Turnover and Retention Rates – part two
July 30, 2020
Written by Courtney Keene:
Last month we looked at Recruiting and Hiring and why it’s important for you to track. This week we’ll look at the flip side, tracking the turnover and retention rates and why that’s equally beneficial. The impact of employee turnover goes beyond just operational inconveniences. It can affect employee morale, productivity, and of course costs. But with the right tools you may be able to mitigate the damage. We’ll uncover what these rates are and how we can use it to your advantage.
- Overall retention rate – Your company’s retention rate will say a lot about the health of your teams, management, departments, and company as a whole. Retention of a positive and motivated employee is very important for the company’s success and productivity.
- Overall turnover rate – The turnover rate can be indicative of problems with everything from specific departments, to the entire company. Conversely, it can also shed light on high rates of employee satisfaction. To make sure you’re getting an accurate view of what’s happening within your company, start tracking 4 things: average employee tenure, positions opened and positions filled, overall turnover rate (broken down into voluntary, involuntary, and high performers), and average turnover due to promotions or transfers.
- Voluntary turnover rate – In addition to tracking how many employees quit, you should use the data from exit interviews to help improve future employee engagement. Ask questions about why the employees leave and if there was anything the company could have done to prevent them from leaving.
- Involuntary turnover rate – Whether from restructuring, poor performance, or just a bad fit for the organization, sometimes workers are let go. This could be due to a mismatch between the job description and the actual job, or the job and/or company has been oversold by the recruiter. Tracking why employees are fired or laid off provides valuable data in case of lawsuits and for unemployment filings.
- The retention rate of top performers – Because the hiring process can be expensive, you should track your top talent retention rate. Finding out what keeps your superstars engaged with your company will help you keep your compensation packages competitive and will show you who your most valuable managers are.
Turnover cost – As we just mentioned, hiring is expensive across the board. If your hiring costs seem excessive, your department should look into it. One reason why hiring costs can be so high is that they can come from many places:
- The amount of time spent filling vacant positions, including overtime spent by co-workers and management, to make up for the loss of labor.
- Time spent on recruiting and hiring tasks like posting on job boards, screening resumes, conducting background checks, interviews, and onboarding.
- Third party recruiting fees for hiring someone to backfill that role if ads don’t produce anyone suitable.
Depending on who you talk to, time and money costs can be a flip of the coin in importance. I always ask companies to rank 3 things before I kick off a new search from most important to least: How critical the role is, How quickly you need someone and The perceived cost per hire. And the least important is the perceived cost per hire, most of the time. By being armed with stats and data on your time to fill and history of turnover rate you can already overcome those two objections whether it be from a potential new hire looking to join your company or a recruiting firm you’re potentially interested in partnering with.
Armed with the kind of insight that can come from tracking your recruiting, hiring, and turnover metrics, your hiring department can make great strides in improving the hiring experience for everyone involved, save time and money, and provide exceptional value to your company. For guidance on what metrics will most benefit your organization, contact BRIX today.