The Two Different Types of Employee Turnover

There are two different kinds of turnover: voluntary and involuntary. Within each of these categories, there are a number of reasons why businesses experience turnover. Different industries experience different fluctuations, the strength of the economy can dictate hiring and lay off patterns, and many more. Regardless of the reasons or category, it’s important for a business to track and understand turnover. 

What is voluntary turnover?

Voluntary turnover is when an employee leaves a job under their own violation. Perhaps they leave for another job, retire, or transfer to another internal department. Voluntary turnover is typically more problematic because it comes as a surprise, and can take more time and money to fill the position. 

What is involuntary turnover?

Involuntary turnover includes firing under-performing employees, layoffs, or other forced reductions in staff size. Involuntary turnover is still unfortunate, but it can lead to some benefits for an organization. For example, if you fire a bad employee and find a motivated, skilled candidate to fill their old position, productivity and engagement from the entire department will increase. 

How to calculate turnover rates

To calculate your business’s turnover rate, determine these two numbers: 

  • The number of people you employed at the start of the period (A)

  • The number of terminations you had during that period (B)

Use these numbers with the following formula: B / A x 100 = Turnover Rate.

For example, Imagine you run a small business that employees 80 people at the start of the 2nd quarter. During that time period, 6 people quit. With the above formula your turnover rate for the 2nd quarter was 7.5 percent.

The Downside of Any Employee Turnover

Regardless of why an employee leaves your business, finding a suitable replacement is costly. SHRM estimates the average cost to replace a salaried employee is about six to nine months of that employee’s salary. So even if you lose an entry-level employee making about $30,000 a year, finding their replacement could cost about $15,000 to $20,000 in recruiting and training costs. 

How to reduce undesirable turnover

If your business is experiencing an unusually high amount of voluntary turnover, there are a few factors to consider to retain top-performing employees.

  1. Invest in an Onboarding software

Did you know about 20% of employees leave within their first 45 days of employment? An integrated and customizable onboarding process can benefit your business in more ways than one. A guided, structured onboarding process will help you nurture strong employees from day one and help them feel like a valuable part of your business.

2. Do your employees have what they need to succeed?

It’s frustrating to work in a position when you don’t have the tools you need to succeed. Make sure your employee has the tools and knowledge necessary to meet and surpass individual and departmental goals. Not sure how to determine if your employees are set up for success? We can help.

3. Review your management 

While you may think employees leave solely because of a higher salary or better perks, chances are they were unhappy with upper management. It’s likely a combination of both factors, but if you notice one department has an unhealthy level of turnover or unsatisfied employees, be sure to take a look department management to gauge what’s happening. 

4. What are competitors offering that you’re not?

If you’ve lost a number of talented employees to your competitors, it may be time to review your company benefits and salaries. Make sure you express how to maximize the benefits you offer. And even if you can’t match a higher salary, consider offering new-age perks such as flexible work environments, telecommuting, or other creative ways to please employees.