Despite differences in industries, employee headcounts, and company missions, one initiative seems to remain steadfast across the corporate world – tackling turnover.
In human resources, turnover is the term used to reference when employees leave a workplace. It could be voluntary – maybe a person gives their resignation to pursue a new opportunity, or they retire – or involuntary, which includes lay-offs and termination.
Regardless of the cause, turnover is a major concern for businesses, as it can hurt budget, productivity, and employee morale. It’s expensive – SHRM estimates it costs 6-9 months salary on average to replace a salaried employee.
But the costs go far beyond dollars and cents. It’s time consuming, as the hours spent posting job openings, screening applicants, scheduling interviews, and hiring candidates add up to an average time to fill of 42 days.
Arguably more alarming, turnover affects an organization’s most valuable asset: its people. Whenever someone leaves, be it voluntarily or involuntarily, it disrupts the entire org structure. It can also lead to burnout from employees left to pick up the slack. If turnover becomes a regular phenomenon, discontent, fear, and mistrust can ripple throughout a workplace quickly, putting an organization’s company culture at risk.
With ChartHop, you can record terminations and departures right on the org chart.
If your company is suffering from a high turnover rate, it’s time you get proactive about it. Read on for three metrics every team leader and HR professional should know to improve employee experience and reduce high turnover rates.
How to Calculate Turnover Rate
Like other HR initiatives, turnover is something that can and should be minimized 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 are moving through the employee lifecycle:
This number serves as the first step to minimize the risks of turnover down the line.
If your turnover rate is higher than you’d like, next comes using other people metrics to reduce it.
ChartHop’s visually rich people analytics reporting gives you granular insights into your org’s turnover rate.
Successfully leveraging people metrics via a platform like ChartHop gives you deeper insights to mitigate attrition in the future. When you measure key contributors to turnover, like employee engagement, professional development opportunities, and productivity, you’re armed with the holistic insights needed to foster tenure. Here’s how:
1. Employee Engagement
Employee engagement, otherwise known as the employee experience, 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 it may seem like a subjective metric to measure, people metrics like eNPS rate exist to help quantify your employee experience.
ChartHop robust custom surveys allow you to create and distribute eNPS surveys to your staff.
eNPS – which stands for “employee net promoter score” – is a surveying tool companies use to collect feedback from employees. Using a sliding scale from 0-10, employees are asked to rank their experiences around company culture, brand mission and values, career pathing, and managerial support. Responses are then divided into the following groups:
- 9-10: Promoters – Highly engaged employees.
- 7-8: Passives – Neutral employees
- 0-6: Detractors – Disengaged employees.
From there, companies can plug-in their results into the formula to calculate eNPS Rate:
How it helps: eNPS surveys are two-fold: they provide a numerical score, as well as written feedback from employees explaining their answers. When you leverage eNPS rate in conjunction with the written feedback, you gain a comprehensive understanding of engagement. This allows you to examine initiatives more granularly and address specific issues that might be directly affecting your turnover rate.
When collected, measured and shared in a platform like ChartHop, eNPS rate enables org-wide transparency into your workplace’s strengths and weaknesses, fueling everyone to address engagement issues and create a culture that supports their professional goals.
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.
Keep track of your employees professional development and growth with ChartHop’s robust people analytics.
One powerful people metric that can aid in reducing turnover is promotion rate. This metric measures the percentage of employees being promoted in a period of time, enabling you to see how your professional development initiatives are performing.
How it helps: When it comes to reducing turnover rate, 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 percent of managers are promoted internally, while 15.6 percent are new hires. Use statistics like these to assess your own internal promotion rates and set new goals.
- Strategize with precision: Inspect promotion rates more granularly. With ChartHop, you can quickly see promotion rates for specific departments, teams, and managers, so you can understand where career pathing is working, and where it’s not.
- Prioritize diversity and inclusion: Using a platform like ChartHop, you can also pinpoint DEI discrepancies in your professional development strategies. From there, you can make decisions that fuel equity and equality across your organization.
3. Employee Utilization
Employee utilization rate is another strategic people metric for reducing turnover rates.
This people metric is 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 to monitor how many hours your employees are working on projects and tasks. Then, you can plug these numbers in to the formula below to get your utilization rate:
How it helps: Quantifying your employee’s bandwidth can help you avoid problems that can lead to turnover, like burnout — which is when an employee is overworked — or “bore-out,” which is when an employee doesn’t have enough to do.
For example, say Employee X spent 20 hours working on a project. Their utilization rate for that 40-hour workweek is at 50% – they have 50% percent to spare, and if that rate continues, indicates they might not be challenged on the job. Their colleague, however, spent 60 hours on a different project that week. Employee Y is working at a 150% utilization rate which, over long periods of time, is unsustainable and runs the risk of burning out.
Knowing your employee’s 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 attrition, like employee engagement, promotion rates, and utilization rates, can help you get strategic in ensuring tenure. When analyzed via a platform like ChartHop, you have the holistic insights to create a data-driven employee retention plan that works for you.