Turnover Rate

Turnover Rate

KPI Details

Turnover Rate, a common and critical HR KPI, measures the organization's ability to attract, develop and retain high quality employees on an ongoing basis. A high rate of turnover can be related to poor employee screening processes (e.g., lack of appropriate integrity tests, technical assessments, etc.), certain missteps during the hiring process (e.g., applicant was not properly briefed on job duties, unqualified applicant was hired, etc.), improper management practices, poor training programs, and/or simple employee underperformance (e.g., low productivity, work quality, poor attitude, etc.). While a certain amount of turnover is unavoidable, exit interviews and other similar methods should be employed to determine what, if anything, could have been done differently by both parties to avoid the separation. The business impact of high turnover can be twofold: recruiting and hiring costs are increased, while departmental productivity, morale and work quality may also be negatively impacted. Specific areas of the business (e.g., teams, departments, etc.) with higher than average turnover should be further investigated to determine root causes and mitigate further losses, where possible.

KPI Definition

The number of employees who left the company (voluntarily or involuntarily) divided by the average number of employees working for the company over the same period of time, as a percentage.

KPI Best Practices

• Effective recruiting and vetting procedures to identify the right fit for job openings
• Provide incentives to employees who remain with the company for certain periods of time
• Implement career paths for employees leading to advancement
• Offer benefits that are competitive or superior to industry averages

KPI Calculation Instructions Turnover Rate?

Two values are used to calculate this KPI: (1) the total number of employees that left the organization during the measurement period, and (2) the average number of company-wide employees working for the organization over the same period of time. Any employee who was separated from the organization, voluntarily (i.e., retirement, elected to move to another company, etc.), involuntarily (i.e., fired, terminated, laid off, etc.) or otherwise, should be counted in the numerator for this calculation. When calculating this value for a calendar year (or month, quarter, etc.), the average number of employees working for the organization during that time period should be used in the denominator for this calculation (i.e., the number of employees at start of period, plus the number at the end of the period, divided by 2).

KPI Formula :

(Total Number of Employee Separations / Average Number of Total Employees) * 100