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Turnover Rate

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What is turnover rate?

Employee turnover rate is the amount of employees that leave your organization in a specified amount of time. Usually, it is calculated by year, but the amount can fluctuate during different quarters. For example, in both retail and restaurant industries, many part-time workers return to school in the Fall, increasing turnover rate during Q3. 

Why should you pay attention to your turnover rate?

High turnover rates not only reduces morale but also cause disorganization in your business. Being understaffed affects your workflow, causing managers to delegate more work and hours to employees. Poor communication and scheduling problems are a lead cause of employee turnover, especially in shift-based industries. Learn more about turnover rate here.

Forecasting your employee turnover rate will allow you to plan in advance, allocating time for recruiting and resources towards training and orientation. If your turnover rate is drastically affected by seasonality, you can prepare for it or apply different incentives to get employees to stay. 

How to calculate employee turnover rate?

To calculate your employee turnover rate, you must set a time period that you want to calculate within. Next, you must have the number of terminations during that period, and the number of employees at the beginning of the period. This is important because you may have hired new staff between January and April that should not be a part of this equation.

Use our employee turnover rate cost calculator here.

Now that you know the costs of your employee turnover rate, it’s time to take action.  You can lower your employee turnover rate by increasing employee satisfaction. One very simple and straightforward way to do this is by implementing better systems and processes for team communication and shift scheduling. Scheduling software has been shown to improve employees’ work-life balance, thus reducing the turnover rate for employers. Our free scheduling software Hyre simplifies team communication and saves managers 10-20 hours a week.

How to Reduce Turnover Rates

The fewer people that leave, the better it is for your budget and your team culture. Lowering turnover rates goes hand-in-hand with improving work satisfaction. This reduces recruiting frequency and saves business costs. In order to improve employees’ experiences, managers need to understand them. Many of the methods below require managers to ask for feedback. In order to get honest responses, managers must build a culture of open communication. Consider conducting an employee satisfaction survey, but also get comfortable having conversations with your team one-on-one.

  • Recruiting and training right: Ask team members for feedback on their onboarding process. Were there any gaps in understanding the role, tasks involved, and workflow? Get feedback from managers on whether new hires were the right fit or how long it takes for them to adapt. As a business grows and changes over time, the onboarding and hiring process will need to as well.
  • Clear, streamlined communication: Pay attention to what questions are asked the most often. Are team members asking to confirm their hours? Is a certain task often unclear? When team managers keep track of what mistakes come up frequently, they can take action to prevent them. This can relate to managing people or tasks.
  • Positive team culture: When managers care about their team and the culture they create, they are setting a positive example for other team members to care about as well. Ask how team members are doing and share personal experiences with them to build a rapport. Invite them to give feedback and empower them to share suggestions that can improve the business. 
  • Competitive pay and perks:  Perks vary depending on the workplace. In addition to salary, some workplaces treat their staff to a meal or have a learning fund they can use after probation. Whether it is having an awesome break room, donating to a charitable cause, or covering healthcare, set aside a budget to take care of team members. Consider conducting a poll to see what feasible options are most popular.
  • Create a rewarding workplace: Challenge your employees with clear goals and reward them for going above and beyond. 
  • Opportunities for growth: Ask team members what their goals are and what they are interested in learning. If their skills and interests are suitable for a different task that fits your business goals, give them opportunities to practice them. 
  • Breaks and flexible scheduling: Give clear guidelines on how team members can book time off, and how long breaks are. This gives team members control over their lives, and managers can spend less time rescheduling if they have this information ahead of time. Hyre’s free employee scheduling software allows employees to set their availability and managers to easily schedule shifts.


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