HR Data Solutions

Understanding employee turnover

The Importance of Employee Turnover | HR Data Solutions

Employee turnover is a buzzword in business. Most organizations are tracking employee turnover (what is a high turnover rate?) but when asked how they use that data and how they understand employee turnover, few are able to answer.

First, it’s important to understand your employee turnover metric. What turnover is included in your metric and does it make sense to include those people? What turnover is excluded from your metric, and does it make sense to exclude those people? When processing employee terminations, it’s important to document as many details as you can surrounding the reason for leaving so you have the most meaningful data.

Here, we’d like to share with you in one central place the most common terms used when measuring turnover and the single most effective way to drive improvement in controllable turnover.

Controlled vs Non-Controlled Employee Turnover

A common mistake is measuring turnover over which you have no control (and then focusing all efforts on reducing a high turnover rate); after all, what purpose is there in measuring data that isn’t meaningful? Knowing that you lost three employees during a specific period of time and there’s nothing you could have done to prevent losing those employees doesn’t give you any data that you can use to drive different results in the future.

Generally speaking, turnover reasons like death, permanent disability, or spouse relocation might be considered uncontrollable while most other reasons – like resigned for other employment, concerns about compensation or benefits, or dissatisfied with their work environment would be considered controllable reasons.

Each organization needs to decide for themselves whether performance, behavior, and conduct issues are deemed controllable or not as there are two schools of thought:

  1. The organization is responsible for choosing candidates who will demonstrate the expected standards of conduct and behavior so turnover related to performance, behavior, and conduct is preventable and controllable through more intentional hiring practices;
  2. All organizations will, at times, hire employees who are unable to meet the requirements of the job despite careful screening, so turnover related to performance, behavior, and conduct is uncontrollable or not preventable

Once you have a solid, consistent method for differentiating controllable and non-controllable turnover, you can choose to set your sights on moving the dial for controlling employee turnover and ensure you put your effort and resources where they have the potential to drive change. This will help you increase employee retention.

Voluntary vs Non-Voluntary Turnover

Some companies choose to differentiate voluntary from involuntary turnover. This metric can be important in identifying how many employees who pass your pre-employment assessments and screening processes are unable to meet the requirements of the role. Involuntary turnover can, therefore, help you identify ineffective methods of pre-employment screening and testing.

How to Make Turnover a Positive Impact

Positive turnover is another reason that measuring turnover as an umbrella metric and then aiming to improve it as an umbrella strategy isn’t always an effective use of your resources. Take a look at these scenarios:

  1. An employee in manufacturing has been disengaged for several months and often engages in negative gossip; the organization is struggling to terminate because she has been given positive reviews in the past and her performance exceeds expectations overall. When she resigns, the organization is improved for it.
  2. ABC Landscaping can see the writing on the wall; they’ll need to maintain their current client load with fewer employees in order to make ends meet. Just as they sit down to make a difficult decision about cuts, three full-time employees tender their resignation, stating that they’ve been hired by a competitor in their region. This turnover supported the organization’s financial and operational objectives.

This illustrates further the need to fully understand your employee turnover metrics through a cultural assessment before making a blanket statement.

Download our eBook and learn how to reduce employee turnover today!

When you’re ready to identify the turnover that’s hurting and costing your organization, HR Data Solutions is here for it. Improvement starts with a data-driven approach incorporating an organizational culture assessment. We have the solution you need and are ready to deploy it in your organization today.

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