Structurally high employee turnover is history
Structurally high employee turnover is a problem for organisations. Excessive employee turnover incurs considerable costs and can even impact matters such as business continuity and customer satisfaction.
Through advanced statistical analysis, an employee turnover analysis identifies risk groups, helps gain insight into the causes of employee turnover, predicts how this turnover will develop and where it will occur.
In short, by applying HR Analytics, organisations get the tools they need to prevent employee turnover!
What is employee turnover?
Strictly speaking, any employee leaving the company counts as employee turnover. However, the departure of some employees is more problematic than others. In particular, unwanted / regretted employee turnover needs to be managed. Unwanted employee turnover occurs when an employee who performs well leaves the organisation, where the organisation would have preferred to retain this employee.
Causes of employee turnover
The literature identifies many causes for employee turnover, including, for example:
- a lack of development opportunities
- a lack of appreciation
- an excessive workload
- an unpleasant working atmosphere
- insufficient remuneration
- a lack of inclusiveness.
Causes that apply in one organisation, however, may not apply in another. Also, a certain factor may impact one organisation heavier than another.
For these reasons, it is important that organisations use People Analytics to gain insight into the at-risk groups and the causes of (unwanted) employee turnover. Once these at-risk groups and causes are identified, structural solutions can be found.
Calculating employee turnover
Employee turnover is a popular theme within HR. For some organisations, however, it is more urgent than for others. A 5% employee turnover would be a bigger problem among highly trained engineers working on a very specific and complex product than among shelf stackers, for example.
Before starting an advanced statistical analysis of employee turnover, it is important to gain insight into some employee turnover figures. Employee turnover can be calculated by answering several questions: ‘How much turnover is there?’; ‘How much of that turnover is unwanted?’; ‘Which employee groups show the highest employee turnover rates?’; and ‘What are the costs of employee turnover?’ The following formula can be used to chart annual employee turnover:
Number of leavers/ ((number of employees at the beginning of the year + number of employees at the end of the year) /2)
Costs of employee turnover
Direct and indirect costs obviously play a role in calculating the costs of employee turnover. These include hiring costs (e.g. for advertisements, assessments, interviews and screening); training costs (i.e. the training and the training hours of managers and colleagues); temporary replacement costs (e.g. additional overtime costs to fill the temporary staffing gap); and loss of productivity (it usually takes 1 to 2 years for someone to achieve maximum productivity).
As a rule of thumb, unwanted employee turnover can cost up to twice an annual salary.
People Analytics applied to employee turnover
If an initial exploration reveals that the costs of employee turnover in your organisation are getting out of hand, it’s time to deploy People Analytics to address the issue of employee turnover.
People Analytics provides your organization with the insights necessary to effectively deal with employee turnover! A People Analytics process always follows eight steps. Read more about the analysis process on this page.
One or more types of analysis can be performed:
- Diagnostic analysis: This type of analysis maps and ranks the groups at risk of employee turnover, identifies the causes of employee turnover and ranks these causes in descending order of impact. This analysis answers the question: ‘Where to start?’
- Predictive analysis: This type of analysis is used to make a prediction about expected employee turnover for the entire population or a subset of the population. Based on this prediction, proactive action can be taken to prevent employee turnover. The analysis provides answers to questions such as: ‘Will the trend of employee turnover increase or decrease and, if so, by how much?’; ‘What is the likelihood of employee turnover occurring in a particular group of employees in the coming period, and how high will this turnover be?’
- Prescriptive analysis: What are the chances that an applicant, when hired, will still be working for the organisation after a certain period of time, and how do these chances compare to those of the other job candidates? This analysis helps in hiring the right people and thus in preventing employee turnover.
Interested? Feel free to contact us!
Gido van Puijenbroek
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