When calculating the costs of doing business, an employer must always take staff turnover into account. Turnover is defined as the ratio of the number of employees who leave the business, either voluntarily or involuntarily, to the total number of people on staff. It is usually expressed as a percentage. In April, 2009, in the U.S. private sector, the highest turnover rate was in construction--7.0 per cent--and the lowest was in education and health services--2.5 per cent.
Decide whether you are going to calculate monthly, quarterly or annual turnover. Typically, business with a high turnover rate will use a shorter time span than businesses with a lower turnover rate.
Determine the total number of people, on average, who were employed during that time frame. This is not the total number of positions available, but rather the average number of positions that were filled.
Determine the total number of voluntary and involuntary separations over the course of the time period. This will allow you to calculate and compare values for total, voluntary and involuntary turnover.
Divide the number of separations by the average number of employees and multiply the result by 100. For example, if you have an average of 200 employees over the course of a month, a total of 10 involuntary separations and a total 40 voluntary separations, the turnover would be: Voluntary = 40/200 = 0.2 _100 = 20 per cent Involuntary = 10/200 = 0.05_100 = 5 per cent Total = 50/200 = 0.25 = 25 per cent
In some cases it may be beneficial to calculate turnover using the total number of employees hired in a given period instead of the total number of separations.
Tips and warnings
- In some cases it may be beneficial to calculate turnover using the total number of employees hired in a given period instead of the total number of separations.