Staff turnover

economic-dictionary

Staff turnover is the process by which a company replaces one or more employees. Entry and exit movements of workers that are not due to natural exit processes such as retirement or death.

Through the staff rotation process, there are workers who are hired (entries) and workers who are fired (exits). This can be due to different causes that we will see later. In any case, the fundamental idea of ​​staff turnover is that there are changes in staff. If there is a high turnover the staff is changing, if there is a low turnover the staff is barely changing.

Although it is usually related to the processes of entry and exit of workers in the company, we can also consider personnel rotation to the processes of alteration or modification of jobs.

Types of staff turnover

Personnel rotation is not a fixed process, so there is only one way to do it. That is, rotation processes can occur in different ways, generating a relationship of types of rotation, which are applied by companies.

  • Voluntary rotation: That which is motivated by the employee himself. That is, where the employee is the one requesting the withdrawal for whatever reason.
  • Involuntary rotation: The one in which the company makes the decision for the employee to leave or change their position in the company.
  • Internal rotation: One in which there is no separation between the employee and the company. That is, the employee changes jobs.
  • External rotation: That in which an employee enters or leaves. That is, one in which there is a separation, or linking of a worker and the company.

Causes of staff turnover

There are numerous causes for a company to undertake a staff turnover process.That is, there are multiple reasons that, as we will see below, can cause a rotation process.

Among the most common are:

  • A negative work environment.
  • Non-competent salaries.
  • Inadequate selection process.
  • Lack of professional development.
  • Lack of work motivation.
  • Failure to achieve the pre-established objectives.
  • Poor supervision of work.

Consequences of staff turnover

If we have a high staff turnover in the company, like everything else, this has consequences for it. Next, we will look at the consequences of a high turnover rate for a company.

Among the most common consequences it is worth highlighting:

  • Costs associated with rotation processes.
  • Increased motivation.
  • Insecurity in employees.
  • Impact on the commercial image.
  • Increases in productivity.
  • Changes in the work environment.
  • Changes in personnel teams.

As we can see, these may be some of the consequences that occur when rotating processes continuously. As we can see, the consequences can be positive and negative, but the result depends a lot on the management and control carried out on the rotation processes.

What is the staff turnover rate and how is it calculated?

The staff turnover index is the indicator that measures the relationship between workers who join the company, as well as those who leave. This indicator gives us a percentage that allows us to know if our staff turnover is high or, on the contrary, low.

To calculate the index we must apply the following formula:

((X-Y) / Z) * ​​100 = IRP

Where:

X: Number of employees who have joined in the last year.

Y: Number of employees who have been laid off in the last year.

Z: Total number of employees in the company.

IRP: Personnel turnover index.

If we want to count the rotation in the jobs, it is enough to add the employees who have changed jobs as if it were a dismissal.

To interpret the results, we must know just two things:

In the first place, if the index gives us a high result, we could say that a good strategy is not being adopted for the selection of employees, which leads us to have to rotate them constantly. This could lead to damage to our business such as lost productivity or a bad brand reputation.

Second, if the index gives us a low result, less than 2%, this means that we are stabilizing our workforce. In other words, we are building loyalty among our employees. However, we must be careful, because, combining it with other indicators such as productivity, a low turnover rate could also reflect that our workforce is stagnant.

Example

We have a company that has 500 workers. This, this year, hires 100 employees. At the same time, on the other hand, it has fired 5 employees and, also, has changed another 5 positions.

If we do the calculation we obtain the following:

((100-10)/500)*100 = 18%.

This shows that, for the example cited, staff turnover is 18%. That is, a very high turnover. In this case, justified by the increase in personnel made this year.

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