Defined: Voluntary Turnover vs. Involuntary Turnover
Turnover is a staffing calculation used to determine the rate at which employees leave an organization within a specified amount of time. Looking at voluntary turnover compared to involuntary turnover can help employers hone in on where they need to focus their employee retention efforts. What is the difference between voluntary and involuntary turnover, and what do employers need to know about the two?
What is the Difference Between Voluntary Turnover and Involuntary Turnover?
Every organization will experience turnover in some capacity, but there are two different types of turnover that employers should monitor. These include:
- Voluntary Turnover: Voluntary turnover is a type of employee departure when a team member leaves a role or organization on their own terms, either for a new position, to relocate to a different city, or for another reason. In many cases, voluntary turnover can be especially costly because the departures can be unexpected and result in unfinished projects that require other teammates to pitch in.
- Involuntary Turnover: On the other hand, involuntary turnover is a type of employee departure where a team member is dismissed from a position within a company. This can be the result of many different factors, including poor performance, company cutbacks, company restructuring, a violation of company policies, and more.
How is Turnover Calculated?
Calculating turnover can help HR professionals identify issues with a company’s culture, its recruiting and hiring processes, and other factors that impact staffing. The first step to improving the turnover rate is to identify exactly how often employees are leaving the company. This can be calculated using the following equation:
- Take the total number of employees who left your company within a predetermined time frame (i.e. all employees who left The ABC Company in 2020)
- Divide this sum by the average number of employees in that predetermined time frame
- Multiply this sum by 100 to calculate your turnover rate percentage
E.g. In 2020, 45 employees departed The ABC Company, which averaged 477 employees in that same timeframe.
45 / 477 = 0.094
0.094 x 100 = 9.43%
Why Does Turnover Matter and How Can Employers Reduce Turnover?
Turnover is often expensive for employers and it can have a negative impact on your organization’s morale. Calculating turnover can help HR professionals identify issues with a company’s culture, recruiting and hiring processes, and other factors that impact staffing while at the same time, taking conscious culture to implement policies to improve these problems.
The following strategies are ways in which employers can help reduce turnover:
- Enhance Your Organization’s Onboarding: It’s no secret that onboarding and orientation have looked different within the past year, with organizations conducting both virtually while working from home due to COVID-19. However, orientation typically introduces a new employee to a company’s culture when they join the team and can make a lasting impression. If an employee has a negative onboarding experience, that negativity will likely color the new hire’s perception of the organization. Inversely, a positive onboarding experience has the potential to lay groundwork for a positive, longtime relationship between employer and employee.
- Improve Employee Relations: Before voluntary turnover happens, employers can usually recognize warning signs for disengaged employees. Improving employee relations—which refers to initiatives set forth by a company to help relationships between the employees and their managers—can help organizations retain employees longer and reduce turnover rate. Having good relations with employees can even be good for their mental health and increase productivity. Actionable items include rewarding and recognizing team members and implementing performance conversations through regular 1-to-1 meetings.
- Focus on Retention Efforts: According to the Gallup 2017 State of the American Workplace Report, “51% of employees are looking for a new job or watching for openings." In order to reduce turnover and retain employees, employers should focus on these five key factors, like providing work-life balance, a stable work environment, competitive pay, brand reputation and culture, and the ability for employees to do what they do best.
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