Now that you’ve calculated the employee turnover rate for your business, you’re probably thinking about whether this number is good or bad.
Due to multiple variables, there’s no one turnover rate that’s either all good or all bad for businesses. It depends on your business type and who they’re losing.
Understanding Your Business Type
For service-providing businesses like hotels, fast food restaurants, and retailers, a high employee turnover rate is standard. These businesses usually rely on students as part-time employees before moving on to another career once they graduate.
However, a high turnover rate can be disastrous for businesses whose employees require high training or education. The company spends lots of money on training new employees only to watch them leave after a short while. Then, the company is forced to spend more money to recruit and train new employees.
Understanding Your Employees
Employers must determine which employees they’re losing. This piece of information would help them to decide whether their calculated employee turnover rates are good or bad.
The above equation can calculate employee turnover for specific reasons, like lay-offs, resignations, and retirements. Employers can use this to figure out which employees are regularly walking away to adjust their work environment accordingly.
If all of their lost employees were, in fact, laid-off due to bad performance, this increase in turnover rate isn't bad at all. It just means they’re leaving behind lousy employees who were getting in the way of business performance.
It’s different, however, if the company loses valuable employees only to see them move on to other companies. That should be cause for concern.
In this case, employers might want to improve the working environment. For example, they can offer bonuses or facilitate professional developments to enhance their employees' business satisfaction and ensure they stay on as their employees.
Business owners and HR personnel might also find it useful to analyze when employees leave exactly. If, for example, it's only a few months after they’re hired, this might mean that the new hires didn't find what they expected of working in the company.
A perfect fix for this would be looking into and adjusting the job descriptions in their advertisements. Employers can also invest in a proper training program for their newest employees. This will work to facilitate their initiation and help them get the hang of their new role’s responsibilities.
It should also be mentioned that your business's employee turnover rate should be taken in the proper context. For example, losing ill-qualified workers might be considered a win for the company. Yet, the same number of leaves can be a debilitating loss if you lose highly qualified workers.