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Employee Turnover Explained: What It Is And How To Manage It

man sitting alone in an office

Employee turnover is an invisible issue that most managers tend to neglect. But if you want your business to succeed, you need to understand employee turnover and be able to manage it for the better.

Because this is often easier said than done, the talent-management experts at Sling have created this article to introduce you to the concept of employee turnover and give you tips for decreasing it in your business.

What Is Employee Turnover?

man working extra hours because of employee turnover

Employee turnover (the shortened form of employee turnover rate) is a metric used to describe the number of employees who leave a business during a specific time period.

We’ll discuss how to calculate turnover in the next section, but before we do that, let’s take a moment to examine its two subcategories: voluntary and involuntary.

Voluntary Employee Turnover

Voluntary turnover is when an employee chooses to leave their job for any reason, including:

If you neglect to address the issues your team members are dealing with, your voluntary turnover rate will be high and you’ll lose more high-performing employees than you’ll retain.

Involuntary Employee Turnover

Involuntary turnover is when an employer chooses to terminate an employee. As with voluntary turnover, involuntary turnover happens for any number of reasons, including:

Understanding the difference between voluntary turnover and involuntary turnover comes down to viewing the issue from the employee’s perspective, not management’s perspective.

If they are the one who does the leaving, it’s classified as voluntary turnover (even though you may not want them to leave).

If you — as management or ownership — initiate the process of termination, it’s classified as involuntary turnover (because the employee probably didn’t want to lose their job).

Now that you understand the concept, let’s discuss how to calculate the metric so you can proceed to control it for the better.

How To Calculate Employee Turnover

business owner calculating employee turnover

To get the best feel for your turnover rate — and to see where you stand in relation to other businesses — base your metrics on the formula that the Bureau of Labor Statistics (BLS) uses to calculate the annual national percentage.

Here’s their formula:

NOTE: They use “departures” (or “separations”) to refer to the total number of employees who have left or been fired.

Employee Turnover = (Number Of Departures / Annual Average Number Of Employees) x 100

So, for example, if 150 million people held a job at the start of a given year and, at the end of the year, 50 million people left for a different job, the employee turnover rate would be:

Employee Turnover = (50,000,000 / 150,000,000) x 100

Employee Turnover = 0.33 x 100

Employee Turnover = 33 percent

The BLS also calculates employee turnover every month within a yearly cycle using the same formula.

For example, if 150 million people held a job at the start of February of a given year and, at the end of February, 4,175,000 people left for a different job, the employee turnover rate for that month would be:

Employee Turnover = (4,175,000 / 150,000,000) x 100

Employee Turnover = 0.0278 x 100

Employee Turnover = 2.78 percent

You can customize this formula to analyze your own turnover rate in a variety of situations, including:

  • Annual turnover
  • Monthly turnover
  • Voluntary turnover (per year or month)
  • Involuntary turnover (per year or month)

While the calculations listed above lump voluntary and involuntary turnover into one large number, you can separate them out to get a more nuanced picture of your business.

How To Manage Employee Turnover

man and woman working in a restaurant

1) Hire With Business Culture In Mind

The first step in controlling turnover is to hire with business culture — not just skills — in mind.

A good fit in this regard matters more than you might think because it’s the “day-to-day” life of your team. If a team member isn’t a good fit, they are far less likely to enjoy their time at work.

As a result, their relationships and productivity will suffer, and they will be more likely to leave or cause problems that would lead you to fire them.

2) Onboard New Employees Successfully

A successful onboarding process is a set of steps that eases new hires into their work environment so that their first days and weeks aren’t such a shock.

You may already have some form of onboarding process in place, but make sure it includes the following information and activities:

  • Communicate often with your new hires before their first day
  • Tell them what to expect when they arrive
  • Create a good first impression
  • Give new team members a resource that answers common questions
  • Provide plenty of structure
  • Give new employees time to get integrated

For more information on how to set up a successful onboarding process, check out this article from Sling: Onboarding Checklist: How to Onboard Your Employees the Right Way.

3) Encourage Teamwork

coworkers preparing food in a restaurant

Encouraging teamwork helps reduce turnover by allowing team members to experience intangible benefits that they can’t find anywhere else, including:

  • Novel ideas
  • Better morale
  • Improved efficiency
  • Group cohesion
  • High-quality work
  • A sense of accomplishment
  • More opportunities to learn
  • Less managerial interference
  • Quicker innovation
  • Stronger working relationships

The value of these benefits makes the day-to-day activities in your business more enjoyable and prevents employee turnover from running rampant through your team.

4) Provide The Right Compensation And Benefits

Competitive pay is certainly a significant part of what prevents turnover — and you should definitely pay your team accordingly. But a high pay rate isn’t the only thing that keeps employee turnover low.

Added value and incentives, such as health insurance, life insurance, a 401k, and other fringe benefits, can help motivate team members to stay with your business longer.

5) Give Employees The Recognition They Deserve

Whenever possible, give your team members the recognition they deserve to prevent high employee turnover rates.

This recognition doesn’t have to be a public spectacle. Sometimes, the best, most meaningful validation of a job well done is simply a word in private.

Take the time to make your employees feel like a valued part of your business and they’ll want to work hard for years to come.

6) Conduct Regular Performance Reviews

Few people enjoy sitting through a performance review.

But when you remove the anxiety and stress from the appraisal process, it’s easier to show employees at all levels how to improve and achieve success in your business.

Then, when they feel a sense of achievement in the work they do, they’re more likely to want to stay in that position rather than looking for a new job.

Decrease Employee Turnover Through Scheduling

Sling scheduling feature to combat employee turnover

One of the best ways to decrease employee turnover is through scheduling. The effects of scheduling on turnover are twofold:

  1. Unique schedules act like a fringe benefit of sorts
  2. Flexible scheduling gives your employees more control of their work/life balance

Those benefits make your business more attractive than other businesses that still hold to a 9-to-5 schedule and, ultimately, help you retain the talent you need in your company.

For example, you might choose to implement scheduling options such as:

Regardless of the schedule you choose, advanced scheduling software like Sling simplifies the process of organizing and arranging even the most complicated staff rota.

With Sling, you can sit down, make your schedule in a manner of minutes, and move on to more pressing matters.

All of Sling’s cloud-based features — from schedule creation to time clock to payroll calculations — make it easy for you to create the best schedule possible, distribute it with ease, make changes, and juggle time-off requests.

Sling even provides suggestions and warnings when you’ve double-booked a team member or created a conflict in another part of your schedule.

All of this — and much more — makes Sling the tool of choice to help you manage employee turnover in your business.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit today.

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