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What Is The Best Way To Calculate Staff Turnover?

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Your staff turnover rate is an important indicator of success for just about any company. That’s because it tells you so much about how your company is performing, both internally and externally.

Together, with other influencing factors, knowing your turnover rate can give you an insightful gaze into personnel movement within your organization.

Keep in mind: A high rate of staff turnover often signals a need for action on the part of HR, and in terms of figuring out a way to optimize employee retention (click here for more on that topic).

Personio’s helpful reports function can offer every key HR indicator at the touch of a button. Click here to learn more.

What Is Staff Turnover?

Staff turnover, often referred to in terms of a ‘turnover rate,’ specifies the level of personnel movement in a company. This can include both employees leaving the company as well as internal and employee-initiated transfers. For this reason, the perspective from which you calculate employee turnover is critical.

Calculating the turnover rate for individual departments is just as important as considering the company as a whole. For example, a high employee turnover rate in a single large department may be a sign of poor management. If a company’s turnover, natural fluctuation aside, is above average, the cause may be the behavior of the company toward its employees.

Download this helpful template to help you calculate your own turnover rate today

Are There Different Forms of Staff Turnover?

Experts commonly distinguish between the following types of turnover:

  • Natural turnover (retirement, death, etc.)
  • Internal turnover (transfers)
  • External turnover (dismissals and resignations)

Early staff turnover is a topic in and of itself. You should always consider this particular subcategory of external turnover separately in your turnover calculation. The higher the turnover rate is, the more likely it is that there are issues in either your employee selection or integration process.

How Do You Determine Staff Turnover?

Once you know what your company’s turnover rate is, you can take action to improve it. Therefore, your employee turnover rate is an indispensable indicator when it comes to successful HR controlling.

Staff turnover is an indispensable controlling indicator for HR.

You can use various formulas for your employee turnover calculation. Two of the most commonly used are the BDA and Schlüter formulas (Try downloading this helpful template for your staff turnover calculation).

These two formulas use different reference values and will often reveal differing results. That in mind, if you do plan to calculate and compare your turnover rate over the long term, be sure to always use the same formula. This is the only way that you will be able to obtain reliable comparison values.

BDA and Schlüter Staff Turnover Formulas: Explained

In order to explain the formulas by way of a practical example, we will start by using the figures below. You can choose what time period you would like to consider. It is perfectly possible to assess staff turnover on a monthly basis, or you could choose to use a quarterly or annual calculation. Employee headcount at the beginning of the period: A 120 Average headcount during the period: 119 Departures during the period: 14 employees (voluntary departures) New hires during the period: 12 employees

The BDA Formula

The Confederation of German Employers’ Associations advocates the use of the BDA formula. It uses the classic method of comparing the number of employees leaving the company with the average number of employees. Turnover rate = voluntary departures/average headcount during the period * 100 Turnover rate = 14/119 * 100 = 11.76%

The Schlüter Formula

The Schlüter formula does not use the average headcount but instead considers the number of employees at the beginning of the period plus the new hires. In doing so, it considers the headcount as a key date value. Employees leaving the company represent a time period value. Turnover rate = departures/(headcount at start of period + new hires) * 100 Turnover rate = 14/(120 + 12) * 100 = 10.61% Innovative HR software solutions can help you work out the turnover rate and automate this process.

How to Calculate Employee Turnover Automatically in Personio

Personio allows you to automatically display the staff turnover broken down by department, month and reason for leaving.

Employee Turnover Rates By Industry:

  • Telecommunications 18.01%
  • Financial services, banking 17.69%
  • Trade, wholesale 17.35%
  • Chemicals 16.14%
  • Consumer products 15.18%
  • Services, media 13.83%
  • Logistics 13.08%
  • Automotive 12%

According to this list, staff turnover in telecommunications is relatively high compared to the automotive sector. This is caused by industry-specific influencing factors, such as call centers, which are characteristic of the telecommunications industry. These have a negative effect on the general turnover rate. Considering call center staff turnover in isolation significantly changes the results and thus the conclusions that can be drawn from this indicator.

If you are having trouble collecting the necessary data to determine employee turnover, you should invest in your data quality as a matter of urgency. Modern HR cannot function without data.

Since each industry is subject to its own unique influencing factors, an industry-specific comparison of turnover rates or even separate calculations for individual service sectors within an industry makes a lot of sense. Only companies operating under similar conditions can provide you with meaningful information.

  • Employee requirement profiles are similar in terms of qualifications.
  • All companies in the industry face similar labor market conditions.
  • Companies share similar corporate structures (call centers, logistics centers, research laboratories).

Staff Turnover Has a Negative Effect on Costs

The loss of employees always comes at a cost. The extent of these costs depends primarily on the required qualification level of the employee. The costs involved in recruitment, training, and loss of expertise are directly related to the requirement profile for the position.

If a high achiever leaves the company, the costs involved will amount to approximately 120 percent of their annual salary.

  • 30% is accounted for by the under-performance of the departing employee during and after their decision to leave the company, any leave of absence they take, overtime by colleagues, temporary personnel, etc.
  • 30% of recruitment advertising costs
  • 10% other selection and recruitment costs
  • 50% of introductory training costs over the first year
  • 2% of administrative costs

If you keep a constant eye on your turnover rate, you will be able to take targeted action to improve it or preemptively make sure that it stays as low as possible.

Is Your Staff Turnover High or Low?

Your turnover rate is a key indicator that can give you important long-term information on employee turnover. In industry-specific comparisons, it can tell you whether your company’s staff turnover is within the normal range. As shown in the examples below, the turnover rate within individual industries can vary considerably.

High Staff Turnover and Its Causes

The causes of employee turnover have been intensively researched for a long time. Nevertheless, all of the current theories have some shortcomings. There is, however, a discernible trend to the overriding motivations that cause employees to leave a company:

  • Affective reasons such as corporate image.
  • Rational reasons such as a salary that is too low, an excessive workload, or a lack of opportunities for further development.
  • Employee dissatisfaction due to bad management or neglected HR work.
  • The employee’s personal career plans.
  • Shock-induced motivations such as the refusal of an expected promotion.

This is just a selection of the possible reasons for a company’s high employee turnover. However, if you know your turnover rate and you know the causes, you have a very good chance of being able to reduce staff turnover by taking targeted action.

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