The flow of employees who pass through a company and for whatever reason end up leaving in a short time can be an indication that there are problems that need attention. Also known as turnover , this high turnover of professionals is a point to be considered mainly if the corporation is trying to attract new investments, get a loan, just plan its future or even sell the business.
Importantly, while staff turnover takes place, the expense of recruiting good new talent, onboarding and training them to replace those casualties continues. That is, the impact of turnover is significant; Its effects are felt in the productivity, in the company’s income and in the satisfaction of its collaborators.
Possible causes for turnover
The biggest mistake organizations make is trying to summarize the high turnover rate in a simple concept to measure whether their employees are happy or not, many believe that it’s just about money. When, in reality, there are many reasons that can generate unhappiness.
A survey carried out by the Stanton Chase International consultancy revealed that workers value well-being in the work environment more than career growth prospects and their own salary. The feeling of belonging and relationship among peers were also mentioned values, followed by a range of attractive benefits such as health plans for the family, fair food vouchers and/or meal vouchers.
The main cause of turnover scored was having to work with direct managers with unrealistic expectations or poor leadership skills: when the employee feels that management does not notice what is being done.
Negative effects on everyday life
As we mentioned above, every time the company has a downturn, what is called the domino effect happens: it is necessary to use resources in recruiting, hiring and training a new employee . At best, even when there is no real expenditure on this movement, there are certainly no profits. Gaps in the team leave fewer members to do the work, this increases time to deliver and meet targets, and productivity simply drops.
Even if the pace of production is not affected, it will certainly be at the expense of an overload of work by other employees to fill this void. And it doesn’t just happen while a position is vacant – that deficiency doesn’t completely dissipate until the new person is at 100% capacity, which will take some time. This increases the stress levels of the entire team, which can lead to the withdrawal of even the most competent workers, after all, even they cannot handle all demands alone.
From an administrative point of view, high turnover impacts the strategic growth of the business because instead of investing in important areas that generate profitability or prestige, a lot of time is wasted worrying about the maintenance of the departments in relation to so many losses and replacements. Left unchecked, turnover can become a never-ending problem that will eventually drive the organization to failure.
How to calculate your company’s turnover
The first step in calculating the employee turnover rate is to survey current data to accurately account for it.
It is worth separating the data according to the strategic areas for the company, for example:
By department;
By business units;
By branches;
By hierarchical levels;
For time at home.
Generally speaking, this is the most basic way to get this average:
Number of professionals leaving the company in the period of interest ÷ Number of professionals active in the company in the period of interest = Turnover rate
For example, Acme Ltd lost 40 employees last year when a new competitor attracted most of them. During the same period, Acme hired an average of 500 professionals. This means that the company’s turnover was 8%.
The measurement is usually annual when you are interested in reporting the turnover of the company in general. However, it is also possible to restrict the measurement focus to more specific time periods, such as when calculating by department, for example. This can draw attention to people leaving certain parts of the business more.
Some data needed to estimate the cost of turnover
High turnover is bad for business. Having mapped where, in fact, the failures are “hidden”, the change process becomes less complex.
Make a list of the indicators below:
- Salary average + benefits of the professions that ask for the most dismissal from the company;
- Average number of days the position will remain open until filled;
- Average salary of the manager responsible for recruiting and selecting candidates ;
- Estimated advertising cost for the open position;
- Estimated hours spent screening resumes;
- Estimated hours spent interviewing;
- Total days that a leader will take to train the new employee;
- Number of working days in the first 3 months of the new hire.
Some companies, however, need to deal with this reality
It is important to recognize that there are companies and types of work that have higher turnover rates than others. Construction companies, for example, often see workers come and go, as the work is hard, has a degree of danger and can be inconsistent.
Because of the pressure, sales positions and customer service jobs are also very common areas for high turnover anywhere. Sellers usually live on commissions on sales made and when they realize they are not generating an income compatible with expectations, they easily choose to search for better options. For the customer service representative, stress is the biggest complaint as they have to deal with the – often negative – demands of customers. This produces exhausting journeys, and it is not uncommon for many of these professionals to leave their jobs because of burnout and other syndromes.