Employee Turnover and Role of HR

Employee turnover refers to the number or percentage of workers who leave an organization and
are replaced by new employees. Employee turnover rate is the term used to describe the
percentage of workers that leave a company and need to be replaced within a certain period of
time. People join and leave companies this isn’t new. There are many causes why someone could
leave your organization. Some reasons are nothing to be worried about as they are largely
unavoidable. However if your workers are leaving due to unhappiness at work or continuously
finding yourself notice underperforming employees organizations have a problem.
Computing employee turnover can be helpful to employers who want to observe the reasons for
turnover or evaluate the cost- to-hire for budget purposes. In the perspective of human resource
management, turnover or staff turnover or labor turnover is the rate at which an employer loses
employees. It specifies the time period employees tend to stay. Turnover is measured for
individual companies and for their industry as a whole. High turnover may be damaging to a
company’s productivity if skilled workers are frequently leaving and the worker population
contains a high percentage of trainee workers.
Higher turnover isn’t necessarily a symbol of a failing economy. Employees leave their jobs so
because they are more confidence in the job market or well financial stability. Employers can
also benefit in the form of a more healthy and talented pool of job applicants. Turnover can cost
up to several years of an employee’s compensation, depending on the type of job and value of
the employee.
Hiring new personnel takes time and money posting job opportunities, interviewing candidates,
training new employees, as well as losing valuable business relationships and intangible
experience are all costs businesses would rather avoid if possible. Meanwhile remaining team
members are stretched thin when roles go vacant, and productivity suffers as a result.
Understanding why turnover matters and how to measure it is a lesson every business must learn
early on. Analyzing turnover to reveal organizational deficiencies and illuminate avenues for
improvement is an ever-evolving art form with which businesses can only hope to keep up with
through constant reassessment and self-evaluation.

Forms Of turnover
Turnover can yield many forms. It can be classified into “internal” and “external”. Internal
turnover contains employees leaving their current positions and taking new positions within the
same organization. Internal turnover might be moderated and organized by usual HR tools such
as an internal recruitment policy or proper train planning. Internal turnover called internal
transfers is generally considered an opportunity to help employees in their career growth while
minimizing the more costly external turnover. External influences include local economic
conditions and labor market conditions.
Voluntary Turnover:
“Voluntary turnover is a type of turnover that occurs when employees willingly choose to
leave their positions”.
Employees might elect to vacate their jobs for a number of reasons. They may feel
unhappy with their position or their return, they may be looking for a career change or
they may possibly have accepted another offer. While involuntary turnover typically
involves employees certainty let go for poor performance, voluntary turnover often
involves capable employees leaving their positions. As a result voluntary turnover can be
very expensive for an organization because of the costs associated with recruiting and
hiring a new employee.

Turnover rate:
The term ‘employee turnover rate’ refers to the percentage of employees who leave an
organization during a particular period of time. People usually include voluntary resignations,
dismissals, non-certifications and retirements in their turnover calculations. They normally don’t
include internal movements like promotions or transfers.
Voluntary Turnover rate is the percentage of employees leave the organization or firm voluntary
because they Find new job or because of any other reason.

How to Calculate Employee Turnover:

To calculate voluntary turnover rate divide the number of voluntary separations by the average
number of employees during the period and multiply by 100.
Voluntary Separations / Average number of employees × 100 = Voluntary Turnover %
Avg no. of Employees = (Number at beginning of period + Number at end of period) / 2
If you have 45 employees at the start of the year and 55 at the end and 5 employees left voluntary
during that year, your annual turnover rate would be:

Now that know how to calculate employee turnover rate using a basic formula you can calculate
your company’s turnover and come up with a number. But what does your number actually
mean? How do you know that your turnover rate is high or low?
One method is to match your company’s turnover rate with the average rate within your industry.
Once one compare his company rate with industry he can reach some conclusions. If turnover
rate is higher than industry average, it probably means management is not as effective as it could
be. So, probably want to identify and address some internal issues.
Although managers and employers fear turnover a turnover rate of zero is unrealistic. People will
without doubt leave at some point to retire, move or because of changing circumstances in their
lives. Keep an eye on rates ensuring they stay within healthy industry and location ranges.

Analyze Employee Turnover:

A business additions slight from its turnover analysis until it has determined what contributes to
employee turnover and why those figures may be too high or too low. For example, first-year
turnover rates often help to determine whether recruiting firms are satisfactorily select
candidates, advertisements are conveying accurate job description data, or rival firms are stealing
hires after training. To better understand employee turnover, all have to do is answer three
questions:
 Who are the employees who leave?
 When do they leave?
 Why they are leaving?

Who Leaves?
Even if turnover rate is lower than industry’s average there’s no reason to celebrate unless
Management can identify who leaves. If organizations top performers are leaving, then
management should take immediate action otherwise organizations performance will decrease.
On the other hand if low performers are leaving you could stand to gain by enjoying better
employee commitment, productivity and profits.

When Leaves?
Keeping track of when people leave can be very useful. For example new hire turnover rate can
offer a lot of understanding. First it can tell whether recruitment methods are working. If a
significant number of new employees leave because they found their job duties different to or
more complicated than what they were expecting organization should consider revising job
descriptions. Investing more time and money developing orientation process could help too, if
employees leave because of cultural mismatches. Organizations could also consider offering
other employee engagement programs like parental leave or flexible working hours if employees
struggle with work-life balance.

Why Leaves?
When organizations know why employees leave they can change company’s management style
or strategies in answer. Exit interviews are a valuable way to see that people give similar reasons
for leaving or whether they offer useful suggestions for how you can improve. For example,
employees often say they decided to resign because their input and effort were not appreciated. If
you hear these kinds of comments in your exit interviews or in performance reviews, HR should
work with managers to consider changing performance appraisal processes
Causes of Employee Voluntary Leave:
The management is the fundamental to any organization’s success. The management is
responsible for providing leadership, noticeable and dynamic support and proves commitment so
that continual improvement is implemented throughout the organization. One mistake HR
professionals and managers make is to undertake people leave only on the basis of their
unhappiness with their compensation packages. Many factors can cause discouraged employees.
Some of those reasons are as follow:
1) Working Conditions:
The critical working environment is one of the major causes of employee turnover in
organizations, where employees are frustrated with the providing working conditions.
Employees take to work in organizational situation that is enjoyable. When organizations
fail to provide a good working environment, employees tend to look for other
organizations with good working conditions.

2) Lack of growth:
Some employees feel “stuck” in their job and don’t see a system to have upward
movement in the organization. Applying a training strategy and developing a clearly
defined route to job growth is a way to struggle this reason for leaving.

3) Work-life imbalance:
Increasing with economic weights organizations continue to demand that one person do
the work of two or more people. This is particularly happens when an organization
downsizes or rearranges causing in longer hours and weekend work. Employees are
forced to choose between a personal life and a work life.

4) Another job:
In some cases separation archives indicate when an employee is leaving voluntarily for a
different position. Employees Leave when they find better opportunities and places in
other organizations. This type generally relates to someone who has already accepted a
new position and is planning on moving away from the current employer.

5) Management:
Many employees cite management as their reason for leaving. This can be recognized
managers not being fair or playing favorites, lack of or poor communication by
managers, and unrealistic expectations of managers. The reason is simply that they don’t
get along with their boss. If your employees feel like their manager’s expectations are
 unclear, that they are not treated with respect, or that you don’t provide adequate training
and resources then employees leave.

6) Workload:
Some employees feel their workloads are too heavy, resulting in employees being spread
thin and lacking satisfaction from their jobs and possibly lack of work-life balance as a
result. We know that some people will move or perhaps their family situation changes.
This type of turnover is normal and expected.

7) A poor match between the job and the skills of the employee. This issue is directly
related to the recruitment process. When a poor match occurs, it can cause frustration for
the employee and for the manager. Ensuring the recruitment phase is viable and sound is
a first step to making sure the right match between job and skills occurs.

Importance of Employee Turnover for Organization:

Employee turnover is one of the most important and commonly used HR Practices.
Employee turnover is usually mentioned in a negative context. This is because of the high
costs related to high turnover rates. A high employee turnover rate is an expensive problem.
When employees leave, a company has to replace them with new hires. Replacing employees
costs a lot of money. According to The Society for Human Resource Management (SHRM)
research, direct replacement costs can reach as high as 50%-60% of an employee’s annual
salary, with total costs associated with turnover ranging from 90% to 200% of annual salary.
The reason why replacing employees costs so much money becomes much clearer when you
consider all the expenses associated with employee replacement. First, you need to find and
hire new employees. Then you have to onboard new hires and train them. You should also
count in the ramp up time. Inexperienced employees tend to be less productive. Not to
mention the time wasted to find, hire and train new employees until they are fully productive.

How to reduce voluntary turnover (Role of HR):

HR department in an organization play a crucial role in the reducing employees turn over and
employees retention. These efforts may include employee training, promotion opportunities,
issuing bounce and improving work polices, procedure and conditions. The HR department is
responsible for leading, indorsing, and implementing strategies during restricting. Even with
the fact that reorganizations ensuing from falling profits are unlikely to provide increase in
salaries, such reorganizations might provide their employees with other benefits or incentives
such as additional work time off, work schedule flexibility or on-site opportunities.

 Create an environment that encourages confidence and communication. Give your

employees new tasks or greater responsibility with their current tasks. This
 demonstrates that you trust your employees and feel that they are competent to
complete the assignment. When the task is completed, give them feedback and
appreciate them.
 Give employees a goal and recognize a job well done. You can do this by helping
your employees develop a career plan. Ask them where they would like to be
professionally in one year, two years and five years. Then help your employees set
goals to reach these professional levels. Give them incentives this will help
employees to feel more invested in and happy with their jobs, causing them to be less
likely to leave.
 Invest in employees help the professional training and tools they need to succeed. If
an outside training course is needed or new office equipment would increase
efficiency, make the investment. This action on the part of the company makes the
statement that your employees are valued. When people feel appreciated, they are
more apt to stay.
 See that employees or not stressed and overburden. Sometimes companies add too
much responsibility or pressure to existing employees instead of hiring new people to
share the load. This attempt to save money can unintentionally backfire, causing
dissatisfaction in your current employees. Hire new employees and divide the work to
employees.


Role of HR:
Here are some areas which are covered by HR department. Some of them are as follow:
• Exit Interview: Everybody needs a job for their living and for their future prospectus. So
no employee leaves his/her job without a reason. If an employee wants to leaves his/her job
and resigns from his present work then it is the responsibility of the HR department to
interview the respective employee and find out the reason for leaving the job and the
organization immediately. There could be various reasons for the employee to leave.
• Finding Reason for Leaving: Finding the reason why an employee is leaving the
organization is very important and should be known for avoiding future employee exits. It is
really very difficult to recruit the right candidate and train him once again. Check the track
record of the employee who wishes to move on. It is really important for the management to
retain those employees who have the potential and are really important for the organization.
• Hiring the Right Resource: The HR person must certify that he is hiring the right
employee who actually fits into the position. Hiring the right person for right job is the
central of HR. A right person doing the wrong job would never find his job interesting and
certainly look for a change. Every employee has been assigned responsibilities according to
his specialization and interest.
• Reward the Performers: The HR must introduce several incentive arrangements for the
top performers to motivate them. Employees feel important for the organization and struggle
hard to perform even better the next time. The employees who show potential should be
awarded with cash prizes profitable bonuses and certificates to make the individual stand
separately from the others.

• Employee Motivation: The human resource department must conduct motivational

activities at the workplace. Organize various internal as well as external trainings which help
the employees to learn something extra apart from their routine work. Make them participate
in additional activities important for their overall development. Encourage them to interact
with each other so that the comfort level increases.
• Job Rotation: The HR along with the respective team leaders must monitor their team
member’s performance to certify whether they are enjoying the work or not. The employees
look for a change only when their job becomes boring and does not offer any growth or
learning. Job rotation can be one of the effective ways to retain employees.
HR professional must try his level best to motivate the employees, make them feel special in
the organization so that they do not look for a change.