Tracking These 3 People Metrics Helps Reduce Turnover Rate

Welcome to the world of HR, where one of our biggest challenges is trying to reduce turnover. You probably know firsthand the pains of high employee attrition rates: the time-consuming nature of training new hires, lagging team productivity as priorities shift, and mitigating damage to company morale.

That’s why it’s so important to minimize turnover as much as possible. Luckily, we’ve compiled a list of people metrics for you to track to help reduce voluntary turnover, all while keeping your people happy and engaged.

Why You Should Know Your Employee Turnover Rate

In HR, turnover – or employee attrition – is the term used to reference when employees leave a workplace. There can be voluntary turnover (when people pursue a new opportunity or retire) or involuntary turnover (which includes lay-offs and termination).  

Regardless of the cause, high turnover rates are a major concern for businesses because:

• High employee turnover can hurt your budget. In fact, it’s estimated that employee turnover costs a company 3-9 months salary on average per replaced employee. 
• Finding new employees is time consuming. The costs of employee turnover go far beyond dollars and cents. Notably, the hours spent posting job openings, screening applicants, scheduling interviews, and hiring candidates add up to an average time-to-fill of 42 days. 
• Turnover affects your people. Whenever someone leaves – voluntarily or involuntarily – it disrupts your entire organization. And we’re not just talking about your org structure. Repeated employee turnover leads to burnout from employees left to pick up the slack… which eventually affects productivity and employee morale. If turnover becomes a regular phenomenon, discontent, fear, and mistrust can ripple throughout your workplace quickly, putting your company culture at risk.

Want to learn more about employee turnover?

Read our 101 guide here

First: How to Calculate Turnover Rate

Like other HR initiatives, employee turnover is something that you can (and should) minimize using people metrics and data.

If you’re ready to tackle turnover, calculating your company’s turnover rate is a great place to start. This popular people metric simply refers to the number of employees that leave an organization in a given period of time. Using the ratio below, with either monthly or annual numbers, you can better understand the rate at which your employees move through the employee lifecycle:

Your answer to this equation serves as the first step to minimize risks of turnover down the line. If your turnover rate is higher than you’d like, you’ll want to use other people metrics to help reduce it.

What’s Considered a High Turnover Rate?

You should always work towards reducing your voluntary turnover rate, as high attrition is usually reflective of internal problems or poor company culture. And as a part of that process, it’s important to know what is considered a high rate (and what’s just normal) when it comes to your people metrics.

Unfortunately there’s not a clear-cut number, since employee attrition rates ebb and flow (hello, Great Resignation). But you can collect and track data to know where your own metrics stand. Routinely ask the following:

• How are you doing compared to industry benchmarks? You’ll want to start comparing your turnover rates to other companies in your industry. Then it’s time to get more granular. Within that industry, how does your voluntary turnover compare to organizations your size? In the same country? In the same state? 
• How are you doing compared to your internal benchmarks over time? You want to make sure you’re reducing turnover, regardless of where you are in relation to the industry benchmark. That’s because, even if your voluntary turnover is within a comfortable range, a 5% spike indicates something is amiss – and you need to dig deeper.  

Metrics to Help Reduce Voluntary Turnover

Measuring key contributors to voluntary turnover – such as employee engagement, professional development opportunities, and productivity –  arms you with the holistic insights needed to create an environment in which people want to stay.

1. Employee Engagement

Employee engagement has a large hand in turnover and attrition. In fact, Gallup reports companies that score in the top 20% of engagement, where employees are challenged and motivated to come to work, have 59% less employee turnover than other businesses where engagement isn’t a priority.

While they may seem subjective, people metrics like eNPS rate exist to help quantify your employee experience.

ChartHop’s robust custom surveys allow you to create and distribute eNPS surveys to your employees.

Use the surveying tool employee net promoter score (eNPS) to collect feedback from employees. Ask employees to rank their experiences on a sliding scale from 0-10 around company culture, brand mission and values, career pathing, and managerial support. Then, divide responses into the following groups:

• 9-10: Promoters – Highly engaged employees
• 7-8: Passives – Neutral employees
• 0-6: Detractors – Disengaged employees

From there, you can plug-in your results into the formula to calculate eNPS Rate:

How It Helps

Using your eNPS rate in conjunction with written feedback provides a comprehensive understanding of engagement. These insights allow you to examine initiatives more granularly and address specific issues that might be directly affecting your turnover rate.

When collected, measured, and shared in one place – such as a people operations platform – eNPS rates enable org-wide transparency into your strengths and weaknesses, fueling everyone to address engagement issues and create a culture that supports their professional goals.

Looking for other methods to measure and address employee engagement?

Here’s 7 ways how

2. Professional Development and Career Pathing

Opportunities for growth and promotions motivate people to stay. Yet, 43% of employees report leaving their jobs due to a lack of clear career pathing.

One powerful people metric that can aid in reducing turnover is promotion rate. This metric measures the percentage of employees promoted in a period of time, enabling you to see how your professional development initiatives are performing.

How It Helps

When it comes to turnover reduction, your determined promotion rate allows you to:

• Benchmark accordingly. Using nationwide workforce metrics, you can see how your organization’s promotion rates stack up and iterate as needed. For example, ADP reports that 17.2% of managers are promoted internally, while 15.6% are new hires. Use statistics like these to assess your own internal promotion rates and set new goals.
• Strategize with precision. Inspect your promotion rates more granularly. With a modern people operations platform, you can quickly see promotion rates for specific departments, managers, and teams, so you can understand where career pathing is working, and where it’s not.
• Prioritize diversity and inclusion. Using an all-in-one platform can also help you pinpoint DEI discrepancies in your professional development strategies. From there, you can make decisions that fuel equity and equality across your organization.

Use your people operations platform to slice and dice your data to determine any strengths and weaknesses when it comes to your promotion rates.

3. Employee Utilization

Employee utilization rate is another strategic people metric for reducing your employee attrition rates. It’s used to calculate how much individuals are working in a given period of time to better gauge productivity. 

In order to measure employee utilization rate, you need a time-tracking tool or employee feedback to know how many hours your employees spend on projects and tasks. Then, you can plug these numbers in to the formula below to determine your utilization rate:

How It Helps

Quantifying your employees’ bandwidth helps you avoid problems that can lead to turnover. So while you may be worried about employee burnout, your utilization rate could actually indicate your people are experiencing “bore-out,” which is when an employee doesn’t have enough to do.

For example, say Demitri spent 20 hours working on a project. His utilization rate for that 40-hour workweek is at 50%; he has 50% of his time to spare. If this rate continues, it indicates he might not be challenged on the job. Alternatively, Samantha spent 60 hours on a different project that week. She is working at a 150% utilization rate which, over long periods of time, is unsustainable and runs the risk of leaving her burnt out.

Knowing your employees’ bandwidth inside and out can aid in resource planning and task allocation to keep everyone working at reasonable rates and ultimately mitigate the risk of turnover.

Putting People Metrics to Work

No matter how your company changes and grows, tackling turnover should always be a top priority. The cost of turnover adds up, so it’s important to recognize the red flags and strategize ahead of time to prevent attrition before it happens.

Luckily, people metrics can help. Examining contributors to your employee attrition rates, like engagement, promotion rates, and utilization rates, can help you get strategic in ensuring tenure. And when you analyze these metrics in a people operations platform, you’ll have the holistic insights to create a data-driven employee retention plan that works for you.

Looking to make the best decisions for your organization? Of course you are. Learn from Even Financial, who decided they needed a comprehensive system to provide accurate reports to get it done.