the major surveys of employee turnover, including the major CIPD and CBI surveys that are carried out each year. So they are necessary for effective benchmarking purposes. However, it is also useful to calculate a separate figure for voluntary turnover and to consider some of the more complex employee turnover indices which take account of characteristics such as seniority and experience.
A stability index indicates the retention rate of experienced employees. Like turnover rates, this can be used across an organisation as a whole or for a particular part of it. The usual calculation for the stability index is:
Number of staff with one or more years service x 100 divided by
Number employed a year ago
Costing employee turnover
It is possible to compute a 'not less than' figure very easily by working out what it costs on average to replace a leaver with a new starter in each of your major employment categories. This figure can then be multiplied by the crude turnover rate for that staff group to calculate the total annual cost of turnover. The major categories of costs to take account of are:
* administration of the resignation
* recruitment costs
* selection costs
* cost of covering during the period in which there is a vacancy
* administration of the recruitment and selection process
* induction training for the new employee.
Many of these costs consist of management or administrative staff time (opportunity costs) but direct costs can also be substantial where advertisements, agencies or assessment centres are used in the recruitment process.
More complex approaches to turnover costing give a more accurate and invariably higher estimate of total costs. A widely quoted method involves estimating the relative productivity of new employees during their first weeks or months in a role and that of resignees during the period that they are working their notice.
Why do people leave organisations?
Employees resign for many different reasons. Sometimes it is the attraction of a new job or the prospect of a period outside the workforce which 'pulls' them, on other occasions they are 'pushed' due to dissatisfaction in their present jobs to seek alternative employment.
Sometimes it is a mixture of both pull and push factors. For a fourth group reasons for leaving are entirely explained by domestic circumstances outside the control of any employer, as is the case when someone relocates with their spouse or partner.
Recent research strongly suggests that push factors are a great deal more significant in most resignations than most managers appreciate. It is relatively rare for people to leave jobs in which they are happy, even when offered higher pay elsewhere. Most staff have a preference for stability.
It is important to appreciate that the reasons people give for their resignations are frequently untrue or only partially true. The use of exit interviews is widespread yet they are notoriously unreliable, particularly when conducted by someone who may later be asked to write a reference for the departing employee. They are reluctant to voice criticism of their managers, colleagues or the organisation generally, preferring to give some less contentious reason for their departure.
Hope this will be of some help to you
From Sri Lanka, Kolonnawa
I think it would be a gud idea to study some best practices across industry to understand the issue of employee turnover..
Take for example the attrition rate at GE ( most of their businesses) which is lowest amngst all of its competitors despite of not being the best pay masters ..
From India, Calcutta
tissymariamthomasSir, I have been not able to access the community for some personal matters. Thank you for the information on attrition. It was a great help for my research works. Tissy
While doing Attrition analysis, there are other factors one should keep in mind.
1. Attrition and span of service in the Company
2. Attrition and Age level
3. Attrition Job Level Band
4. Attrition and Gender
5. Attrition and Education
Studying all these factors will help you to find the Remedial, Corrective actios to reduce the Attrition.
From India, Mumbai
JyoZenithHi, I have one more query related to Attrition - Can we forecast the attrition based on the current trend in the Company. If yes how? Best Regards, Jyoti
From India, Mumbai
keerthikilarichk out this attachment
From India, Hyderabad
thank you all for the information on attrition.
in one research i found out that attrition on the part of female employees occurs as they highly value type or nature of work than any other values.
plesae send your comments.
anu22hi every one how can i study the major attrition causes other then exit interviews and questionairres
From India, Delhi
Quite a few of you have done research on attrition. Can someone share such report with me. I am new in my organisation and have been assigned this task. Just wanted a brief idea after going through other reports.
Also guide me, what are the possible interventions for the same to reduce attrition.
From India, Mumbai
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