How do you calculate staff turnover and analyse staff turnover?

The staff turnover rate enables a company to know how it is renewing its workforce. This indicator shows HR managers the quality of their human resources management. Our article gives you the formula for calculating turnover in your organisation.

But this rate alone cannot explain the frequency of employee departures or the arrival of new employees. The labour market differs from one sector to another. Follow our advice to analyse your turnover rate and reduce it. We'll also show you the tools you can use to improve the management of your HR data.

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Definition of turnover

Turnover is a term widely used in the workplace to describe the turnover of employees.

Although turnover is a term widely used in everyday language, human resources managers actually calculate the rate of staff turnover in a company over the course of a year.

This staff turnover rate is a strategic indicator for the company, as it reflects the state of health of your organisation.

You need to know how to interpret this indicator in a specific context, and according to identified factors.

A company's staff turnover can depend on :

• the number of employees leaving the company
• the number of new recruits arriving,
• staff transfers,
• the abundance or shortage of labour,
• working conditions,
• the HR policy applied,
• the social climate,
• company growth,
• the sector of activity,
• the economic context
• the environmental context
• the political and legislative context,
• the disappearance of professions
• the emergence of new professions.

The formula for calculating staff turnover

Here's how to calculate the staff turnover rate for a given year, in stages:

• Step 1: Add up the number of departures and arrivals over the course of the year, and you get a result of A ;
• Step 2: divide this number A by two to obtain a result B;
• Step 3: divide this number B by the number of your employees at 1 January of the year, to obtain a result C;
• Step 4: multiply this number C by 100 to obtain the turnover rate expressed as a percentage.

The formula for calculating turnover for a given year is :

[[(number of departures + number of arrivals)/2]/number of employees at 1 January of the year] X 100

= staff turnover rate in %.

Let's apply the turnovercalculation formula to an example:

Dupond has 600 employees on 1 January 2018.

During 2018, 70 employees were hired and 50 employees left the company.

Calculation of Dupond's turnover rate for 2018

= [[(70 + 50)/2]/600] X 100 = [[120/2]/600] X 100

= [60/600] X 100

= 0,1 X 100

= 10 %

Dupond's staff turnover rate is therefore 10%.

This means that the company has renewed 10% of its staff.

Another simplified method of calculation:

staff turnover = number of departures in the year/average number of employees

This method of calculating turnover is used in some HR dashboards.

It is applied when each departing employee is replaced by a new entrant.

Analysing your turnover rate: stop preconceived ideas!

Beware of preconceived ideas and pitfalls in interpreting your data. Staff turnover is an important indicator for the human resources organisation.

However, it should not be considered in isolation. If you do, your reasoning will be flawed.

In the majority of cases, a low turnover rate reflects a good HR policy. A high staff turnover rate can be interpreted in two ways: one positive, the other worrying.

So what is an acceptable turnover rate? Here are some valuable tips for analysing turnover in your company.

A low turnover rate: yes, but not too low!

Traditionally, a low turnover rate has been set at up to 5%. A low turnover rate is a sign of good human resources management.

If employees stay with the company, it's because they feel good there. They are satisfied with working conditions and pay.

This phenomenon also reflects a good social climate, where the corporate culture is shared. A good atmosphere reigns, like a fairy tale.

Beware of deceptive appearances. The shop window may be perfect, but behind the scenes there may be some nasty surprises in store.

A low staff turnover rate can mean you're running out of steam, stifling creativity and preventing the emergence of innovative ideas: when you're like a rooster in a pot, why change such a comfortable situation?

A zero staff turnover rate can also prevent you from recruiting outside talent: they may perceive a skewed image of the company, where nothing moves, which can be synonymous with routine and boredom. They may even think that you have to be very senior before you can get promoted.

On the other hand, some administrations have a very low turnover rate due to the fact that civil servants are hired for life.

A high turnover rate can be normal

A company with a turnover rate of 15% or more should be considered to have a high rate. A high turnover rate is normal in sectors that take on low-skilled labour or qualified employees on fixed-term contracts to fulfil an order for a specific period.

This is also the case for call centres. The employment of temporary staff can correspond to an increase in activity, which is quite positive for the company.

Fast food outlets and the mass retail sector regularly employ students looking for temporary and seasonal jobs, as well as temporary staff to carry out inventories or rearrange shop shelves.

In certain areas of the service sector, such as Parisian advertising agencies, the mercato is very lively.

Furthermore, when a company has several retirements in the same year, its turnover rate rises, which is not a negative sign, but simply a normal phase in an employee's life.

A high turnover rate can be problematic

A high turnover rate can simply be explained by job cuts or a massive redundancy plan to deal with economic and financial difficulties.

In other cases, the company needs to look into the factors that are causing large numbers of resignations or redundancies.

Certain indicators can help you identify the causes of staff turnover:

• management that does not comply with employment law
• lack of organisation
• communication problems
• a tense social climate
• poor skills management,
• employee integration,
• the working environment,
• renewal of a temporary contract,
• lack of recognition,
• lack of benefits,
• repetitive tasks,
• too little or too much responsibility,
• health problems,
• lack of professional training,
• lack of experience,
• competition offers better opportunities,
• the competition offers a higher salary, etc.

In addition, a social or economic factor beyond the control of management can explain high turnover :

• new European or global standards requiring the recruitment of experts,
• an increase in tax pressure reducing the possibility of recruiting,
• the disappearance of jobs and the emergence of new ones linked to electronics and digital technology.

Sometimes, priority is also given to investment in equipment rather than people, in order to remain competitive.

Figures and feedback on job rotation

Times change, customs evolve and the job market changes. Here's some information to help you understand how the labour market is changing.

This information will enable you to look at your turnover rate from other angles, and to determine an acceptable turnover rate.

First element: the context.

According to INSEE, the staff turnover rate has increased almost 5-fold in 30 years, and this increase is set to continue.

It is therefore mathematically logical that staff turnover is higher than in the 1990s.

The second factor is the turnover rate by business sector.

Job turnover varies from sector to sector. So compare like with like: look at the figures for your sector to assess your turnover rate. Figures from other sectors will distort your judgement.

Find out more about turnover rates by sector from a major survey by the French Ministry of Labour: here.

Note: it may also be relevant to look at the figures for your sector in France and compare them with those from other countries, whether French-speaking or not, such as Canada, European countries, the United States, etc.

To find an effective employee and keep them, you have to start by finding them. Download our sample job interview grid in Excel format to help you make your selections:

Cost of turnover, processes and tools to reduce it

An abnormally high turnover rate can have serious consequences. The cost of staff turnover can take many forms.

Here we give you some examples of what can go wrong, what you can do to reduce high turnover, and some essential tools to help you do the job.

Consequences and cost of staff turnover

Let's look at the consequences and cost of staff turnover from a number of angles:

• When an employee resigns to strike out on his own or go to work for a competitor, it can encourage other rare birds to leave the nest. Watch out! Talent drain is possible in any organisation;

• Repeated redundancies can give potential talent and candidates a bad image of the employer. Supersonic talent will fly over your company without even casting an eagle eye. Damage to turnover;

• The loss of an employee often results in a loss of experience and operational skills specific to the company's processes: to fill the vacant post, you will have to hire a new person and train them in work procedures, or even in the job and all its specificities. Throughout the integration and training phase, you will feel the loss of earnings;

• Training new recruits takes time. Training new recruits takes time, but who should be allocated this training and support time?

• You know what you're losing, but you don't know what you're gaining: will the replacement or successor do the job, or will he or she be incompetent? If the casting is a dud, you'll lose out. The company loses money;

• Repeated voluntary redundancies or job cuts create a bad social climate internally. Who will be next? When you work with a sword of Damocles hanging over your head, you lose performance and productivity;

• Some departures prevent or delay the completion of strategic tasks for the company. A customer who waits too long for an order to be delivered may cancel the initial contract;

• The departure of a qualified and efficient employee leads to a drop in quality. You have to wait a while before you can get back to an acceptable level;

• Redundancy payments, the costs of sourcing new candidates and the recruitment process: you need to budget for the scale of your ambitions.

Staff loyalty and retention processes

To reduce staff turnover, you need to identify the causes of high staff turnover (see above), and then put in place an action plan to improve your talent management.

An internal survey can also raise previously unidentified issues. Loyalty and retention processes help you to reduce turnover: let's take a look at them.

Retaining an employee means putting together and providing the best working conditions so that they feel fulfilled in the company.

A number of factors have a positive effect on employee motivation, such as :

• attractive remuneration
• comfortable offices
• benefits in kind,
• flexible working hours,
• authorised teleworking,
• bonuses and endowments subject to targets,
• free drinks and fresh fruit, etc.

Initiating a retention process involves doing everything possible to keep an employee who wants to leave the company. Dialogue is then essential to identify the reasons for the employee's announced or "suspected" departure.

Certain arguments retain talent more easily than others. Among the changes to be made, the employee may wish to :

• vary the tasks entrusted to them
• move up the job ladder
• obtain a promotion
• training,
• be paid more,
• telework more because of the long distance between home and work, etc.

HR tools to improve personnel management

Let's now look at the technologies dedicated to human resources managers. These tools make it possible to centralise and automate numerous tasks and facilitate personnel management.

Let's take a closer look at the invaluable help they provide in reducing staff turnover and building sustainable talent management.

GrafiQ

GrafiQ by QuickMS is an HR solution in SaaS mode that helps VSEs, SMEs and SMIs manage their human resources. More than 1,000 indicators and dashboards make it easy to calculate HR performance, so you can get a clear overview and make the right decisions.

QuickMS

The features and benefits of GrafiQ :

• complete monitoring of employee turnover (general turnover rate, by status, by sector, by type of contract, etc.),
• rapid calculation of the exit rate, and monitoring of its evolution,
• the ability to carry out QWL surveys and social barometers to assess well-being in the workplace,
• dynamic HR dashboards that can be customised with filters, by period or by population type, for accurate, real-time monitoring,
• the ability to comment on dashboards to provide analysis.

Thanks to its regular monitoring of staff turnover and its HR performance management tools, GrafiQ enables you to detect any tendency for the social climate to deteriorate quickly, so that you can take corrective action and avoid talent drain.

ServicesRHOnline

First of all, we'd like to introduce you to a tool that's just as suitable for VSEs as it is for much larger companies: ServicesRHOnline. This is HRIS software, a Human Resources Management Information System. It is modular: you can choose only the functions you need.

ServicesRHOnline features and benefits :

• integrated management of annual appraisals, staff appraisals and objectives,
• dedicated skills management tools such as skills maps and personalised training paths,
• an employee management module with individual social reports and leave management,
• a module for analysing employee performance by employee profile,
• tools for building succession or mobility plans.

The wide range of analysis functions and modules makes ServicesRHOnline a powerful tool for skills management, with the ability to create comprehensive individual profiles.

Sirhéos

Sirhéos, the HRIS solution for SMEs, ETIs and large groups. You can choose to use the complete HRIS software or just specific tools. Sirhéos is also a modular software package.

Sirhéos features and benefits:

• a professional interview module that traces an employee's career within the company, including appraisals and annual interviews,
• an employee skills map to compare the employee's wishes with the company's needs,
• a comprehensive talent management module that tracks employee performance and profiles,
• a dedicated training module including needs identification and training planning,
• a customisable dashboard for monitoring the desired indicators.

Through its functionalities, Sirhéos offers human resources managers the opportunity to enhance the company's human capital while taking into account employee performance.

See all software Human Resources (HR)

Good skills management reduces staff turnover

A talent drain is a brain drain. The company can find itself weakened and lose its competitive edge.

Losing sharp skills and know-how means "losing an arm", so to speak, and therefore agility.

The challenge for HR managers is to align employee skills with the company's development strategy.

To strike the right balance, these managers need to consider human capital in its entirety: beyond skills, they need to be able to detect potential and anticipate sources of demotivation and departures.

Good skills management then becomes a real challenge if turnover is to be reduced. Regular reviews and exchanges enable indicators to be defined, so that areas for improvement and positive elements can be identified.

All these indicators need to be brought together in a dashboard to give the HR Director the best possible visibility.

With this in mind, HRIS software centralises all the information gleaned from professional interviews.

Equipped with customisable dashboards, these tools become indispensable to the HR manager for identifying the risks of essential talent leaving the company and reducing staff turnover.