The Different Types of Turnover
The Different Types of Turnover

The Different Types of Turnover

Voluntary vs. Involuntary Turnover

Regardless of business type there are two main types of employee turnover: voluntary and involuntary. Within each of those categories, however, you’ll find various reasons for why a company might have employee turnover. While the term “turnover” sometimes has a negative connotation, not all turnover is bad. For example, when a poorly performing employee is let go and replaced with someone who is motivated and excels at their job, productivity can soar. This new worker can bring bottom-line benefits, as well as provide an overall boost to team morale.

What is involuntary turnover?

Involuntary turnover includes layoffs or reductions in force and terminating poorly performing employees. The first type of involuntary turnover would be considered undesirable because it can reflect on the company’s management and financial operations. The second would be more positive for the business as we outlined above.

What is voluntary turnover?

Voluntary turnover is when an employee leaves a job, whether that’s because they got another job elsewhere, took an internal transfer or retired. These types of turnover are typically more expensive to businesses because they often involve the loss of a high-performing employee.

How to calculate and monitor employee turnover rates

The calculation of turnover is pretty easy. You simply divide the number of employees who left the company for whatever reason by the total number of employees you started with. This number would be the percentage of turnover. You can calculate involuntary turnover, voluntary turnover and total turnover.

Example
Say you start off the year with 100 employees. During the year, five employees quit, and seven are laid off. The voluntary annual turnover rate for the year would be 5/100 or 5%. The involuntary turnover rate was 7/100 or 7%. Adding the two numbers together would give you the total turnover rate of 12%.

The downside of employee turnover

Unfortunately, the downside to any turnover is that, regardless of the means of departure, replacing any employee is expensive. The Society for Human Resource Management (SHRM) estimated that the average cost to replace a salaried employee is around six to nine months of that employee’s salary. With an employee who earns $30,000 per year, that replacement cost would total between $15,000 and $22,500 in recruiting and training costs. Now, think about that calculation as it pertains to your executive suite. You can see how replacing many hourly, or just a handful of high-level, salaried employees can be a real budget buster. Use our turnover calculator to see just how much employee turnover is costing your organization.

4 ways to stop undesirable turnover of employees

If you find that your business is experiencing an unusually high level of undesirable turnover, you can look at a few factors.

  1. Assess your management
  2. As the old adage says, “People don’t leave companies, they leave bad managers.” If you notice that a lot of attrition is occurring in a certain department, it’s important to evaluate the managers to see what’s going on.

  3. Look at overall engagement
  4. How’s the morale at the company? If it’s less-than-great, maybe it’s time to take a hard look at taking measure to improve it.

  5. Do employees have what they need to get their jobs done?
  6. It’s disheartening to work at a job when you don’t have the tools you need to be successful. Make sure each employee has everything they need.

  7. What are competitors offering that you’re not?
  8. If your salaries are lower than your competitors’ or they’re offering some killer benefits that you’re not, it’s time to figure out what you’re lacking. Compare upward adjustments in salaries or offering retention bonuses to the cost of losing your best employees to the guy down the street and you might find that it actually costs less.

Get our guide for more insights on what’s causing your employees to leave, and strategies to use to boost retention.

Paycor Can Help

If your company needs help with managing your turnover or if you need to simply get a handle on it, give us a call. Our Workforce Insights can help you determine where the trouble areas are and give you the tools to help stop the bleeding.


payroll compliance guide

More to Discover

Emergency Sick Leave for Childcare: What Employers Need to Know About FFCRA

Emergency Sick Leave for Childcare: What Employers Need to Know About FFCRA

The Families First Coronavirus Response Act (FFCRA) is a big part of the government response to the current public health crisis, offering emergency sick leave and paid family medical leave to those affected by Coronavirus. Take a look at our guide on managing employee leave scenarios.The FFRCA doesn’t just apply to employees who are directly affected by the virus—those who are infected, caring for the infected or quarantined. It also puts in place measures for the parents or guardians of children whose schools or day care facilities are closed due to the pandemic.These measures will apply from April 1, 2020 through December 31, 2020. How Does the FFCRA Work for Parents? If an employee has been on payroll for at least 30 days and cannot...

Essential Business Letter (Template)

Essential Business Letter (Template)

Many states and cities are imposing complete or partial lockdowns, with most businesses forced to temporarily shut their doors or move to remote work and only “essential businesses” unaffected. This has left many employers and employees asking what exactly counts as an essential business.Download Essential Business Letter Template What Counts as an Essential Business? On March 19, the Cybersecurity and Infrastructure Security Agency (CISA, overseen by the Department of Homeland Security) issued guidance on what business count as critical infrastructure. Some businesses are obviously essential—hospitals, pharmacies and law enforcement. The list is extensive—other essential businesses include stores selling supplies which allow people to...

Paycor's COVID-19 Command Center

Paycor's COVID-19 Command Center

We're excited to announce the release of Paycor's COVID-19 Command Center, a new analytics solution that delivers instant insights for crisis management. With the COVID-19 Command Center, you'll be able to: Prepare with real time insights Plan with actionable data Respond with the help of HR experts Recover quickly by playing the long game now Discover how your organization can make the best possible decisions with real time data, actionable insights and expert HR counsel.

Webinar: COVID-19 Summit - LIVE DEMO: See Paycor's COVID-19 Command Center - 4/23/20 @2pm ET

Webinar: COVID-19 Summit - LIVE DEMO: See Paycor's COVID-19 Command Center - 4/23/20 @2pm ET

Join Paycor’s Senior Product Manager, Kelly Silverman, for a live demonstration on how Paycor is providing HR leaders with the technology and expertise to help them prepare, respond and recover. The demonstration will highlight how Paycor Analytics and HR Support Center can offer the data and resources HR leaders need to mitigate risk and reshape business strategy.Speaker: Kelly Silverman Kelly Silverman is Paycor's resident benefits and HR marketing leader. An HCM industry veteran with a strong product and marketing background, Kelly’s responsibilities include driving the go-to-market strategy for benefits and analytics to Paycor’s customer base.Thursday, April 23, 2020 2pm ET