Turnover Metrics Your C-suite Wants to Know
Tracking employee turnover is critical in determining the effectiveness of your people management strategies, but it’s broad metric that only tells a piece of the story. You can unlock the power of your turnover data by gaining a deeper understanding of who’s leaving and when. This and other KPIs will enable you to optimize determine the effectiveness of your engagement and retention initiatives and drive action to improve performance.
Critical Turnover Metrics to Measure
- Overall retention rate – Your overall retention rate can provide excellent insight about the health of your teams, departments, or the company as a whole. The overall retention rate percentage is calculated by dividing the current number of employees by the number of employees at the start of your measurement period (typically annually), multiplied by 100.
- Overall turnover rate – If it’s high, your overall turnover rate can be an indicator of problems within the entire organization or with specific departments or locations. The percentage is calculated by dividing the number of employees who left over a specific period of time, by the average total number of employees over the same period, multiplied by 100.
- Voluntary turnover rate – People quit all the time. It’s just part of doing business. If you don’t already, you should schedule exit interviews with departing employees. This data can help with future employee engagement and retention by providing answers to questions such as: Why did the employee leave? Is there anything we could have done to prevent the loss? What level of impact will the loss have on the team, department or organization?
- Involuntary turnover rate – Much like people quitting all the time, people get fired and laid off, too. It’s an unfortunate fact of life, and a costly one for organizations, but sometimes an employee just isn’t a good fit for the organization. You may run into poor performers, people displaying troubling behavior, or you might be undergoing a reorganization that dictates the loss of some employees. Regardless of the reason, keeping track of exactly why someone was let go is important information to have in the case of potential litigation or unemployment filings.
- Retention rate of top talent – The hiring process is expensive, so you want to make sure you keep your super-stars engaged and employed… with you. Calculating the retention rate of your best performers, and finding out what’s keeping them with your company, will help you ensure that your compensation package is competitive, as well as show you where your best managers are.
- Turnover costs – If your staff turnover costs are excessive, you’ve got a problem. Like we said, hiring people is expensive and time equals money. When calculating the cost of turnover, you need to remember a few things, including:
- The amount of time you spend filling vacant positions
- Overtime that co-workers and management use to make up for the former employee
- Time spent on recruiting and hiring tasks (job postings, resume screening, interviewing, onboarding)
ERE has a handy worksheet that can help you calculate the exact cost of turnover at your company.
If you already track some or all of these metrics, you get a gold star! If you feel as if you’re lacking in some areas of data and don’t think you’re getting the whole picture, dig into that data and start tracking. Having this data, and sharing it with your executive team, can help HR drive even more value within the organization. Visit the HR Center of Excellence People Management Hub for additional action plans and inspiration to take your efforts to the next level.