Turnover refers to how many people join and how many leave. Turnover can tell us a lot about how employees feel, how stable the team is, and whether there are issues with company culture. But not all turnover is the same – there are different types of turnover that we should take a closer look at.
1. Voluntary Turnover
Voluntary turnover occurs when employees leave the company on their own. The reasons can be varied: a better job offer, a desire for a career change, dissatisfaction with management or the team, or simply personal life circumstances.
Here’s the deal: A high rate of voluntary turnover can be a sign that something in the company isn't right. Are the working conditions less than ideal? Are there enough opportunities for advancement? How is the work environment? You should take a close look here to understand why employees are leaving.
2. Involuntary Turnover
Involuntary turnover means employees leave the company because they are forced to – in other words, they are fired. This can happen for various reasons, such as financial difficulties within the company, poor performance, or company restructuring.
In this case, a high rate of involuntary turnover could indicate inefficient processes in hiring or employee management. If many people need to be let go, it might suggest they either don't fit well with the team or aren't receiving enough support.
The 3 Most Important Questions About the Turnover Metric:
1. How is turnover calculated? The formula is simple: Turnover rate = Number of departures during the period / Average number of employees during the period ×100
An example: A company has 100 employees in a year, and 10 of them leave. The turnover rate would be 10%.
2. What is a "normal" turnover rate? Turnover varies by industry and company. For example, in hospitality and retail in Germany, turnover can be as high as 50% due to many part-time and temporary workers. In more stable industries like finance or IT, turnover tends to be around 10-20%.
3. How do you interpret the turnover rate? A high turnover rate can indicate issues within the company – such as a poor work environment or lack of advancement opportunities. On the other hand, too low of a turnover could also be problematic if the team isn't dynamic enough and new ideas aren't coming in. So, it's important to find the right balance!
How Can You Optimize the Turnover Rate?
Improve working conditions: Employees often leave because they don't feel appreciated or the work-life balance is off. With flexible working hours, attractive benefits, and a positive company culture, you can ensure employees are more likely to stay.
Offer career opportunities: A common reason for voluntary turnover is that employees don’t see opportunities for growth. Invest in training programs and provide internal promotion options.
Effective onboarding and coaching: The first few months are crucial in determining whether new employees feel comfortable. A structured onboarding program and regular feedback sessions help address misunderstandings early and retain employees long-term.
Conclusion
Turnover is an important indicator of a company's health. Through conscious leadership, creating attractive working conditions, and promoting career opportunities, you can positively influence the turnover rate. Sure, some employee turnover is natural – but too much turnover is usually a sign that something isn't quite right within the company. As such, this metric is a key indicator of your company's success that you should proactively monitor in detail.