How Do We Determine a Healthy Turnover Rate?

Dear Number, Please:

A “healthy” turnover level depends on the damage it causes to your business.

For example: If your business is losing a higher proportion of top performers, it will be worse off than if lower performers were jumping ship. In other words, aside from the number of employees your organization loses, the type of employee lost potentially has a greater impact.

Also, keep in mind that all your employees will at some point leave the organization because they retire or resign. You can minimize the adverse impacts of unplanned losses by ensuring each key role has a person who is ready now (or ready soon) to take over. Or by providing documentation to help people quickly learn key aspects of the role.

To determine a healthy level of turnover, first identify your high-value employees (high performers, senior leaders, technical specialists and similar roles). Monitor their turnover relative to their employment numbers. For example: Let’s say that 14 percent of your employees are classified as high performers, yet high performers account for one-quarter of all turnover. This means you obviously have a problem and should take steps to learn why top people are fleeing your organization. Find out why they leave and what would make them stay, aiming to boost retention of your best people.

Second, use a rigorous survey of exiting staff to determine the percentage of resignation factors you can influence (lack of career development, conflict, adverse manager practices). Compared it to factors you are unable to change, such as retirement, career change or family-care issues. Benchmark yourself against those “influence-able” factors and address them, measuring your progress each year. Healthy turnover will increasingly mean that you are losing employees for whom there is nothing more you can reasonably do to retain.

Every organization should expect unplanned losses. Organizations that remain healthy take steps to redeploy staff, quicken the up-skilling of new staff, or ensure that key tasks are not confined to a small number of employees.

SOURCE: Lisa Halloran, Retention Partners, Sydney, Australia

LEARN MORE: Getting to the Heart of Retention discusses the challenges a company faces in keeping high performers, which experts say poses the greatest threat from turnover.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.