When you’re looking for a new job, you may be interested in finding out a company’s employee turnover rate. This can provide some perspective about the company culture and its expectations for workers. It can also signal potential issues within the organization if employees are likely to leave within a short amount of time.
By Timothy Mably
If you’re on the verge of accepting a job offer, it may be beneficial to find out a company’s employee turnover rate before moving forward. Since employers have to pay one-half to twice an employee’s annual salary to replace someone, the turnover rate can hint at how sustainable a company is.
A high turnover could provide enough reasons for you to consider declining a job offer. Poor retention can lead to poor morale among employees. It can also cause bad customer relations if there is a noticeable decline in quality.
The turnover rate allows you to know the percentage of employees who departed the company within a specific length of time. This is typically measured either monthly or annually.
However, finding out the general turnover rate might not seem straightforward. According to the U.S. Bureau of Labor Statistics, the 2021 annual turnover rate was 47.2%, but you may have to track down more specific numbers. It contains employees who quit, were fired and retired. Although such data on some companies can be easily accessible, you may have to do some work yourself.
Calculating The Employee Turnover Rate
Lead researcher at Culture Amp, Fresia Jackson, says there are a few different ways to calculate turnover rate within a company. She explains, “In general, it's the number of employees leaving divided by the number of employees in the company.”
It’s possible that instead of calculating the entire company, it may be more relevant to consider a specific department. It’s also more likely you will be able to retrieve accurate data on an individual department.
Unfortunately, data will not always provide distinctions between workers who left voluntarily and involuntarily for reasons such as retirement or layoffs. When there is clarification, it might be worth taking into consideration before declining a job offer due to poor retention.
It should also be noted that industries tend to have vastly different turnover rates from each other. Some fields are more likely to expect workers to remain for longer periods. Jackson says, “The turnover rate should also be considered in comparison to what's normal in the industry. For example, the turnover rate in retail is much higher than in the government. So what would be concerning in one industry wouldn't be in another.”
To calculate the turnover rate, you will need to have the number of people who left throughout a specific allotment of time, the number of people employed at the start, and the number employed at the end. You will need to divide the number of workers who leave in a month or a year by the average number of employees and multiply it by 100.
Jackson says, “This isn't data most people have access to from the outside looking in, but you can get an idea of it by looking at things like the average tenure on LinkedIn insights for the company…”
Tips For Understanding The Turnover Rate
Jackson recommends looking at recent online reviews written by exiting employees. This can help you gauge the reasons for employees leaving, and provide some context to the numbers. Based on the dates when reviews were posted, you can detect how frequently employees leave the company.
Lastly, she suggests reaching out to employees who currently work at the organization. By asking them directly, you may be able to get a better idea of the professional culture than simply by reading reviews or analyzing data. Although exiting employees may have had an experience that prompted them to leave, employees who have chosen to stay can provide additional perspective.
Jackson believes there are valid reasons why a high turnover rate should be a potential cause for concern but doesn’t think it should always be a dealbreaker. She says this is because “high turnover rates can demonstrate that the company isn't taking care of its employees.”
However, she also says, “There are other reasons that a company's turnover rates might be high. For example, if the company went through a hiring spree two years ago, then their turnover rate might be very high this year because those employees are now reaching the average tenure that an employee stays in their job.”
According to Gallup, 52% of employees who left a company voluntarily say that their manager or the company could have done something to make them stay. Gallup states, “Over half of exiting employees (51%) say that in the three months before they left, neither their manager nor any other leader spoke with them about their job satisfaction or future with the organization.” Departing workers could have been given a raise, a promotion, or some other incentive to not leave an employer. However, the employer chose to increase expenses by letting them go rather than investing in their employees.
Regardless of calculating the turnover rate and learning a company has poor employee retention, it’s hard to know whether they are letting top performers leave. Awareness of employee turnover can be critical, but it should be taken into consideration on a case-by-case basis depending on the industry.
By researching the turnover rate and investigating a company, you can make an informed decision about whether it’s wise to accept a position.
Top Takeaways
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