Human Resources
Employee Turnover Definition (E)
What is the Employee Turnover Definition? How is Employee Turnover calculated? What is Regretted Employee Turnover?
Posted: Mar 2008
Employee Turnover Definition
Employee Turnover is the number of permanent employees leaving the company within the reported period versus the number of actual Active Permanent employees on the last day of the previous reported period (physical headcount).
The number of leavers, that are included in Employee Turnover, only includes natural turnover (resignations, termination, retirement etc); it does not reflect any redundancies. Planned redundancies are reported and explained separately if relevant for Employee Turnover.
Formula for Employee Turnover rate:
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Regretted Employee Turnover Definition
Regretted Employee Turnover is the number of permanent high potential employees leaving the company within the reported period, versus the number of actual Active Permanent high potential employees on the last day of the previous reported period (physical headcount).
The number of leavers, that are included in Regretted Employee Turnover, only includes natural employee turnover (resignations, termination, retirement etc); it does not reflect any redundancies.
High potential is an employee rated as Meets and Exceeds job requirements and employee who's readiness for the job is Ready for Promotion or Fully owns the job with high performance rating.
Formula for Regretted Employee Turnover rate:
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Reasons of Employee Turnover
There can be one or more reasons for employee leaving the company. Those reasons are related to different factors like job description, salary, organizational culture, local economy, workload, duration on current position, personality etc. One of the predominant reasons for leaving of position is the local economy and ratio of demand for employees and number of employees that are looking for a job. If there are more jobs available, than the employee turnover rate is higher, since employees are trying to get the better offer. The Maslow's Hierarchy of Needs explains the structure of human needs. If they are not fulfilled, the employee will look for the environment that will satisfy his/her needs.
Healthy Employee Turnover
The Exit Interview shows the reasons of the employee turnover. The employee turnover should be managed by the company in order to keep it at acceptable level. The certain employee turnover is desirable, since the new employees are more motivated and open to demands of their job.
Old employees gives experience, but at same time they tend to be more resistant to change and new requirement. The healthy employee turnover depends from the company organisation and business objectives, but anything up to 5% on annual level is acceptable. Too high employee turnover may cause organizational problems, while to low or no turnover is causing lack of idea generation and resistance to changes.
Recommended Reading:
Employment: Hiring Process
Exit Interview
Staff Turnover and Movement on Positions
