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How do I calculate retention and turnover?

By John Wilcox, Moderator
1/15/2008 - 3:30am
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John Wilcox, Moderator

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John Wilcox is senior editor of 15 HR Specialist newsletters covering employment law, compensation and benefits, as well as theHRSpecialist.com. A journalist who has covered HR, training, organization development and business management for more than 15 years, John keeps his finger on the pulse of what’s working in HR through daily contact with some of the nation’s top HR pros, business people and employment law attorneys.

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Question: "I am trying to calculate our employee retention and turnover rate. I understand that these are two different things relating to: 1) how many employees we have, and 2) how many employees we lose, keep and hire. Does anyone have the equations for figuring out these two rates?"—Katie, Louisiana

Comments

Turnover Costs = Cost to terminate + Cost per hire + vacancy costs + Learning Curve Cost

Posted by: Robbyn | January 15, 2008 at 02:41 PM

The consulting firm Kepner-Tregoe Inc. and the Saratogo Institute provides this formula you can use to calculate.

The average cost of turnover is 25% of an employee's annual salary (line 1) plus the cost of the benefits (line 2). Typical benefits amount to about 30% of wages. The total cost per employee (Line 3) is the total of Line 1 and Line 2.

1. Annual wage: _________ x .25 = ___________.
2. Annual wage: _________ x .30 = ___________ x .25 = _____________.
3. Total turnover cost per employee (add Lines 1 and 2):
_______________.
4. Total number of employees who left: ___________.
5. Total cost of turnover (multiply Lines 3 and 4): _______.

Hope this helps.

Posted by: Patty | January 15, 2008 at 02:49 PM

We calculate Retention with the following formula:

(1)# employees at beginning of month -
(2)# voluntary terminations for the month /
(3...same as 1)# employees at beginning of month.

(1) minus (2) divided by (1)= retention rate

Posted by: Ann | January 16, 2008 at 07:01 AM

Slight correction to the instructions. Take the number of terminations and divide by the number of positions each month. Then at the end of the year, take an average of the months for a yearly average.
Ex: 2 people left in a company with 50 position.
2 / 50 = .04 = 4% for the month

Posted by: Judy Treibman | January 22, 2008 at 12:25 PM

Tags: employee retention, employees, retention, terminations

Workplace Conflict Resolution: 10 ways to manage employee conflict and improve office communication, the workplace environment and team productivity