Calculating employee turnover for improved employee engagement

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Employee turnover is the percentage of people who leave (and are replaced) in an organization during a given period, typically a year. Most employers saw an increase in employee turnover this year, and there were many possible reasons for this, but we suspect that after the pandemic employees felt more confident than they did in 2020 to leave their employers. It’s debatable, but perhaps many employees were also eager to start afresh after the stress they endured during 2020. And then, of course, there’s been a war for talent especially in the UK. 

Employers can expect people to leave – there is no getting around it. However, it should be monitored and ‘managed’.

An increase in employee turnover has serious implications:

  • Lower engagement and morale: People leaving can ‘disrupt the apple cart’, from a change in team processes and structures, to an increase in workload for other members who need to fill the gap. This can cause disengagement, fatigue and stress within the team. 
  • Fear and uncertainty: Employee turnover can even cause other team members to think negatively of their working experience. Frequent exiting often causes other employees to wonder if they should leave too. 
  • Decreased productivity: When employees go, they take skills and knowledge with them, which will take the newcomer time to learn. This affects productivity and performance and will absolutely affect engagement.

It goes without saying, every organisation wants to retain their top performers and reduce turnover within teams so that the above problems are avoided. But how do you do that? Well, the first step is learning how to calculate employee turnover and understand turnover rate. From there, you can take active steps to improve your retention rate, by improving employee engagement, employee experience, culture and diversity and inclusion. 

How to calculate employee turnover

example of a formula to calculate employee turnover

#1

Add the number of employees at the start of the year with the number you had at the end of the year.

For example: 20 employees at the start of the year + 18 employees at the end of the year = 38 employees.

#2

Divide the total you got from step one in half (by 2).

For example: 38 total employees ÷ 2 = 19 employees.

#3

Divide the number of employees who left during the year by the outcome of the first equation.

For example: 2 employees left during the year ÷ 19 employees = 0.105

#4

Multiply this final number by 100, and you‘ve got your employee turnover rate.

For example: 0.105 × 100 = 10.5% turnover rate.

You can calculate your employee turnover more regularly, bi-annually, monthly or quarterly if you want to keep even closer to it (which is recommended).

Spotting risk factors for employee turnover 

Employee engagement

Staying in touch with employee engagement levels by conducting regular pulse surveys can help you spot risk factors for employee turnover early. Using surveys to ask your people how they feel and why, and assessing their feedback and key touchpoints will not only alert you on a possible increase in employee turnover, but will highlight the exact areas that need addressing to retain high performers.

Regular communication

Regular pulse surveys are by far the best way to communicate with your people because it provides the anonymity and protection employees need to disclose their true feelings about their working experience. But, if this approach is not used, managers should have regular one on one’s with their people to gauge how they feel and what their concerns are.

Lower productivity 

A slump in productivity is generally a tell-tale sign that employees are disengaged, and disengaged employees are more likely to leave

What is a good employee turnover rate?

When it comes to turnover data, it can be difficult to benchmark an ideal rate; it will look different for every organisation but should typically be compared to historical data and the organisation’s average turnover.  It’s also important to consider these factors: 

  1. How much voluntary turnover do you have (people choosing the leave the organization)?
  2. How much involuntary turnover do you have (people being fired or laid off)?
  3. Are people moving within the organization?

Understanding why your people leave

The big question is always why are people leaving? Asking this question is really important because it helps you understand what the concerns are and address them before other high performers decide to leave. 

The answer to your why however, should not be sought out only once people have resigned. Instead of asking ‘why are people leaving?’, ask throughout the employee lifecycle and throughout the year ‘why would and why wouldn’t employees stay?’. Pulse surveys will help you to answer this and keep abreast of what your people and potential talent need. Takings a proactive approach to retention, rather than a reactive approach to employee turnover is critical. 

Learn How to Keep Your Best People In Our Free Guide to Retention