Calculating Turnover

PMI · May 2001

Can anybody give me the correct formula for calculating the rate of staff turnover? I found several web sites that have turnover cost calculators, but I can't find anything that calculates just the rate of turnover.

Tricia · May 2001

Turnover = # of separations during a month/average # of employees on payroll during a month.

Call me if you have problems understanding the way I wrote this formula: 336-227-8600 ext 3203.

Tricia Neary

PMI · May 2001

Any other suggestions? I have one manager saying, as the previous respondent states, that the correct turnover formula is the average terminations divided by average number employed monthly, which puts us at a healthy (but understated, I think)1.7%. Another manager believes it is total annual terminations divided by the average employed, which would make our rate 21%. A third manager says it is the first formula multiplied by 12, to annualize, which would put us at 20%.

I once saw a formula on the web that incorporated other factors--it may have been total employed over the year or it may even have been based off total months or years of service for total employed.

davidh · May 2001

Turnover can be calculated based on the target audience as well as to fit your own internal performance improvement needs. The typical rate I have calculated is the total number of FT/PT terminations divided by the total number of employees. Usually it is aimed at an annual rate (x12 if you use the terms for the month divided by total employees). I believe that a more realistic figure is to also report a number of terms which include Casual or Pool individuals. From an HR perspective, we have to do all the same amount of work to keep up with a Casual Pool employee as with the FT/PT person, i.e. application, interview, hire, train, evaluate, pay, etc. I like to report both figures and attach a "cost of replacement" when the turnover rate for "casual / as needed" employees goes up significantly. Most of the time Management is only interested in turnover of FT'ers and what the root cause analysis shows for why they're leaving.

Gillian · May 2001

The other messages have given you the formula. In addition to that you should decide what turnover is. Do you want to calculate layoffs as turnover, without being morbid - deaths. When uncontrollable factors are not counted you may end up with a more realistic view. The parameters should be decided then kept consistent so that you can measure one period against the next. The next thing to do is to divide the organization into groups so that high, or low, turnover can be recognized departmentally. This will give you red flags that something is wrong, or maybe right, if the turnover is low.

Margaret Morford · May 2001

I would eliminate counting any turnover that you do not control as the previous answer indicates. Exclude lay offs, deaths, terminations for violation of company policies, returns to school, people who chose to stay home after the birth of a child and spousal transfers. No matter how wonerful an employer you are, you cannot retain people in the above categories (except for offering the stay at home parent a home commutting arrangement). You should focus on the people you lose to other jobs, etc. This is the area of retention you can do something about. Dig deeper than "I got a better opportunity." Ask whether he/she sought that opportunity out or ask why he/she was interested/restless enough in their current job to entertain another opportunity. There are some outside firms that can also do this for you in an effective way, demonstrating trends, etc. Statistics kept like this will tell you when you have a supervisor problem as well. Also look at trends for people bidding out of an area on a very regular basis. That might also be a sign of leadership or a job requirements problem.

If I can be of any other help to you, don't hesitate to call me at 615-371-8200.

Margaret Morford
theHredge

Calculating Turnover

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