What is Turnover?
Turnover is an English term that means, among other things, “renovation”. It is usually used in a variety of media, including administration when people management we want to refer to the renewal rate of a company's employees.
The formula is quite simple: [(admissions + layoffs) / 2] / total of employees. That is, if a company has 11 employees in total, it has admitted 3 and dismissed 1 in the period in question - which can be a month, a year, a quarter - the formula is given by [(1 + 3) / 2] / 11 = 0,18181818 ... Multiplying by 100 to find the percentage, we can conclude that the turnover rate of the company is 18,18%, as the example below taken from our HR Indicators Worksheet.
Although the connotation of the word renewal leads us to believe in something positive, it is not interesting for a company to have a high turnover rate because it shows its inability to retain employees, in addition to generating some collateral problems. We will see them below.
Problems Having a High Turnover Rate
Every company has a set of values, beliefs, rituals and norms that define its Corporate Culture. It may seem something very theoretical, far from reality, but it is not. If you want your company and its employees to preach honesty to each other and to the company, it's much easier to achieve this with a team that stays together for a long time, evolving and creating ties than with a team that has been changing the time everything.
Also, if you want to shape the culture of your company and not let it evolve into something you do not want, you have to hire the right people and keep them. Your effort to create culture will be less and, with successive exchanges, it is easier for mistakes to occur in the selection process and people with different values of the company are hired.
The Knowledge Management of a company has the objective of controlling, facilitating access and maintaining an integrated management of information about it. As much as today is investing in good practices and knowledge management tools, there is always a cost of transition in an exchange of employees.
For example, even though you have a CRM Worksheet to store your customer information, losing an employee of your business has the potential to weaken some of the accounts that he managed, as there are details in the relationship with customers that only that employee knew and until the new member of the commercial caught, can generate loss or brake growth.
This loss in knowledge management can occur even in relation to speed in the execution of company processes, because older employees know the company very well and are already prepared for more situations than the new ones, for having greater knowledge of the information and situations lived for the company.
Hiring and Training Costs
Unfortunately hiring people is not easy. Hiring the best is even more difficult as it requires financial and time sacrifices. And every time a contributor from a key position resigns, a vacancy is opened, and that same complicated hiring process begins (if you want to read more about hiring staff, we have a good material on this.):
- Draw the profile of the vacancy
- Assemble publicity material
- Choosing the Right Places to Disclose
- Analyze resumes
- Interview, apply dynamics, make proposals
This entire hiring process costs money and takes time. Some companies prefer to hire HR consulting to save time, but they can not escape financial sacrifice. Others simply hire the first possible employee, which is worse, because her chance does not fit the job and the company is big and this will increase the turnover even more.
The waste of money and time does not stop there. Before the new employee is able to perform his new role, he needs to be trained. In other words, someone will need to move from their role to teach them how to exercise theirs. Even if he is an experienced employee on the job, he will need to understand the particular processes of the new company. If the turnover was down and the old employee had not been lost, none of that expenditure of time and money would have to be made.
In a country like Brazil, the termination of an employee can never be considered a good deal for the owner of the company. Depending on how the termination is made, the amount of fees may increase and the financial outlay will be greater. Read about terminating a contract.
How to Reduce the Turnover Rate
Hire the right people - it pays to spend a little more time and money in the selection process to find people who adapt to the culture of your company. It is much easier to train a person to develop technical skills that he has than values he does not have. Placing the right people within the team generally means longer staff time. Another tip is to always be interviewing people, however vague they may be.
Talk to employees to find out if they are happy in the company - it is sometimes difficult for an employee to open up with the boss, but try to understand their level of satisfaction with the company. One way to do this is through a organizational climate survey. Find the biggest complaints and deal with them before it's too late.
Understand their long-term aspirations and show that they can be fulfilled in the company itself - it is always good to know the dreams and aspirations of your team and to know that your company can help them to achieve them. A promotion? Greater capacity? More access to education? Show them what they need to do to achieve their goals and combine goals. It's interesting to know that, from the interview. If your company has long-term ambitions conflicting with your employee's ambitions, you're sure to have trouble with that one day.
Periodically evaluate employees and show points to develop and strengths - do performance evaluations periodicals. Set criteria for this: what he needs to improve to continue in the position he is in, to be promoted and what he already has. Show him how much he has evolved in the last period and keep pushing.