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Macro Employee Turnover Statistics - Worthless Until You Show Me The $$$...

I'm on record as saying in the past that the best way to to see HR pros judge one another is to say that another HR pro has 64 percent turnover in their shop.  Then step back to watch the judging and snobbery ensue.  Everyone generally tries to get just a little bit superior.  It's like Dana Carvey and the church lady, HR version.

Since we’re human, it stands to reason that HR pros have been known to judge one another. Since ourChurchlady part of the business isn’t known for quantifiable metrics, turnover percentages in the businesses we support represent a rare opportunity to feel a little bit superior. Of course, we conveniently forget that industry, pay strategy, and culture all intersect and conspire to make such comparisons ridiculous.

Case in point, the big turnover numbers that are rolled up by industry and sector.

More on the game of turnover from the gold standard of Compensation, Ann Bares:

"And now, in response to reader demand and a begging email on my part, Compdata has generously shared the following 2008 turnover data, both voluntary and total, by industry.  This data is particularly robust, having been collected from nearly 5,300 participating HR departments.

2008 Turnover Rates

There's no question that voluntary turnover is waaaaay down due to the economy.  Still, this type of macro-level turnover data is pretty useless in helping you on the street level.  That's not Ann's fault, because she's reporting something of interest to all of us.  Still, you need to dig at least one, if not two levels deeper to find information of value to you in your business.

Here's why:

  1. Turnover is relative, and many HR managers in organizations don’t understand that. This is especially so if they’ve never worked in a high turnover business. Retail, big-box call centers and hard-knock production environments are all examples of places where 40 percent turnover can mean you’re best in class.

  2. Many HR pros don’t understand that money and working conditions drive turnover. Do the jobs you have lead or bring up the rear of the market with turnover? If you pay $9 an hour in your call center and the market pays $10.50, budget for turnover and evaluate your business plan for talent costs at least annually. Still want to pay $9? OK, just make sure everyone knows that turnover is going to run 70 to 100 percent. It’s a business decision. Maybe not a great business decision, but a business decision nonetheless. Sue Meisinger herself couldn’t get turnover below 60 percent under those circumstances.

  3. Many HR pros really don’t have a great understanding of how to calculate turnover. I send out my turnover calculator about 20 times a month upon e-mail request, and let’s just say the method is not well known. Example: If you have 100 people in your company, and you lost two this month, and that trend continues, your annualized turnover would be 24 percent, not 2 percent. Lots of folks add up three months of turnover and report it quarterly as, say, 6 percent, and then repeat the process for the next quarter. I’m not being critical of those who haven’t been exposed to the correct way to report annual turnover. I’m just encouraging my HR colleagues not to judge those with higher numbers who are reporting their turnover accurately.

Don't feel good or bad according to the macro turnover stats.  Get street level data to validate whether you're struggling... or should feel superior.

Comments

Darcy Dees

Great post! Turnover is frequently used as a HR metric because it is easy to calculate. But that doesn't mean it's the most important metric.

I've long been interested in the idea of good vs. bad turnover. We all know that some turnover is good, because your business only gets better if you remove the dead wood. (Some would argue that you shouldn't have hired them to begin with, but no hiring process or manager can weed out ALL the bad apples.) But losing your top sales person, particularly to a competitor, is bad turnover and is a very important metric; as long as you dig into why you lost that person and take steps to improve. All metrics are just numbers unless you use them to change behavior.

Although turnover compared to industry can give you some insight, looking at your own internal strategies and "bad" turnover is much more meaningful.

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