Understanding and Improving Turnover Rate

A key role of any organisation’s HR department is to understand and manage the turnover rate of employees. Losing good employees is just too expensive. Managing turnover goes beyond simply calculating the turnover rate and trying to hit an arbitrary number. When business leaders see turnover as an indicator of workplace culture, leadership effectiveness, and more, the entire workforce can prosper. To read the pulse of a company’s culture, begin with the turnover rate.

How Turnover Impacts Business

A massive two-thirds of Australian businesses have seen turnover increase in the last three years according to recruiter Robert Half. With the cost of backfilling roles estimated at 20% of that position’s salary and 40% of total separations occurring within an employee’s first year, it’s no surprise that business leaders are eager to curb turnover by any means necessary.

Keep in mind that a “healthy” turnover rate, just like the cost of turnover, varies greatly across industries and even across one company’s own diverse departments. While turnover is an organic part of running any business, it can be potentially damaging if it’s not understood. There’s no way to completely prevent any employee’s separation, but savvy leaders and HR teams know that mitigating unnecessary departures requires a close, innovation-minded look at overall workplace culture. The new wave of employee retention is all about diversity, happiness, flexibility, and benefits.

First, tracking voluntary versus involuntary separations is an essential first step in understanding why employees are leaving your company—and your key to keeping good talent. OrgChart has several clear visualisations of relevant turnover metrics to pinpoint strengths and weaknesses within your organisation:

Terminations and separations

Turnover ratio

Tactfully and compassionately addressing any employee’s exit is vital for the health of your whole organisation, from ensuring that private data is secure to maintain a good culture within the former employee’s team.

Some practical, actionable advice for improving unwanted turnover:.

Good hiring practices
- Retention starts with recruiting, as many of the world’s biggest and most valuable companies have already realised. Implementing smart interviewing and hiring practices is your first step to curbing unnecessary turnover.
Unique benefits
- Companies are getting increasingly creative with employee benefits, even beyond paid holidays and good health insurance options. Think transportation assistance (like subsidised bus passes and indoor bike parking), subsidised c, and support for continued education.
Healthy culture
- Workplace culture is more important than ever—and it doesn’t mean office parties and ping-pong tables. Real, change-making cultural shifts include allowing workplace and schedule flexibility, focusing on diversity and inclusion, and driving a culture of appreciation and communication.
Career advancement and mobility
- Neglecting to encourage or even allow for internal movement of employees is a recipe for disaster. Check out our in-depth look at workplace mobility here.
Exit interview and “stay conversations”
- While exit interviews are an indispensable source of information regarding separation, many employers are implementing proactive “stay conversations” to bolster retention. Why do quality employees feel at home at your company, what’s working or not, and what are the challenges are they facing? Listen and take action before issues become insurmountable.
Let it go
- Remember that turnover is inevitable, even if your business is a fantastic place to work. Life happens. When an employee decides it’s time to move on, the best you can do is ask for their feedback, let them go gracefully, and show them that you’ve appreciated their contributions. Embittered exits contribute to a toxic workplace and can put a stain on everyone’s record.