How to calculate staff turnover: formula for calculating the coefficient

What is staff turnover

What should be understood by staff turnover? This is a phenomenon that reflects the state of affairs in the company: working conditions, reward system, psychological climate, management styles and much more. There are different types of fluidity.

active. A person leaves on his own because he is not satisfied with the content of the job, lack of career growth, working conditions in the workplace, the relationship with the manager or the team does not work out, etc.;
passive. The employee does not leave, but his manager dreams of getting rid of him, since he cannot cope with the job, does not fit into the corporate culture, is often sick, etc.;
intra-organizational. If an employee is transferred to another department, this is also a loss for his previous manager;
external. Employees are leaving.

Thus, the reasons for employee departure can be generated by two parties: both the employee himself and the employing organization. And then staff turnover can be defined as a process of labor movement caused by employee dissatisfaction with the workplace or the organization’s dissatisfaction with a specific employee.

Staff turnover: reasons and solutions

Looking through various job and employee search sites, you will notice that the same companies post the same vacancies, periodically offering work to the same specialists. Staff turnover

– one of the key and painful problems for any modern organization. To say that high turnover has a negative impact on business is to say nothing. A high rate of staff turnover prevents the formation of a permanent and well-coordinated team, and, accordingly, the corporate spirit in the company. What are the reasons for such an unpleasant phenomenon? Are there ways to avoid it completely, or at least significantly reduce it?

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What is staff turnover?

Staff turnover

– labor movement caused by employee dissatisfaction with the workplace or the organization’s dissatisfaction with a specific specialist.
This indicator is also called the “revolving door index”
and it reflects how long a specialist has been at his job.

Figure 1 – Main types of staff turnover

1. Intra-organizational

– associated with labor movements within the organization.

2. External

– between organizations, industries and sectors of the economy.

3. Physical

Personnel turnover covers those employees who, for various reasons, quit and leave the organization.

4. Hidden (psychological)

Personnel turnover occurs among those employees who outwardly do not leave the company, but actually leave it and are excluded from organizational activities.

5. Natural

turnover (3-5% per year) contributes to the timely renewal of the team and does not require special measures on the part of management and HR.

Based on the last definition, we can say that a small staff turnover rate is even useful for the organization, since it carries with it the renewal of the team with fresh thoughts and forces. Read more about calculating staff turnover here.

Employee turnover can also be classified based on the employee's position and period of employment. A real disaster can be considered a large “turnover” of management personnel with some baggage of experience in the company (and the more experience it has, the more strongly it affects the financial and emotional health of the company). Due to the frequent change of manager, not only temporary stagnation and low performance are possible, but also a ripple effect - the dismissal of his subordinates, who may leave after him.

Also, for some organizations, a real problem may be the dismissal of new staff if the new employee quit before working out the funds that were invested in him.

Reasons for staff turnover

Everyone knows perfectly well: to cope with a disease, you need to treat not the symptoms, but eliminate the source. What are the sources of the disease called “staff turnover”?

Let's start from the very beginning of the employment process - selection
. Often the reason for dismissal is laid down already at the first stage, during poor quality selection. There are many reasons for such an unprofessional selection: a banal rush to fill a vacant position on the part of the employer, a desire to quickly receive your fee as a recruiter, to finally find at least some work for the applicant, or simply insufficient information to the parties. In 99% of cases, this approach will sooner or later lead to dismissal.
After selection, an employee undergoes an adaptation process
. Poor adaptation or, in general, its absence causes premature dismissal during the probationary period. Even when new employees stay and work in a company for a long time, their decision to leave may be made already in the first weeks of their working life in this company.
A successful onboarding process is not the key to success in the fight against staff turnover. An employee spends most of the daylight hours at work, and
his decision about his future stay in the company depends comfortable the working conditions
Dissatisfaction with management
- in any form, be it personal hostility, dissatisfaction with professional qualities or management methods can also cause an employee to quit. The last two points are not limited to time frames, since in this case everything depends on the character of the person.
After working for some time, an employee with some ambition and professional qualities will begin to think about the possibility of growth and development. Lack of career growth
, professional development and training can cause an employee to leave. The following reason for an employee’s dismissal can immediately be traced - the prospect of obtaining a higher position in another place, the opportunity to use their abilities more widely there and, accordingly, higher wages. This practice is usually observed at all levels of personnel. Although often money is not the primary reason. Salary is not a direct determinant of job satisfaction. Many employees are not satisfied with the psychological climate that has developed in the team, they are not loyal and not motivated, and money in this case is a convenient excuse for leaving the company.
An employee leaving after his colleague
, friend, girlfriend, wife, etc. is also a common occurrence. After all, man is an emotional being.
And finally, dissatisfaction with the employee on the part of the manager
. The incompetence of an employee or his inability to work in a team is the cause of dissatisfaction with the manager and, accordingly, the reason for dismissal.

It is impossible to unambiguously determine the reason for the dismissal of all employees, so it would be useful to introduce into the company, for example, a dismissal interview, during which an employee of the HR department or the manager should find out the reason for the dismissal.

Methods for solving the problem

Having found out the reason for the dismissal of employees, it is necessary to take measures to eliminate it. For example, if the level of wages is to blame, it is necessary to find out whether it is financially possible to increase salaries, bonuses or introduce other options for financial motivation of staff. If some employees were not satisfied with their working conditions, then it is necessary to make a decision about the possibility of improving them.

Figure 2 – Reasons and methods for solving staff turnover

If it turns out that the majority of those who quit have work experience of up to 6 months, this indicates errors in the selection of personnel and their adaptation. In this case, it is necessary to review the criteria for selecting specialists, improve the adaptation process, introduce supervision of an experienced employee, monitor the adaptation process of everyone, conduct training, etc. There are situations when turnover is observed with a particular manager, in this case it is necessary to discuss with him the reasons for his dismissal employees, train them in effective management and interaction with the team. You can learn more about calculating staff turnover in your company and get a basic set of recommendations in this section.

HRM assistants for HR specialists

Of course, there are many reasons for dismissal that are almost impossible to predict, but most of them can be monitored and eliminated before the actual dismissal takes place. To help HR managers, there are a huge number of ready-made testing packages, developed methods and instructions for creating your own tests. Thanks to them, you can regularly conduct various surveys, tests and personnel assessments. The purpose of such events may be to analyze the psychological climate in the team, the adaptation process of new employees, the effectiveness of various services in terms of personnel management, the level of satisfaction with working conditions in the company, and much more.

1C: Salaries and personnel management

To effectively combat staff turnover, it is necessary to constantly monitor its rate and examine the situation in the company. On the modern market, there are automated systems for personnel records that contain modules for personnel planning, monitoring the efficiency of the personnel service and the state of personnel in the organization. One of the popular HRM information systems that has the necessary functionality is “1C: Salary and HR Management 8”. The system contains the “Staff Turnover Rate” report, which allows you to monitor the current staff turnover rate both throughout the organization and in a specific individual department.

This indicator represents the following ratio taken for a certain period: (number of dismissed employees / average number of employees) * 100%.

Figure 3 – Report: staff turnover rate in “1C: Salary and HR Management”

The program contains functionality for testing employees, automatic payroll calculation, tax and personnel records. “1C: Salary and HR Management” will allow you not only to use standard questionnaires, but also to develop new ones, send them to employees, receive responses and process the results.

1C:Personnel assessment

Another HRM automation system, 1C: Personnel Assessment, will be a useful tool for a manager or HR manager in testing and assessing personnel. This solution gives the HR officer a wide range of opportunities to analyze candidates when hiring and employees in the process of work, monitoring the socio-psychological climate in the team. The program allows for an individual approach to testing and assessment due to the ability to construct new tests.

Figure 4 – Program “1C: Personnel Assessment”

Find out how 1C: Personnel Assessment helps combat staff turnover

Methods of dealing with staff turnover, in principle, can be very individual in the same situation, but with different people. The main thing is a clear identification of the root cause and its prompt elimination. A late understanding that turnover needs to be dealt with can be too expensive for the company. Constant monitoring and analysis of the reasons for employee dismissal and, of course, the search and implementation of methods to combat them - all this will bring huge benefits for your business. The financial result will not be long in coming.

EFSOL

System integration. Consulting

How is the staff turnover rate calculated: calculation formula

How to calculate staff turnover? In the practice of personnel management, various formulas are used to calculate the indicator we need.

Some methods calculate the ratio of the number of dismissed employees who left the organization during the reporting period to the average number of employees for the same period.

The peculiarity of this methodology is that not all employees are counted among those dismissed, but only those who quit of their own free will or on the initiative of the employer:

for absenteeism;
for violation of safety regulations;
for leaving work without permission;
due to unsatisfactory certification results, etc.

Other experts consider this method ambiguous, since it does not answer the question: what to do if formally a person quit of his own free will, but the real reason is different?

There is another technique that allows you to calculate the staff turnover rate; The formula for calculating it is as follows:

Where:

Chuvol - the number of people who left the organization during the reporting period;
SSCh - average number for the same period.

In any case, further analysis of the reasons for dismissal is necessary to obtain a clearer and more complete picture.

Why are enterprise performance indicators needed?

The real part of the value of an enterprise consists not only of the material resources (assets) of the company, but also other indicators: personnel, ongoing business processes, innovative technologies, relationships with organizations acting as consumers of manufactured products. They are subject to clear systematization, because a coherent system will ensure the mobilization of personnel and increase its efficiency.

When assessing the efficiency of an enterprise, not only economic indicators expressed in numerical values are taken into account, but above all an integrated approach. To do this, performance indicators are conditionally combined into two large blocks.

Objective (financial). This includes:

determining the minimum labor costs aimed at ensuring the final production result;
comparison of quality and quantity of products produced;
profitability, showing the efficiency of using all resources.

Subjective (social, personal, sensory orientation) relate to staff motivation. They help determine the strength of an employee’s resources, his emotional and psychophysical preparation, and are no less important because they characterize staff turnover.

The staff turnover rate indicates how well the structure of interaction within the enterprise is organized, the success of the actions of the management team and the management methods being implemented.

Where and what is it used for?

This indicator is used in personnel services, personnel management services, labor and wage organization, financial and economic (depending on the organizational structure of the enterprise) as an indicator showing the level and nature of the movement of labor.

Like any indicator, this indicator informs us whether there are problems at the moment or whether everything is going well. Normal values mean the values that have developed in practice for various categories of personnel, sectors of the national economy and stages of development of the organization.

Human capital management specialists should keep constant records of layoffs by personnel category and by company division, examining not only the quantitative but also the qualitative characteristics of the phenomenon, that is, analyzing the reasons for staff turnover.

Absolute and relative rates of turnover

Approximate limits have been established within which turnover is considered normal - 3-5%; a relatively stable team has a CPC of 5-9%. An indicator of less than 3% indicates stagnation, figures of more than 50% indicate serious problems.

It is possible to more accurately determine turnover limits depending on specific indicators.

Different indicators may be considered the norm for workers at different levels:
ordinary managers – up to 10%;
ordinary employees – up to 30%;
unqualified personnel – up to 50%.
Limits vary greatly in different areas of work:
production – 12-15%;
trade – up to 30%, etc.

IMPORTANT! CPC and SP are indicators that are the most informative when viewed over time.

Standard values of staff turnover rate

In practice, it has been established that staff turnover within 5% is normal. It indicates a renewal of human resources, which has a beneficial effect on the company’s activities: employees retire, move to a new place of residence, and those who work ineffectively leave.

But if the staff turnover rate exceeds 50%, then this is an extremely negative phenomenon. Such employee turnover interferes with the normal functioning of the organization and leads to inefficient use of resources. New employees need to be constantly trained, they need to pay for the services of recruitment agencies, and conduct interviews with applicants.

The normal turnover rate for an individual company can vary significantly depending on:

type of company activity;
the area where the enterprise operates;
working conditions;
other factors.

It is advisable for each company to determine its optimal level of personnel turnover from a cost point of view and take it as a standard. To this end, you need to track the development of the phenomenon over time, taking data, for example, over the last five years, and then decide whether you will reduce the indicator or be satisfied with the existing level.

Analysis of staff turnover allows us to identify the reasons that cause actual values to exceed normal values. After this, you can develop an action plan to correct the situation.

Personnel turnover and how to calculate it correctly

Calculating the employee turnover rate is quite simple; this can be done using the following formula:

(USZH + UIR) x 100 / ChS, where:

USZH – those who left of their own free will;

UIR - those dismissed on the initiative of their superiors;

ChS – average number of employees;

To calculate the emergency, you need to note every month (for example, the first day) how many people are in production or in the office, and then calculate the average value. For a quarter it will look like this:

ChS = (ChS1 + ChS2 + ChS3) / 3;

Reasons for staff turnover

Staff turnover can be caused by a variety of factors. Let's look at the most common ones:

Type of company activity. For example, trade organizations always experience higher staff turnover than manufacturing companies.
Location of the organization. In large cities it is easier to find alternative employment options. In small localities, applicants do not have as many choices, so for similar positions the turnover rate will be significantly lower.
An overly young or, conversely, older workforce: young people are more likely to change jobs frequently, while workers of retirement age may decide to end their working career at any time. Middle-aged employees are more interested in maintaining a permanent job.
Inconsistency of wage levels with market realities. Low wages are one of the main reasons why qualified employees change jobs. A clear understanding of what market salary levels are for each job position is necessary.
Lack of prospects for development and growth. Most promising employees strive for professional development and career growth. And if the current employer cannot provide the necessary growth, the employee will be forced to look for professional development opportunities outside.
Inconvenient work schedule or poor working conditions.
Bad climate in the team. This is a subjective factor, but sometimes excessive claims by managers towards subordinates, difficult relationships with colleagues, and difficulties in adapting new employees can also lead to excessive turnover.

Interesting facts about employee turnover

Employee turnover in an organization is also called the “revolving door index” . This expression comes from American corporate culture, as many office buildings in the United States used to have revolving doors.
Some analysts also highlight psychological fluidity; it is also called hidden. This is when, in fact, a person remains in his position, but does not consider himself involved in the company’s activities, or experiences hostility towards it. Unfortunately, most managers underestimate the seriousness of this phenomenon, although it often causes permanent losses.
Recently, a trend of “departmental care” has emerged in the domestic labor market. In this case, the entire team leaves their place of work and joins a competitor. Undoubtedly, such a turn of events could be fatal for the entire enterprise.

What can be done to stabilize the turnover rate

Constant monitoring of personnel movement, calculation of the turnover rate and analysis of the reasons for its change must be accompanied by real actions designed to maintain personnel turnover at a normal level. To prevent uncontrolled escape of employees, the following actions can be taken:

Establish competitive wages for employees.
Control over the change of generations of employees. Ensuring the attraction of promising young specialists, organizing their training by the older generation, retaining qualified specialists of the middle generation.
Provide opportunities for career and professional growth: training courses, career advancement, possible with proper organization of generational change.
Set a more favorable work schedule. For example, if all employees prefer to eat lunch at work, shortening the traditional one-hour lunch break to 30 minutes may be viewed favorably by employees as they will finish work earlier.
If an organization operates in places that are not very attractive to promising employees, it is possible to provide them with more favorable conditions: for example, reimbursement of housing rental costs.
Organize proper personnel work, which will allow you to cut off employee runners at the interview stage, before signing an employment contract.

Example of calculation and analysis of staff turnover rate

LLC "Company" is a manufacturing enterprise. The average headcount of the organization has been stable over recent years and amounts to 100 people annually. When calculating the turnover rate, the analytical department takes into account all the reasons for staff dismissal. So, over the past five years the following people quit their jobs:

Reason for dismissal	2014	2015	2016	2017	2018
At your own request	1	5	2	6	8
For absenteeism	1	1	2
For failure to perform official duties	2
Total	2	7	3	6	10

For each year, we will calculate the staff turnover rate and monitor its dynamics. We use the same formula:

Using this formula, we make a similar calculation of the turnover rate for each year:

Year	2014	2015	2016	2017	2018
Staff turnover rate	2 %	7 %	3 %	6 %	10 %

From the calculation results it can be seen that over the past five years the company’s staff turnover rate has increased significantly. Moreover, for the last two years it has exceeded 5%. The staff turnover rate has not yet reached critical values, but is already above normal. In this regard, the company’s management needs to work to normalize the working climate in the team, perhaps review working conditions or work schedules. It is also necessary to analyze the reasons for the increase in the number of dismissals for absenteeism. This may indicate errors by HR services when selecting candidates for vacant positions.

What types of dismissal do not affect turnover?

Termination of labor relations occurs due to various factors, but not all of them affect the Labor Code index.

Types of dismissals under Russian law

To calculate the coefficient, dismissals at the employee’s own request, by agreement of the parties, due to violation of labor discipline (absenteeism, ignoring safety requirements) are taken into account. This list also includes failure to pass mandatory certification and transfer to another position.

To determine the indicator, cases of contract termination based on: