It’s time to revamp the way you calculate turnover — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

It’s time to revamp the way you calculate turnover

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in HR Management,Human Resources

There’s a big difference between losing three slugs versus three stars in your department within a month. Yet, at most organizations, those losses would be calculated the same—as an overall percentage of employees—when figuring turnover rate.

The problem: Such a simple metric treats all turnovers alike and doesn’t account for performance differences among departing employees.

Advice: Start calculating your turnover using the performance turnover metric. Advantages: It distinguishes between the kind of turnover you want (poor performers) and the kind you don’t want (high performers) without lumping them together in an indistinguishable way.

Performance turnover, as developed by HR guru John Sullivan, HR professor at San Francisco State University, assumes that the loss of a high performer has three times the impact as the loss of an average performer. The loss of bottom performers has little or no impact.

Here’s how it works:
Categorize employees in your organization or department into top performers, midrange performers and bottom performers. Multiply the number of top performers by three, the number of midrange employees by one and the bottom performers by zero.

Example of “bad turnover”: Six of a company’s 60 employees leave within a month. This includes four top performers, one midrange performer and one bottom performer. The performance turnover score is 13. That’s “bad” turnover because the score is higher than the number of employees who departed. 

Example of “good turnover”: Six of a company’s 60 employees leave within a month. This includes one top performer, two midrange performers and three bottom performers. The performance turnover score is five. That’s “good” turnover because the score is lower than the number of employees who left the company.

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