What is turnover rate?
Turnover rate: Employee turnover rate in a given period of time (Month/Quarter/Year). This index is calculated based on the number of employees who quit their jobs over the average number of employees in the same period.
What impact does Turnover rate have on business?
In general, most businesses want to minimize employee turnover, which means a low Turnover rate. But in many cases, a low or zero turnover rate is not enough for a business to assess its performance and human resource policies. Sometimes it is like your body is sick without you knowing it. However, every result has two sides: benefits and lossesi.
Benefit:
- Eliminate incompetent and bad-attitude staff.
- Opportunity to get creative ideas from new hires.
- Ensure salary fund
Damages:
- Shortage of staff affects processes and operational performance.
- Reduced work quality because new staff are unskilled and need time to adapt.
- It costs time and resources to recruit and train new employees.
- Cost of recruiting new staff.
- Affecting the psychology of other employees, easily leading to mass resignation due to crowd psychology.
What is a good Turnover rate?
There is no mandatory standard Or what statistics prove that what is a good turnover rate, it depends on the business's performance and the specific industry/field of operation.
Turnover rates tend to be low in low-stress (leisurely) jobs, and high in high-stress jobs (such as KPI-driven sales jobs). This is especially true for businesses operating in the BPO (Business process outsourcing) this rate is often quite high compared to the general level.
According to the survey, most businesses choose the ratio Turnover rate ranges from 5-10% is ideal.
Formula for calculating turnover rate.
Monthly turnover rate = [L/Avg] x 100
In there:
- L (Left): Number of employees quitting in the month
- B (Beginning): Number of employees working at the beginning of the month.
- E (End): Number of employees working at the end of the month
- Avg (Average): average number of employees in the month = (B + E)/2
For example: Your company had 100 employees on February 1, 2020. During this time, 20 employees left, and the company hired 30 new employees. What is the turnover rate?
- Calculate Avg = (100 + 110) = 105
- Calculate the turnover rate = [20/105] x 100 = 19.04%
=> So the company's unemployment rate in February is 19.04%.
Methods to reduce turnover rate.
Appropriate and timely adjustments are the "salvation" solutions for many businesses when facing the risk of high employee turnover rates. Here are some methods that can be applied to improve this situation.
1. Review and improve welfare policies.
Conduct a review of the company's welfare mechanisms for gaps using research methods based on thinking and employee opinion surveys. Analyze and propose welfare policy solutions that are suitable for human resource needs within permitted conditions.
2. Create competition and training programs.
Offer competitive programs related to work, helping employees have more motivation to strive and opportunities to improve their income.
Develop training programs to improve the qualifications/skills of employees, taking place throughout their working process at the company. Help employees see the company as a place worth working and studying.
3. Develop and implement internal cultural communication programs.
This is one of the most important activities that most businesses in Vietnam are not paying attention to. Investing in internal communications is investing in developing and promoting corporate culture, connecting employees in a sustainable and long-term way. This activity requires perseverance and long-term but brings about expected results with much lower investment costs than other improvement options. These activities give employees confidence in the brand they are attached to, help them have more motivation and excitement in their work, and help each individual in the company get closer together. This brings about extremely effective employee retention.
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