What is an Employee Turnover Ratio?
If you’re not sure what an employee turnover ratio is no worries, I’m here to explain. Simply put, an employee turnover ratio is the ratio of total separations from the average number of employees. For example, lets say one month 30 employees left their job, for whatever reason, out of the 300 already employed individuals. Your turnover ratio for that month would be 10 percent [100 x (30/300)]. This indicates that your company lost 10 percent of its employees in the past month. While some companies choose to have high turnover rates to cycle though new employees, ideally this is not a good thing. Turnovers can cost your business a lot of time and money. Having high turnover rates means that new employees need to be constantly employed at your company. With this constant employment comes a constant effort in training and recruitment.
Why Turnover Rates can hurt your business
Turnover rates can vary based on many different factors. Low pay, not enough incentives, non-engaging workplace and the list goes on. What really hits hard for a business is the lack of an engaging workplace. With the workforce now being primarily influenced by Millennials, traditional style workplaces are no more. This is bad news if you are an established business that has a traditional style approach to recruitment and an overall workplace atmosphere. However, this is great news if your company is pushing for change, or if you plan on starting a company for yourself. Take this, for example; an employee leaves their job because they feel a lack of value in the company they work for. If one employee feels this way, chances are his or her colleagues feel the same. I like to call this the domino effect. One person leaves, and the rest follows. Starting to see how important it is to bring value to your employees? Now that we understand the damage that this could potentially do, let's talk about the solutions.
How to decrease your employee turnover ratio
There’s no set in stone secret to magically decreasing your employee turnover ratio. With everything, it takes time. However, it is the problem that must be addressed. First, find out what is it that is causing your high turnover ratio. Yes, easier said than done, but you have to start somewhere. Could it be a lack of employee alignment with corporate values or a lack of value and incentives? Whatever it may be, chances are it stems from one of those issues. One of my personal favorite ways to resolve this issue is to sit down with your employees and take an anonymous survey of every individual’s needs and wants. Write out a plan and begin thinking about an employee alignment model. Finding out the proper method of attack is crucial for decreasing your employee turnover ratio.
Find out how Involve is helping companies decreasing their employee turnover ratio by establishing a customized employee engagement model. Request a demo to learn more.