Average Employee Turnover Rates

What Is The Ideal Employee Turnover Rate?

It is only natural that you want engaged and productive employees working for you.

While a high employee turnover rate can be damaging, that doesn’t mean you want to stop every employee from leaving your business ever again. A healthy turnover rate keeps fresh ideas coming and pushes out low-performing employees who simply don’t want to be there. It’s the best way to keep your business focused on the future.

 

What is the employee turnover rate?

The employee turnover rate is the rate at which employees leave during a specific period of time. This could be in their first year, over several months, all the way to a five-year period. The employee turnover rate doesn’t typically include employees who “leave” their position because they were transferred to another department or who were promoted. It’s a metric specifically used to calculate those who leave your organisation as a whole.

 

What is the average employee turnover rate?

The average employee turnover rates in the UK are 15%. Average employee turnover rates do vary slightly, of course, depending on the sector that you work in. Private sectors have a slightly higher rate than the public sectors, education sectors, and legal and accountancy sectors.

 

What is a healthy employee turnover rate?

The healthiest turnover rate depends entirely on your business. Some companies may benefit from higher turnover rates; others will suffer for them. At the end of the day, it depends entirely on who is leaving. If lower performers leave, then this benefits your business. If higher performers leave, then this can hurt your company.

Of course, you cannot deduce a high-performing employee from a poor-performing employee right away. It takes months, up to a year, even, for new hires to settle and start reaching their potential.

Being around the national average is a good ballpark to start with, but do be wary if you have a high first-year turnover rate, as this will incur the highest costs.

 

How to calculate employee turnover rate?

The staff turnover calculation is very simple to deduce and takes just two steps.

Step One:

Active Employees at the Start of the Month + Active Employees at the End of the Month ÷ 2 = Average Number of Employees During the Month

Step Two:

Number of Employees who Left During the Month ÷ Average Number of Employees During the Month × 100 = Monthly Turnover %

This employee turnover calculation can be adapted to suit any period of time that you find useful for your metrics. Instead of adding the number of employees at the start of the month and the number of employees you have at the end of the month together, you simply use the time frame you want.

For example, say you have ten employees at the start of the year and 20 at the end of the year. During that year, five employees left. To calculate the annual turnover rate, you will need to:

Step One:

10 (start employee number) + 20 (end employee number) ÷ 2 = 15 (average employee number for the year)

Step Two:

5 (number of employees who left during the year) ÷ 15 (average employee number for the year) × 100 = 33%

 

Why is employee turnover important for your business?

There are several key pieces of information that you can glean when you calculate your staff turnover rate.

Low turnover rates can seem like a good thing, but the fact is that many people will stay with a company not out of loyalty but out of familiarity. These employees can be a detriment to your company if they are demotivated or performing poorly. You need fresh new employees to keep motivation high and to also enjoy fresh new ideas and new perspectives that keep your business growing.

Too high, however, and you will incur unnecessary costs. Recruitment costs, onboarding costs, and training costs all add up. Then there is also the issue that employees won’t reach their maximum productivity levels until six months to a year into their new position.

 

How Can You Improve Retention of Valuable Employees?

There are two main ways you can improve the retention of your high-performing employees.

  1. Provide Growth and Advancement for High-Performing Employees
    You must give employees a future with your company. Anyone working in the same position without any chance to grow or progress is going to start to falter. By building in means for employees to take on new responsibilities and grow their career with you, you give high-performers ample reason to push themselves harder.

  2. Improve Your HR Strategy
    HR are not just there to handle the recruiting process and payroll. Their work, when done effectively, can help you understand the human capital of your organisation. This includes issues like turnover rate and also can help you understand a high-performing employee from a low-performing employee. These are more complex issues, however, and can only be conducted once you improve the productivity and efficiency of your HR team.

    Improving HR productivity is one of the first steps to understanding your turnover and making your turnover work for you. How digital HR can boost productivity is a free-to-download whitepaper that provides a critical framework to boost your own company’s productivity and potential.

 

Discover how Digital HR can Boost Productivity - DOWNLOAD OUR WHITEPAPER NOW

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