Monitoring turnover is an important function of human resources. Companies like to monitor the movement of employees out of the organization so they can look for and minimize causes of turnover. Controlling turnover is one of the many quantitative ways the HR department can impact the bottom line.
The formula for calculating turnover on a monthly basis is figured by taking the number of separations during a month divided by the average number of employees on the payroll . Multiply the result by 100 and the resulting figure is the monthly turnover rate.
Example:
Number of separations during month
----------------------------------------------------------- X 100
Average number of employees on payroll during the month
The number of separations during the month includes both voluntary and involuntary terminations. Do not include employees who are on layoff.
There are times when employers would like to calculate the annual turnover rate. This can be done by adding each of the monthly rates together. January + February + March + April ......+ Dec = Annual Turnover rate.
After calculating the turnover rate for your organization you may want to compare it to others in the same industry or companies of the same size. Some resources you may want to look at include the Bureau of Labor Statistic’s Job Openings and Labor Turnover Survey (JOLTS).
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