Employee turnover is a phenomenon that affects productivity, efficiency, and workplace atmosphere in any organization. It refers to employees leaving a job position, either by their own decision (voluntary turnover) or through dismissal or forced resignation (involuntary turnover). What factors influence talent turnover and how can it be prevented?
In this article, we will explain what employee turnover is, how to measure it, and its consequences for human resources and business. Additionally, we will introduce an app designed to help reduce employee turnover and improve talent retention in your workplace. This tool facilitates hiring, recruitment, and monitoring of new employees, creating a positive and motivating work environment for your staff. Want to know more? Keep reading to discover how to prevent this issue in companies with this app.
You may want to read: Theft in the workplace: How to prevent it during the hiring process.
What is Employee Turnover?
Employee turnover refers to the change of employees within a company, specifically the inflow and outflow of workers from a job position. It is also known as human talent turnover, which is the percentage of employees leaving an organization within a specific period, either voluntarily or involuntarily.
Employee turnover directly impacts your company's functioning and performance, as it implies a loss of knowledge, experience, and skills, potentially affecting service quality, customer satisfaction, and business competitiveness. Additionally, it generates associated costs such as recruitment, selection, training, and adaptation of new personnel, as well as severance pay and other termination costs.
Types of Employee Turnover
Employee turnover can be classified into various types based on its cause and employees' willingness. The most common types are:
- Voluntary Turnover: Occurs when an employee decides to leave the company on their initiative, seeking better job opportunities, a career change, or due to dissatisfaction or demotivation with their current job.
- Involuntary Turnover: Happens when an employee is dismissed or forced to resign by the company due to economic, organizational, disciplinary, legal reasons, or any other factor affecting the company's operation.
- Functional Turnover: When an underperforming, poorly qualified, or poorly adapted employee leaves the company. This type of turnover can be beneficial as it allows the company to replace the employee with a more competent and productive one.
- Dysfunctional Turnover: When a highly performing, well-qualified, or well-adapted employee leaves the company. This type of turnover can be detrimental as it results in a loss of talent, knowledge, and experience that is hard to replace.
Causes of Employee Turnover
Employee turnover is a complex process with various internal and external causes. Some common causes include:
- Salary: If remuneration is insufficient, unfair, or below market standards, employees may feel undervalued and seek more attractive job options.
- Working Conditions: Overwork, lack of resources, poor organization, job insecurity, or any factor affecting physical or psychological well-being can cause stress, exhaustion, or dissatisfaction, leading employees to leave.
- Organizational Climate: A negative, conflictive, or toxic work environment with poor communication, leadership, recognition, or relationships can make employees feel isolated, demotivated, or frustrated.
- Company Culture: If employees do not share the company's values, mission, vision, or goals, they may feel misaligned and seek an organization that better matches their principles or expectations.
- Professional Development: Lack of growth, learning, improvement, or career progression opportunities can make employees feel stagnant, bored, or undervalued.
- Motivation and Commitment: If employees do not find meaning, utility, or satisfaction in their work, they may lose passion, enthusiasm, or interest and look for activities providing greater personal fulfillment.
Understanding the causes of employee turnover is crucial for prevention or reduction. Analyzing employee turnover helps identify the reasons for employee exits and their impact on the company.
Analysis of Turnover: Consequences of High Employee Turnover
High employee turnover affects many companies and has negative consequences for both the organization and its workers. Here are some key consequences:
- Loss of Talent and Knowledge: When an employee leaves, they take their experience, skills, and contacts with them, which can be a detriment to the company and a benefit to competitors.
- Decreased Productivity and Quality: Employee departure creates a vacancy that needs time and money to fill, leading to potential delays, errors, and work mismatches.
- Increased Costs: Turnover generates costs such as selection, hiring, training, and severance. Hidden costs like opportunity, image, or workplace climate should also be considered.
- Deterioration of Workplace Climate and Motivation: Turnover can create instability, distrust, and dissatisfaction among remaining employees, affecting their commitment, performance, and loyalty.
- Loss of Clients and Reputation: High turnover can affect customer relationships, leading to perceived lack of continuity, professionalism, or service quality. This can decrease customer loyalty, satisfaction, and trust, damaging the company’s image and reputation.
To mitigate these consequences, measuring turnover and estimating its cost is crucial. This allows for implementing measures to prevent or reduce turnover and improve employee performance and well-being.
Employee Turnover Rate: Definition
The employee turnover rate is an indicator measuring the number or percentage of employees entering and leaving a company within a specific period, usually a year. This rate indicates workforce stability or mobility and its impact on the organization's functioning and results. To calculate the annual turnover rate, divide the number of voluntary or involuntary exits by the average number of employees during the year, then multiply by 100.
How to Calculate Employee Turnover Rate in Your Company
Calculating the employee turnover rate is simpler than you think. Follow these steps:
- Identify the period you want to analyze (e.g., a month, quarter, or year).
- Sum the number of employees at the beginning and end of the period and divide by two to get the average number of employees.
- Count the number of employees who left during the period, whether by resignation, dismissal, retirement, or other reasons.
- Divide the number of exits by the average number of employees, and multiply by 100 to get the turnover rate percentage.
For example, if your company had 50 employees at the start of the year and 40 at the end, the average number of employees is (50 + 40) / 2 = 45. If 10 employees left during the year, the turnover rate is (10 / 45) x 100 = 22.22%. This means 22.22% of employees left the company within a year.
Can You Prevent Talent Turnover by Hiring the Right Personnel?
One of the most effective measures to retain employees and increase retention rates is hiring the right personnel for each position and project. This strategy involves avoiding poor personnel selection from the recruitment and hiring process.
Hiring the right personnel means defining the candidate profile well, including technical skills, soft skills, motivation, and fit with the company's culture and values. It also involves using appropriate channels and tools to attract, select, and evaluate candidates, such as video resumes, employment platforms focused on candidate assessment, or HR support platforms. This ensures the candidate meets the job's requirements and expectations and feels comfortable and committed to the company.
A good selection process helps reduce talent turnover, improve workplace climate, productivity, quality, and innovation, and decrease turnover costs. Therefore, investing time and resources in designing and implementing an effective hiring process guarantees success in finding and attracting the best talent for your organization.
How to Reduce Employee Turnover During the Hiring Process
Employee turnover is a severe issue for companies today, leading to high economic costs and loss of talent, knowledge, and productivity. Hence, the hiring process must be effective and aligned with organizational needs and expectations.
How can you reduce the turnover rate during the hiring process? Here are some tips to improve selection and retention:
- Define the Ideal Candidate Profile: Clearly understand the type of professional you are looking for, their competencies, previous experience, and attitude toward work.
- Use Different Evaluation Methods: Beyond interviews or resumes, apply psychometric tests, group dynamics, practical cases, or simulations to better understand the candidate and their potential.
- Offer an Attractive Value Proposition: Besides a good salary, provide development opportunities, social benefits, a good work environment, and a motivating organizational culture.
- Follow Up with New Personnel: Integrate, train, and support new employees in their early stages to identify difficulties, resolve doubts, and reinforce their sense of belonging.
- Promote Communication and Feedback: Maintain frequent contact with employees, listen to their opinions, recognize their achievements, and consider their suggestions to improve workplace climate, satisfaction, and performance.
By following these tips, you can reduce turnover and keep employees motivated and committed to company goals. Remember, recruitment and hiring are crucial processes for any organization's success, and poor selection can have long-term negative consequences. Therefore, make the best decision and choose the right talent for your team.
Cazvid App: Avoid High Employee Turnover with This Application
Understanding turnover causes and consequences, and knowing how to calculate it, helps stimulate employee retention and productivity. Making informed decisions about tools and strategies is crucial. One such tool is Cazvid, an app focused on video as an instrument to capture, select, and evaluate qualified personnel.
Cazvid offers companies the ability to see and hear their future employees through video resumes or presentation videos. This allows you to assess aspects that traditional resumes or cover letters cannot, such as the candidate's commitment, potential adaptation to the company, and internal communication skills.
This app positively impacts employee retention, prevents various types of turnover, and influences recruitment strategies to halt turnover before hiring. Cazvid is a valuable tool for making well-informed hiring decisions.
Conclusion: Preventing Various Types of Turnover
We understand how turnover affects companies and the reasons behind it. Knowing its consequences and prevention methods is crucial. Beyond measuring turnover and addressing it with strategies like flexible work hours or reducing workload, the key recommendation is to start preventing employee exits from the recruitment stage. Turnover measures human resource management, but connecting with the right employee from the beginning is essential. Cazvid offers solutions for this.
