Turnover rate is a metric used to measure the percentage of employees who leave a company within a specific period of time. It is used to measure the effectiveness of the employee management process and to identify areas where improvements can be made.
The formula for Turnover rate is:
Turnover rate = (Number of Employee Turnovers / Average Number of Employees) * 100%
It is calculated by dividing the number of employee turnovers (resignations, retirements, dismissals) by the average number of employees during a specific period of time and expressing the result as a percentage.
For example, if a company has 100 employees and 10 of them leave within a year, the Turnover Rate would be 10% (10 / 100 = 0.1 x 100%).
It’s important to track the Turnover Rate over time, compare it against industry benchmarks and historical data, to identify areas where the employee management process can be improved. It’s also important to track the Turnover Rate by different segments, such as by different teams, positions, or locations, in order to identify where the problem is and take action to reduce the Turnover Rate.
Turnover Rate is an important metric for companies, as it allows them to evaluate the effectiveness of their employee management process and make decisions about employee policies, employee engagement, and employee retention.
It’s also important to keep in mind that the Turnover Rate should be aligned with the business requirements and the needs of the end-users, a low Turnover Rate can indicate a strong employee management process, but it can also mean that the company is not investing enough in employee development or employee career opportunities.
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