Employee Turnover / Employee Churn

Employee turnover or churn refers to the percentage of employees that leave an organization and are replaced with new employees over a specific period of time. Many organizations analyze their employee turnover to determine the overall costs of staffing.

Employee turnover doesn’t always imply a negative trend within a company. Turnover varies across organizations, industries and different company cultures. Some industries normally have a higher employee turnover rate such as the construction and retail industry.

There are two main types of employee turnover:

  • involuntary turnover: also referred to as the termination or firing of an employee. It occurs as a result of poor performance, layoff, absenteeism, or a violation of company policies

  • voluntary turnover: when an employee leaves on their own due to finding another job, relocating, or to manage personal issues

Employee turnover can either be desirable or undesirable. Desirable turnover is when a company is able to replace talent with new, highly skilled employees. Undesirable turnover is when a company loses a poor performer and is able to replace them with a better, higher performing employee.

Companies analyze turnover to better understand the reasons why employees are leaving a company and to implement measures to avoid future loss of high performers. Turnover can result from poor compensation packages, bad management, insufficient time off, or lack of opportunities. It can occur across industries, departments, or between different demographics within a company. Turnover is also measured externally and internally. Companies must continuously look for ways to reduce employee turnover by requesting feedback from employees via questionnaires or exit interviews.

The negative effects of employee turnover are the increased costs associated with continuous training and recruiting efforts. Organizations may experience a lack of productivity in losing their best talent and could gain notoriety within their industry. Companies must, therefore, take proactive measures to avoid turnover including investing in their employees’ future goals and promoting a positive and cohesive workplace.

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