What Is Employee Turnover?
The employee turnover rate is the percentage of workers leaving an organization, expressed as a percentage of total workers over a defined period (typically year-over-year).
Leavers, voluntary or involuntary, include retirees, former employees, resigning employees, and those made redundant, and thus described as overall turnover or 'crude' turnover.
Additionally, specific turnover data can also be calculated, such as redundancy-related turnover or resignation rates, the latter of which can be used in assessing the effectiveness of people management practices.
Are There Different Forms Of Staff Turnover?
As a whole, "employee turnover" is perceived as a negative term. Employers and human resources professionals are viewed as obligated to minimize the cost of employee turnover at all costs. However, different types of employee turnover impact the working environment differently, some negatively and others positively.
Positive Employee Turnover Types
Employee turnover is beneficial when new employees bring fresh ideas and perspectives and replace workers terminated due to poor performance. This desirable turnover works by adding new talent to an organization, increasing productivity and profitability.
This degree of turnover assures quality over time for companies in dire need of a workforce revamp. Of course, if many employees are being asked to leave due to reduced company productivity, this "desirable" turnover could mask professional flaws in a business's operation.
Investing in recruiting and selection processes for new and fully engaged employees can be expensive. Ultimately, however, employers receive a return on their investment in replacing a stagnant workforce.
There are other benefits to employee turnover that we should explore that provide a more desirable organizational performance.
While many companies will happily tolerate the worst-performing employees, those with moderate to high workforce turnover ensure that they consistently work hard.
Suppose it wasn't clear in a candidate's job description that your business expects nothing but an employee's best performance. In that case, your high deal of turnover and high-performing company culture will make the standard clear.
When employees know that slacking will not be tolerated in this culture of trust, they are generally guaranteed to satisfy their departmental managers' weekly goals.
Incentivizes Employees To Perform Better
Another one of the positive effects of functional turnover is a greater motivation for employees to work harder, for greater rewards and promotions.
Let's take, for example, a bad workplace with a moderate to high turnover rate, where bad managers only last for short periods of time. Said business is then likely to have many high-level positions open.
Indeed, many career prospects can be created by the aforementioned issue. Employees who have internalized their cultural impact and proven their loyalty will have a better average employment relationship and a better chance of being promoted.
Improves Company Morale
While we stated that involuntary turnover could harm a workforce's morale, the opposite can sometimes be true when a toxic employment relationship is present.
When employees that would otherwise negatively impact your staff's enthusiasm, progress, and even their mental health affairs leave, your organizational performance is bound to improve.
When unproductive employees are removed from your workforce through this desirable turnover, then your employment relationship can flourish, and your employees will enjoy safe and satisfying days of employment.
Despite the potential positive effects of avoidable turnover, the adverse effects of labor turnover generally outweigh the positive.
Negative Employee Turnover Types
Turnover is often seen as a negative factor: layoffs, business closures, and plant closures may be considered a negative turnover. Remember that layoffs have an adverse effect on workers and the community.
In some areas, losing jobs can adversely affect the economy of nearby companies in a downward spiral. For example, when workers suffer job losses due to a plant shutdown, nearby services, such as transportation, meals, and other services, also lose revenue.
There are many reasons why an employee may decide to leave your company, whether positive or negative. There are more reasons for turnover than just resignation or “being fired.”
In addition to finding out why employees leave, whether they are leaving voluntarily or involuntarily, retiring or being transferred, department managers should also establish their true motivation.
The general rule is that employees must retire at some point and that the company has a lack of control over this eventual deal of dysfunctional turnover. However, there are times when employees become disengaged and opt to retire early for various reasons, such as bad hiring procedures.
To engage and retain older and more experienced employees, organizations need to understand what led to this unexpected retirement and if bad hiring practices were present. A great way to discuss this is to hold exit interviews and behavioral interviews. Behavioral interview questions can determine whether employees enjoyed authentic opportunities, suffered a poor job performance, and whether they had a poor work-life balance.
Transferring within an organization usually involves moving into a new position. There may be other intentions behind the move, even if this type of turnover is a sign of a healthy work environment and good organizational performance.
Is their interest in another department's role genuine, or are they trying to escape lousy department managers?They might also harbor a high level of distrust toward their colleagues.
Employee turnover is primarily caused by:
- Voluntary needs
- Involuntary commands
Typically, employees leave their company voluntarily. Volunteer turnover occurs when employees resign, retire, or leave for other personal reasons.
Attrition occurs when the number of employees at a company dwindles after a period in which many people retire or resign without being replaced. It is often considered a less disruptive way to reduce the workforce and payroll than layoffs when staff is reduced due to attrition.