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November 13, 2008


deb owen

I don't know that all HR pros don't understand turnover numbers. I think there are a lot of them out there who just aren't honest about it. I worked in a "hard-knock production environment" that was one of the lowest paying in the area. They had all kinds of ways to get around 'real' numbers. (One way was to basically create their own internal 'temp service'....where they brought people in on a temp basis for the first 90 days at a lower rate than the full time rate, and without benefits. And none of those people, though hired internally and costing the same recruiting costs, were ever counted in the turnover numbers.)

Too often, turnover numbers get played with just to make sure HR doesn't get any blame.

All the best!


Regarding #3:
Never mind well known, is it even a fact that you have to "annualize" your turnover number by multiplying a one month turnover by 12? In some cases, depending on what you are actually trying to measure (i.e. what do you mean by turnover), reporting an "annualized" turnover rate may be no more informative than simply presenting the turnover for the past month.

Consider this: from a cost perspective, losing 2% of staff per month annualizes to 24% per year. But, from a retention perspective, your annual retention is not necessarily 76% (Perhaps retention does not equal 1 minus the turnover rate, but that's what I'm going with). It is, in fact, somewhere between 98% and 76%. At one extreme (the 76%), every two people per month who leave were with you at the beginning of the year, leaving only 76 people at the end of the year who started the year with you. At the other extreme (98%), the same two slots keep changing every month, and at the end of the year you still have 98 of the 100 people you started the year with.

Maybe when you’re discussing costs to hire and train, you don’t care if it’s the same two jobs that you keep having to refill, or if it’s two new ones each month. However, when you think about it from an accumulated human capital perspective, or a workforce continuity perspective, calling a 2% per month turnover “24% annualized turnover” may actually misrepresent the true picture.

Second, do HR folks make a distinction between turnover defined as the rate of jobs vacated and refilled, versus turnover defined as the number of people remaining at the end of a period who were present at the beginning of the period? As in my example above, these can be two very different numbers.

Finally, this may all boil down to the difference between an “annual” rate and an “annualized” rate, where the former is the difference between month 12 and month 0, and the latter the difference between the beginning and end of a given month, multiplied by 12.


Please send me your turnover template.
Thank you

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