Voluntary Turnover Rate by alicejenny


									     HR Calculations and Measurements

     The best and most concise way for the HR department to measure its effectiveness in an
     organization is through HR calculations and measurements. These numbers provide meaningful
     data used to improve business management and to better meet the needs of the employees.

     LaborLawCenter™ provides an endless array of HR calculations you can use spanning absence rate,
     compensation, recruitment, training, tenure and more. Some calculations are more important than
     others depending on your organization’s goals.

These samples are designed with the intent of providing businesses with a general template to use. Please note that general legal
information is not the same as legal advice—the application of law to the company’s specific circumstances. These samples are for
informational and instructive purposes only and may not be suited to every situation.
HR Calculations: Voluntary Turnover

While it’s important to monitor the company’s turnover rates, more detailed
analysis is usually required to get the real picture. And there’s a big difference
between voluntary turnover—when an employee chooses to leave your
organization unexpectedly—or involuntary turnover, such as an employee you have
fired, or one who was forced to leave because of a medical reason.

A large amount of involuntary turnover is not generally a reason for concern, but if
all the company’s turnover consists of voluntary—and unforeseen—departures, you
may have a more serious issue.

1. Determine the number of employees leaving over a certain period of time.

You may decide to calculate turnover on a month-to-month basis, or you might
review the annual turnover rate. (For example, assume 10 employees left during the
previous year).

2. Determine the reasons each employee left to identify only those who
voluntarily resigned.

Exclude from the data those who left involuntarily for medical or disciplinary
reasons, and those who moved away, so you are left with only those who chose to
voluntarily leave the company. (For example, assume 2 employees were fired, 1 moved
out of state and 2 resigned for medical reasons. This means 5 employees voluntarily
left of their own accord).

3. Determine the total average headcount during the period in question.

Find out the number of employees on the books. If you’re monitoring annual
turnover, find out the average number of employees on the books during that
period. (For example, assume there were 50 employees on the books for January – July,
49 employees in August, 52 in September, 49 in October and November and 51 in
December. 50+50+50+50+50+50+50+49+52+49+49+51 / 12 (months) = 50. So the
total average headcount is 50.

3. Divide the number of employees leaving by the total average headcount.

This will provide the voluntary turnover rate. (For example, 5 employees / 50
average headcount = 0.1)

4. Multiply the figure by 100 to get the turnover percentage.

(For example, 0.1 x 100 = 10%)
Whether this figure is considered “high” or not will vary from company to company
and depends on your own typical turnover rates, as well as those of the industry in

Consider excluding those employees who retired from employment from the
turnover rate. While the retirement was voluntary, it was likely an expected action
that could be planned for. It’s also unlikely that the retirement was due to a systemic
problem within the company. Therefore, including this information in the analysis is
unlikely to be useful to your evaluation.

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