The turnover rate is an important HR controlling indicator. Together with the other influencing factors used in your calculation, it will give you anoverview of personnel movement in your company. High staff turnover often signals a need for action on the part of HR and in terms of employee retention.
What exactly is staff turnover?
How to work out staff turnover – different approaches, one goal
The BDA and Schlüter formulas explained in simple terms
Is your staff turnover rate high or low?
Staff turnover in various industries
Staff turnover has a negative effect on costs
High staff turnover and its causes
What Exactly Is Staff Turnover?
Staff turnover, also called the 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 the employee turnover is important. 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 an Excel template to help you calculate your turnover rate
Different Forms of Turnover
Experts distinguish between
- natural turnover (retirement, death, etc.),
- internal turnover (transfers) and
- 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 to Work Out Staff Turnover – Different Approaches, One Goal
Once you know what your company’s turnover rate is, you will be able to take targeted action to improve it. Therefore, employee turnover is an indispensable indicator when it comes to successful HR controlling.
Staff turnover is an indispensable HR controlling indicator.
You can use various different formulas for your employee turnover calculation. Two of the most commonly used are the BDA and the Schlüter formulas. Download an Excel template for your staff turnover calculation The two formulas use different reference values and will obtain differing results. If you 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.
The BDA and Schlüter Formulas Explained in Simple Terms
In order to explain the formulas by way of a practical example, we will use 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: 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.
Turnover Rates in Various Industries:
- 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% recruitment advertising costs
- 10% other selection and recruitment costs
- 50% introductory training costs over the first year
- 2% 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 the 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.
Download This Excel Template to Help You Calculate Your Turnover Rate
This Excel template allows you to easily calculate your turnover rate by simply entering your employee headcount at the beginning and at the end of the period in question. The formula it contains will automatically calculate your turnover rate according to the BDA and Schlüter formulas.