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How to Calculate Employee Turnover _monthly_


									Compensation Today: How to Calculate Employee Turnover

                    « Employee Competency Checklist | Main | Using Credit Checks in the Hiring Process »                       About Compensation Today
                                                                                                                               Compensation Today is the source for
 How to Calculate Employee Turnover                                                                                            up-to-date info on compensation
                                                                                                                               planning, employee retention, talent
 February 1, 2010                                                                                                              management, and more.
 Costs of Employee Turnover - Part 2
 In our first post on the costs of employee turnover, you learned why hanging onto your employees is important to the
 financial well-being of your organization, as long as those employees are a good fit.

 In part 2, I will show you some twists and variables on those calculations that you must make to see the full picture that
 employee turnover in your organization is telling you. I will also cover a few of the many variables that can affect your
 turnover rate and affect how you choose to interpret results of your employee turnover calculations.

 Further Analyzing the Cost of Employee Turnover Rates                                                                                   Earn HCRI/CHRP
                                                                                                                                      Re-certification Credits
 Beyond just looking at your overall employee turnover rate, taking the time to        Do you fret over losing your top
 look closely at certain segments of your organization will provide you even           employees? Feel confident you're           Developing Your
 more insights into your organization’s health.                                        paying and managing them better            Compensation Philosophy &
                                                                                       than anyone else in your industry.         Policy
 For example, you could focus on employees who leave in the first-year of              View our webinar Employee Retention:       Part 2 of 3 in a Series
 employment. From hiring to firing to replacement, losing employees in the first       High Impact Performance Management         Learn how a compensation plan
 year can be costly.                                                                   for Engaging and Retaining Your Top        can encourage retention and
                                                                                       Performers and get ahead of the            morale.
 Some employee replacement costs include:
                                                                                       competition.                               Tue, Feb 9, 10:00 PST
        sourcing (how you find applicants and how they find you)
        interviewing                                                                                                              A Fresh Tool for Your HR
        hiring expenses                                                                                                           Toolkit
                                                                                                                                  Learn about a new HR tool that
 On-boarding costs include:                                                                                                       helps you benchmark salaries
        training the new employee
                                                                                                                                  Wed, Feb 10, 11:00 PST
        acculturation of the employee to the organization’s culture and expectations

 Employee separation costs include:                                                                                               Mission Impossible:
                                                                                                                                  Managing and Mitigating
        unemployment compensation                                                                                                 Internal Pay Issues
        COBRA benefit continuation costs                                                                                          Part 3 of 3 in a Series
        conducting exit interviews                                                                                                How can you avoid trouble from
                                                                                                                                  internal pay inequities? Learn
 As a side note, effective orientation programs in the first several months after a hire have been proven to have a direct,
 positive impact on the employee’s choice to stay with the organization.
                                                                                                                                  Tue, Feb 16, 10:00 PST
 How to Calculate Employee Turnover by Month
                                                                                                                                  See All Webinars
 Let’s revisit an employee turnover calculation I explained in my previous blog: monthly turnover. This turnover calculation
 can be used to learn more when employees leave in their first year.

 To calculate monthly employee turnover rates, divide the number of employee separations in one month by the average
 number of active employees at the worksite during the same period. We’ll say we have one site of operations.                          PayScale Compensation Data

 For example, let’s say we lose four employees out of 200.
                                                                                                                               See how having access to the largest
                                                                                                                               online compensation database can help
                                                                                                                               you with your salary benchmarking
 That gives us an employee turnover rate of 20 percent. What if we repeated this employee turnover calculation to highlight    project. Request a private PayScale
 the turnover rate just in the new hires, not in the whole company, over the course of a year?                                 demo today.

 How to Calculate Employee Turnover Rates within the First Year
 Have you wondered if employees leaving in less than 12 months have a bearing on your business? What about on your
 business practices? You can learn both by learning about first year employee turnover.

 To compute this, divide the total number of employees who leave in less than one year by the total number of employees        PayScale provides an inexpensive and
 who leave in the same period.                                                                                                 easy benchmarking solution for HR
                                                                                                                               Professionals. Free report for qualified
 Here’s what the formula looks like:

                                                                                                                               See our upcoming HR webinar
 Now to pull numbers into our formula for first year employee turnover:
Compensation Today: How to Calculate Employee Turnover

                                                                                                                                 Review our HR webinar archive>

 What Can Employee Turnover Calculations Tell You About Your Organization?
 How do 26.7 percent first-year employee turnover rates compare to the industry standard, or to your local area? If it is
 consistent with those measures, your organization may be fine.                                                                  CATEGORIES

 The following questions and answers will be important to note and act on, regardless if 26.7 percent is a good number or a      Compensation Data
 bad one.
                                                                                                                                 Compensation Plans
        If 26.7 percent is higher than your overall employee turnover rate, the industry standard, or the standard turnover in
        the area, you might want to review your selection or on-boarding process.                                                Employee Labor Laws

 For instance, what questions were asked when the employee was hired? Did the questions relate to the job? If not, they          Employee Performance Reviews
 may have set up the application for the job to be quite different than the job really is. If so, why was that done?
                                                                                                                                 Employee Retention
        Did those who sorted applicants by their responses understand what skills the job required? Did they end up looking
        for or finding the wrong things?                                                                                         Executive Compensation

        Did the employee get an orientation? Was the employee made to feel comfortable in the organization after the             HR Management
        orientation? Why or why not?
                                                                                                                                 HR News
        How did the employee’s supervisor interact with the employee?
                                                                                                                                 HR Recruiting
        How did the existing workforce interact with the new employee? With acceptance and assistance, or with a cold
        shoulder? How did the supervisor react to that? Did the supervisor take any steps in response to the workforce           Job Descriptions
        interaction with the new employee?
                                                                                                                                 Salary Benchmarking
 How might the supervisor’s training have contributed to this percentage?
                                                                                                                                 Salary Ranges
                                                                                                                                 Talent Management
 Joe Gross
 HR & Policy Solutions, PLLC

 Note: Even though I have worked with employment laws for over 20 years, I am not a lawyer. Nothing in this blog should          FEED
 be taken as legal advice or interpretation of laws.


 1. “How do we calculate turnover costs?” March 2004; Society for Human Resources Management                                     Subscribe to this blog's feed
 2. “Turnover Rate- SHRM Human Capital Measure of the Month”, November 2005; Society for Human Resources
 3. Ibid.
 4. “First Year Turnover Rate- SHRM Metric of the Month”, October 2006; Society for Human Resource Management

 Related Articles:

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        Employee Retention Tips for Managers
        Cost-Effective Employee Training Methods

 Do you have any salary range topics you would like to see covered here on Compensation Today? Write us a
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