CALCULATING TURNOVER RATES
In its simplest form, turnover is the percentage of separations against the total number of
employees. Therefore, should you want to know the percent turnover among ITS 3’s in your
agency you would determine a specific time period and divide the number of separations by the
total number of ITS 3’s during that time period.
Separations may include voluntary resignations, dismissals, non certifications, retirements and
transfers to other agencies. Separations normally do not include internal movements such as
promotions, transfers, etc.
Depending on what you want the turnover numbers to illustrate you may define “separations”
differently.
For example, if you want to illustrate retention within an agency, division, or classification you
would normally define separation as voluntary resignations since non voluntary separations and
retirements would not illustrate losing employees to other employers.
However, if you simple want to illustrate overall turnover, you may want to include all
separations. If you do include retirements in your turnover calculation, you should note this so it
is clear to whoever is reading the data.
When preparing workforce planning data you need to develop a variety of reports to illustrate
what is happening within your workforce. I would recommend doing a turnover report using
only voluntary resignations and then having separate reports on retirement patterns, external
transfers, and non voluntary separations. You may also want to do some reports on internal
movements if there are issues within your agency that require such data.
There is no workforce planning report that calculates turnover within the state or agencies. It
was a deliberate decision not to include such a report since agencies calculated turnover
differently and there was no one accepted way to do it. To calculate turnover you should use the
report titled “Annual Separation Counts”.
The “Churnover within State Service Report” will give you information on transfers between
agencies.
For internal movements, you should use the “Annual Appointment Counts” Report.
The “Annual Loss Rate” report should not be used to calculate turnover. The data in this report
is simple a calculation of how many employees existed at one point in time compared to another
separations including abolishment of positions, internal promotions, title changes, etc. For
example, if an agency moved all employees in one class to another class due to a reclassification
or title change, the report would show a 100% loss rate. Or if you lost 5 people and replaced
them within the timeframe of the report, this would not show in the numbers. Therefore, this
data is not turnover.
Calculating Employee Turnover Rates
Calculate your turnover rate
For the last 12 month period, add up the number of voluntary resignations. Next divide
by the total number of employees at the end of the same 12 month period.
•
Resignations
= ________
•
Number of Employees
= ________
•
Your Turnover rate
= ________%
(divide resignations by number of employees)
•
Resignations
= 55
•
Number of employees
= 500
•
55 ÷ 500
= .11 or 11%
For Example
COST OF EMPLOYEE TURNOVER
Turnover cost indicates how much turnover is costing and its impact on the operations of
the agency. The cost of turnover includes the direct costs of recruiting new employees
interviewing time, administrative work that is associated with hiring and processing,
training, supervisory time, and overtime that is paid to employees who have to cover for
employees who are no longer there.
For example:
Number of employees………………………………………….500
Annual turnover…………………………………………………11%
Number of employee turning over……………………………….55
Average turnover cost per employee………………………….$1,694
Total annual cost………………………………………………$93,170
Savings from reducing turnover by 5%....................................$ 42,350
(Turnover reduced to 6%; 500 x .06 = 30
55 - 30 = 25 fewer employees turning over
25 x $1694 = $42, 350)
Turnover costs also take into account indirect costs. Research indicates that the indirect
costs of turnover can be 2 to 5 times higher than direct costs. These costs are more
difficult to quantify and assign a dollar figure to, but they are very real.
CALCULATING DIRECT TURNOVER COSTS
Recruiting Costs
Advertising, radio, direct mail, newspaper, etc.
Interviewing Costs (time spent x wage of the interviewer(s)
Interviewing
Reference Checks
Administrative Costs (time spent x wage of administrator(s)
Processing of paper work for newly hired employee
Processing of paper work for exiting employee
Supervision Costs (time spent x the wages of the supervisor/manager
Training Costs
Time spent training (xx hrs) x wage of employee
Time spent training (xx hrs) x wage of trainer(s)
Materials, equipment, job aides
Separation Costs
Average cost of unemployment, separations pay, etc.
Overtime costs to do work of exiting employee
Total for Direct Costs
1998 The People Solution Inc.