Calculate employee turnover (Employee turnover analysis)

In the broadest sense, any employee departure is considered employee turnover. However, the impact varies depending on who leaves. The loss of certain employees can be far more disruptive than others. Specifically, organizations should pay close attention to unwanted turnover— this happens when a valuable, high-performing employee leaves, despite the organization’s desire to retain them.

Many causes of employee turnover have been described in the literature. Causes of employee turnover include: 

• Too few development opportunities 

• A lack of appreciation 

• Too high a workload 

• An unpleasant work atmosphere 

• Insufficient remuneration 

• A lack of inclusiveness 

However, the causes that apply in one organization do not have to apply to another. Likewise, the impact of a particular factor may weigh more heavily in one organization than in another. Therefore, it is important that organizations use HR analytics to gain insight into the risk groups and causes of (undesired) employee turnover. After all, once the risk groups and causes are known, structural solutions can be worked on. 

Employee turnover is a popular topic within HR. However, it is much more urgent for some organizations than others. An employee turnover rate of five per cent among highly trained engineers working on a very specific and complex product is a bigger problem than an employee turnover rate of five per cent among shelf stockers.

Employee turnover figures

Before starting advanced statistical analysis on turnover, it is important to first understand some employee turnover figures. Calculating employee turnover can be done by answering several questions. How much turnover is there? How much of that turnover is undesirable? Among which employee groups is employee turnover highest? What are the costs of employee turnover? To chart annual employee turnover, the following formula can be used:

Number of leavers / ((number of employees at the beginning of the year + number of employees at the end of the year) /2)

Employee turnover costs

To calculate the costs of employee turnover, direct and indirect costs obviously play a role. These include at least: hiring costs (advertisement, assessments, interviews, screening), onboarding costs (training, training time of manager and colleagues), temporary replacement costs (e.g. extra costs of overtime to temporarily fill the gap in staffing) and loss of productivity (usually it takes one to two years to get someone up to maximum productivity).

If an initial reconnaissance reveals that the costs of employee turnover in your organization are getting out of hand, then it is time to deploy HR analytics on the topic of turnover. 

HR analytics gives your organization the insights to effectively address employee turnover. One or more types of analysis are possible. 

• Diagnostic analysis: this maps and ranks turnover risk groups, identifies causes of turnover and ranks these causes from most impact to least impact. This analysis answers the question: where to start? 

• Predictive analysis: this provides a prediction of expected employee turnover for the entire population or for a subset. With this prediction, proactive action can be taken to prevent turnover. The analysis answers questions such as: will the employee turnover trend increase or decrease and by how much? What is the likelihood that turnover will occur in a particular group of employees in the coming period and by how much? 

• Prescriptive analysis: what is the probability that a candidate, if hired, will still be working for the organization in a given period of time and how does this probability compare to that of other applicants? This analysis helps to hire the right people and thus prevent turnover.