Calculating Average Employee Tenure: Should We Exclude New Hires to Avoid Skewed Data?

Hello HR colleagues, I hope you all are doing well and staying safe. My question pertains to the calculation of the average tenure of employees. The formula I use is:

Average Tenure Calculation

Average Tenure = Total Employment Time for All Employees divided by Total Number of Employees.

Consideration of Minimum Tenure

My question is: should we consider a minimum tenure for an employee? For instance, if we hire 20 new employees who have only completed one month in the organization, wouldn't including their tenure in the calculation skew the data and significantly impact the average tenure percentage? I am seeking advice from a location in India.

Hello and thank you for your question.

The method of calculating the average tenure usually involves all employees, regardless of how long they have been with the company. However, it's valid to consider that including a large number of new hires with very short tenures can skew the data.

One solution to this is to set a minimum tenure threshold, such as three or six months, before including an employee in the calculation. This way, you can avoid the average being significantly impacted by new hires. However, this method has its drawbacks as well, as it may overlook the high turnover rate of new employees if that is a concern in your organization.

Alternatively, you could calculate a weighted average, where longer tenures have more weight in the calculation than shorter ones. This method gives more emphasis to employees who have been with the company for a longer period of time.

Lastly, it's crucial to remember that the method you choose depends on what you want to measure with this metric. If you are looking to understand the overall stability and experience in your workforce, the inclusion of all employees or a weighted average might be best. If you're more interested in the retention of new hires, setting a minimum threshold might be more suitable.

Remember, the key is to be consistent in the method you choose and to clearly communicate this method to all stakeholders.

Please note that there might be specific regulations or industry standards in India that you should also consider, so it's always a good idea to consult with a local HR professional or legal advisor.