Is My Turnover Rate High?

If I had a nickel for every time someone asked if their turnover rate was high, I’d have….well, it wouldn’t be that much money but people ask about it a lot. And with some justification. After all, when an employee quits, that person is taking their knowledge, skills, and abilities with them. In most cases, this means a new round of candidate searches, time-consuming interviews, service disruptions and all-around team disruptions. If your competitors are doing less of this than you are, they are gaining a competitive edge.

In today’s post I’m going to try to answer this in two ways. First, I’ll give you some ballpark figures to think about, some cold numbers from the Bureau of Labor statistics that will at least tell you very broadly which way you are facing.

Second, I’ll step you through some additional considerations at the more human scale that you can apply to your HR Analytics tasks today.

The goal here is not to give you “the answer” but instead to provide some broad guidance on how to ask the right the question for your organization. We’ll be short and focused today, but it you are interested in pursuing this issue further, tell your friends, leave a comment, and we can dig in en masse.

The Numbers

First, lets take a quick look at the numbers from the US Bureau of Labors statistics. You can find the data here (https://www.bls.gov/news.release/pdf/jolts.pdf) but below I also provide the summary data that you need to make a comparison.

The government are generally the best thing going and they are timely so if you are looking data, it’s the best place to start. Plus, remember that real government and funding decisions are based on these numbers. It doesn’t mean those decisions are necessarily right or that the numbers are perfect, but it does mean that a lot of people are taking a serious look at them. That’s about the best you can get when it comes to external HR data.

Summary Turnover Stats by Industry

The following shows the annualized quit rates across multiple industries calculates from Table 4 provided above and here: https://www.bls.gov/news.release/pdf/jolts.pdf

How To Make Use of the Government Data

If you want to do some of the work yourself instead of the summary numbers I provide above (always good for learning purposes) do the following:

1. Focus on the “quit rates” which are generally voluntary separations initiated by the employee. Therefore,
   the quit rates can serve as a measure of workers’ willingness or ability to leave jobs.” Accordingly, they correspond fairly well with our focus on voluntary turnover.
2. Go to Table 4 labeled “Table 4. Quits levels and rates by industry and region, seasonally adjusted”. This table tells what the quit rates across all kinds of industries. Each monthly quit rate is the number of quits during the entire month as a percent of total employment. So as an example, if you have a total quit rate of 2.1 for May, that means that 2.1% of the people employed quit their jobs in May.
3. To get a rough comparison between your organization and the broadly defined average for your industry, do the following:

• Calculate the annual turnover rate at your organization (see the many other posts on this site)
• Find your industry in the list on Table 4 (again, found here https://www.bls.gov/news.release/pdf/jolts.pdf)
• Take the average of the quit rates for the 6 months displayed. This will given the average quit rate over those months.
• Take this monthly average quit rate and multiply it by 12 to get your annualized quit rate. For example, if an industry is losing an average of 2% of its employees every month, then you would expect that a total of 24% of those employees to quit over the course of the year.
• Compare this number to the annual turnover

Note these are ballpark estimates but they should give you a very rough estimate of how your company compares to the industry. I would also suggest calculating the same numbers a few of the other industries just to give yourself a better feel for your numbers. You may wish to do the same for the regional numbers provided in the table.

Your People Behind Your Numbers

Ok, so now you have some numbers. You are feeling really great, really depressed, or (most likely) somewhere in the middle. But put those feelings to the side and let’s really focus on our people.

Why? Because we are MUCH better off thinking about the what’s really going with our people and process. Yes, those turnover numbers matter but they are really just a reflection of your organization. Before overstating the degree of success or failure, use the analytics skills you’ve honed on these pages and in your daily work to answer the following questions.

This is not a comprehensive list, but they should get the wheels turning. They are all variants of the broader “Who is leaving?” question and it’s a great place to start your analysis.

Who is leaving?

Start with the basics like gender, age, and ethnicity to see if anything leaps out. For example, elevated rates at the younger and older ends of the age distribution. Younger employees switch jobs more frequently as they explore roles. Older employees are more likely to retire.

I would also strongly suggest you look at the performance ratings (or something comparable). Are you losing all of your best people? Just those who were not performing well? The answers to these questions will tell you a lot about the specific problems you have…or don’t have.

What skills are leaving?

Are you losing people with hard-to-find technical skills? Senior managers? Physical laborers? Break those numbers down! You might in the oil and gas industry, but if you are losing all your tech people, it might be because you are competing with tech clusters in your native Texas. That has little to do with what industry you are in.

What department?

This closely related to the skills question, but it really comes down to this: is one area just bleeding talent or are the losses evenly distributed throughout your organization? Again, any attempted interventions must correspond to the source of the issue. Vaguely defined  solutions tied to “improved employee engagement” are almost guaranteed to cost you time and money with little to show for it.

What processes are impacted?

People are leaving. So what? What is really impacted? Is their departure reflective of a chance in the business focus or the market or is it truly crippling your core operations?

Final Thoughts

So that’s it. Some numbers to think about, some perspectives to consider. As always, ask the big questions, plot your data, think broadly and remember that not all voluntary departures are created equal.

Like this post? Have Something to Say?

Add your comments OR just send me an email: john@hranalytics101.com

I would be happy to answer them and/or engage in a vigorous discussion if you a different view. 

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