Turnover in business, literally translated as "rotation", calculates the number of departures and arrivals within your teams over a year. It is a measure that can tell you more about the health of your business. The turnover rate, while useful, is a tool to be handled with care as the same result can have different readings.
All about turnover in companies
What is company turnover?
Turnover is the word used to refer to the rate of staff turnover and is usually calculated on an annual basis. Also known as 'staff turnover', this ratio takes into account the number of people leaving and joining your company. It is used to determine whether or not employees tend to stay with your company for a long time.
A high turnover rate is neither good nor bad: it depends on the factors that lead to the increase in turnover. The context of arrivals and departures needs to be analysed in order to be able to say whether this turnover rate is desirable or not.
How to calculate turnover in a company?
The calculation is very simple. You take the number of departures in the year you want to calculate turnover and the number of arrivals in that same year, divide the sum by 2 and divide the total by the total number of staff on 1 January of that year. Then multiply by 100 to get a percentage.
In other words, the calculation is as follows: [(Number of departures in Year N + Number of arrivals in Year N) / 2] / Number of staff on 1 January of Year N x 100
How to calculate turnover in a company?
Make sure that you take into account all departures, including resignations, terminations, dismissals and retirements.
If you get a turnover of 100% then it means that the whole team has been replaced during the year. On the contrary, if the turnover is 0%, it means that there is no movement, no staff member has left but you have not expanded your team either.
How to interpret the results?
The turnover rate should be handled with care as it is sensitive to different factors and the rate does not mean the same thing depending on the sector you are in and the specific industry.
This rate should be compared with that of previous years so that you can see how the situation is developing and adapt your company's policy to this development.
For the sake of accuracy, you may also decide to refine the turnover by distinguishing between types of departures, as some natural departures do not have the same meaning as resignations, dismissals and non-renewed contracts.
What are the factors that contribute to turnover in companies?
Takeover by another group
Company policy is undeniably modified during a takeover, and employees already present may decide to leave because the new dynamic does not suit them. In this case, it is important to reassure them about the future in order to build loyalty and make them want to stay.
Change of manager
People are often reluctant to change at first sight, as the expression "we know what we are leaving, we don't know what we are gaining" illustrates.
A change of manager can be worrying, but it does not have to be. A special effort should be made to keep the team together despite the change of management.
Similarly, toxic management or micro-management can cause disgruntled employees to leave.
Transfer or acquisition of business
In the same way, a transfer or acquisition of activity can encourage departures but also new arrivals if the workload increases and the team needs to grow to ensure all the missions.
Rapid growth of the company
If your company doubles in size in a single year, the turnover rate will be very high even if there are few departures.
For this reason, we advise you toanalyse the reasons for high turnover, as high turnover does not always mean that dissatisfied employees decide to leave the company.
Profiles in demand
Another factor not to be overlooked is the ease and frequency with which certain profiles will be courted and poached. This is very true in high-volume occupations, such as developers.
The appearance and disappearance of new jobs will also affect the total number of employees in your company, which you will have to deal with despite yourself. Unfortunately, you will not have much control over this, except to ensure that you offer your employees the best possible working conditions.
A tangible macro-economic context
As we all know, 2023 will not be a year like any other. The international macro-economic situation is tending to reduce traditional financing, a trend that could lead to a decline in corporate turnover. In fact, fundraising is becoming more and more discrete and interest rates are drying up. This uncertain situation, like any other economic trend, is bound to recur and may therefore lead to an increase in corporate turnover.
Other factors that contribute to turnover in companies
If your company has a high average age, then there will inevitably be retirements. Positions will be filled or not, which will result in increased turnover.
Finally, the economic context, both internal and external to the company, will change the dynamics of hiring. Social plans, judicial liquidations, but also the context of a health crisis or legislative reforms will greatly modify the balance of your teams.
Our 6 tips for reducing company turnover
Tip 1: Understand the reasons for leaving
If you see a common pattern in the reason for the departures, you can put measures in place to address the cause of the mass departures.
When your employees decide to leave, you can ask them why they are leaving. In this way, you can reduce the number of departures related to this most common reason.
Tip 2: Organise unifying events
It is important that employees feel good within the company and with their team to reduce turnover in your company. It is the responsibility of the manager or director to create a pleasant working atmosphere.
We therefore advise you to organise moments from time to time when the team can meet and establish links that will be beneficial for the work dynamic.
Tip 3: Encourage internal mobility
Lack of career opportunities can be a barrier and a reason for employees to leave your company.
You can set up training schemes and encourage your employees to validate the skills they have acquired with you in order to get promoted.
Tip 4: Telework and the right to disconnect
It is important that employees feel comfortable in the company but also that their professional life is well separated from their personal life. This is a key point for reducing turnover in the company.
Make sure that you always offer them good working conditions and respect their right to disconnect by offering them fixed working hours.
At the end of the working day, it is normal that your employees are no longer available to meet their professional obligations.
Moreover, teleworking is now a right that employees value. It is important that you are able to offer it to them if your company's activity allows it.
Tip 5: A good quality of life at work
If your employees are to want to stay in your company, they must feel comfortable. This will also require quality equipment such as comfortable office chairs and computer equipment.
Office design is not a futile exercise, contrary to what you might think: a pleasant office environment will increase the productivity of your employees and encourage them to stay.
Tip 6: Benefits
The salary is an important point for your employees, but they are also sensitive to other advantages such as the health insurance you can offer them, whether there is a crèche within the company... These advantages represent a real plus for your company that you can put forward!
A high turnover rate is neither good nor bad, it all depends on the sector you are in, the reasons why employees arrive and leave... If these reasons are detrimental to the company's image, you now have the keys to reduce this rate!