Want to track your employee retention? Learn how to calculate your company’s staff turnover rate.
You can calculate your employee turnover rate by looking at the average number of workers who exit your business during a specific time period and are replaced by new staff.
Your business should monitor and track its employee turnover to gauge how appealing your company is to employees. It can also help you improve areas that may be causing workers to leave your company.
Your employee turnover rate helps you evaluate your risk of an employee leaving and recognize opportunities for retention when you hire new employees.
A survey by iHire revealed the latest 2019 employee retention statistics. This includes the fact that 75% of employees in the U.S. do not stay at their jobs for more than five years. The finding indicates job-hopping is becoming far more common. It was once a liability. But not in today’s candidate-driven labor market.
2019 Employee Retention Statistics
One of the biggest drivers for this trend is a booming economy. This includes a 50-year low unemployment rate of 3.5%. It is the lowest since 1969. There are more job openings than there are people to fill them. Which by the way is responsible for U.S. businesses losing $1 trillion every year due to voluntary employee turnover.
In the past few years, employee retention has become an increasingly prevalent issue for companies, with several studies pointing to the different reasons your employees may be leaving.
Just last year alone, the Work Institute’s 2019 Retention Report found that 41.4 million U.S. workers left their jobs in search of better opportunities, equating to a 27 percent voluntary turnover rate.
By 2023, this number is estimated to increase to 35 percent. The Work Institute conservatively estimated that the cost to lose a U.S. worker is $15,000.
As the economy improves and more job opportunities appear, workers are growing increasingly restless. According to research conducted by ADP, more than 1 in 4 people change jobs annually – an unprecedented frequency of job switching. Moreover, ADP found that 63 percent of the average employer’s workforce is open to leaving for a new job at any time, and 46 percent would leave for a job that paid the same or less than their current position.
So, how can employers find and retain top talent? Sreeni Kutam, division vice president of major account services at ADP, said the findings boil down to two philosophies in conflict with one another: “me vs. we.”
Employee turnover costs money.
A 2012 study by the Center for American Progress shows that it costs a business roughly one-fifth of an employee’s salary to replace that employee once they’re gone.
These costs show up in obvious and subtle ways.
They show up in the hard costs of hiring a new person (what’s involved with advertising, interviewing and screening). They surface in the training and management time spent onboarding a new employee. More subtly, but no less significantly, these costs also show up in the time it takes a new hire to reach a predecessor’s productivity.
The more turnover a company has, the more these costs eat away at the bottom line. While there’s no way to eliminate employee turnover completely, here are five strategies that companies can implement to make it the exception and not the rule: