How to Determine your Retention, Turnover, and Vacancy Rates [2.1.1.a.2]
If you are attempting to lessen employee turnover and increase retention rates, you can calculate some basic information that will assist you. This resource provides calculation formulas to determine retention rates, turnover rates, voluntary turnover rates, the average tenure of employees, the average tenure of employees who have left, a method to analyze special characteristics of turnover, and vacancy rates. Examples are provided.
Calculating retention and turnover is just the first step in determining employee stability. These rates do not tell the whole story. The following retention, turnover, and tenure calculation formulas are simple and effective methods to determine who is leaving, when, and under what circumstances.
The term “calculating period”can be months, a series of months, or years, depending on the trends you are researching. You can use any time period. We used months in these examples.
The“employee”category can be a specific job position or type of job, a specific shift, or your employees in general.
The following formulas can help you determine:
- Retention rate;
- Turnover rate;
- Voluntary turnover rate;
- Average tenure of current employees;
- Average tenure of employees who have left;
- Special characteristics of employees who have left; and
- Vacancy rate.
Retention Rate
Calculating your retention rate (stayers)
The number of “stayers” (employees who remain at the end of calculation period) divided by the number of employees you had at the beginning of your calculation period times 100 equals your retention rate.
Example of Retention Rate Calculation
If you have 100 employees starting the first day of the month, and 90 employees at the end of the month, you have lost 10 of employees. Your retention rate is 90 percent.
|
Number of stayers
|
Divided by
|
Number of personnel at beginning of period
|
Times 100
|
Equals
|
Your retention rate
|
|
( 90
|
÷
|
100 )
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X 100
|
=
|
90%
|
Calculating your retention rate can be interesting, but misleading. Using the retention formula, it appears that you lost only 10 employees during the month. However, what happens if you hired 12 employees after the first day of the month and 8 left before the end of the month, in addition to the other 10 that left? You can gain a better understanding by simultaneously measuring your turnover rate.
Turnover Rate
Calculating your turnover rate (leavers)
The number of “leavers” (employees terminating during your calculation period) divided by the total number of people employed during your calculation period times 100 equals your turnover rate.
Example of Turnover Rate Calculation
You had 175 people in your employment in January. Fifty employees left by the end of the month. A simple turnover rate is 50 divided by 175, which equals 28.6 percent.
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Number of leavers
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Divided by
|
Number of people employed
|
Times 100
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Equals
|
Your turnover rate
|
|
( 50
|
÷
|
175 )
|
X 100
|
=
|
28.6%
|
Voluntary Turnover Rate
The previous calculation shows the entire turnover rate, but not all turnover is voluntary. Voluntary turnover is when the employee chooses to leave. The reasons for voluntary turnover vary, and it can be caused by a number of factors. These may include lack of job training or advancement opportunities, little feedback, job dissatisfaction or unmet job expectations, stress, or compensation factors. To pinpoint problem areas or make changes, you need to determine the rate of those who left voluntarily for another job. Take the same example and look at who left voluntarily.
Calculating your voluntary turnover rate
The number of employees who left voluntary divided by the number of employees you had during your calculation period times 100 equals the voluntary turnover rate.
Example of Voluntary Turnover Rate Calculation
Fifty total employees left, but only 12 were dissatisfied with the organizational policy, compensation, and/or career opportunities. Good exit interview strategies should help you determine which employees terminated voluntarily.
Of the other 38, 15 retired, 7 moved to another part of the State, 8 were laid off due to funding cuts, 3 were terminated for poor performance, and 5 became ill and could no longer work. These numbers indicate involuntary turnover.
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Number of voluntary leavers
|
Divided by
|
Number of people employed
|
Times 100
|
Equals
|
Your voluntary turnover rate
|
|
( 12
|
÷
|
175 )
|
X 100
|
=
|
6.9%
|
Average Tenure of Employees
Tenure is the length of time an employee has worked for an organization. In order to find out how long your employees stay at your organization, you will need to calculate the average tenure. Examining tenure can assist organizations in targeting interventions to workers at a particular point in their careers, when they may “fall off” from your organization. This information can be useful when planning strategies to retain your employees.
Calculating the average tenure of your employees
To compute the average tenure of workers, list each worker and the number of months the worker has been at the organization. In this example, the time period is calculated in months. Your tenure rate can be calculated by months, years, or other time periods.
The sum of months worked by all current employees divided by the number of employees you have today equals the tenure of “stayers”.
Example of Calculation to Determine Tenure of “Stayers”
|
Number of months “staying” for current employees:
|
|
|
- 1 employee “staying” 3 years (1 x 36) =
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36
|
|
- 5 employees “staying” 12 months (5 x 12) =
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60
|
|
- 2 employees “staying” 10 months ( 2 x 10) =
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20
|
|
- 2 employees “staying” 3 months (2 x 3 ) =
|
+ 6
|
|
Total =
|
122
|
|
Total months “stayed”
|
Divided by
|
Number of current employees
|
Equals
|
Average tenure of “stayers”
|
|
122
|
÷
|
10
|
=
|
12.2 months
|
Average Tenure of Employees Who Have Left
A calculation on longevity (total number of months worked before quitting) may highlight the point at which employees “fall off”, allowing you to rethink your organizational response. It may be useful for you to identify the average tenure of employees who left within the previous 12 months, or within any time frame that accurately represents the trend you are researching.
Calculating the average tenure of your leavers
The sum of months worked by “leavers” who worked in the last 12 months and resigned before today divided by the total number of “leavers” who worked in the last 12 months and resigned before today equals the average tenure of employees who have left over the previous 12 months.
Example of Calculation to Determine Tenure of “Leavers”
|
Total number of months worked by employees who left :
|
|
|
- 3 employees worked for 13 months (3 x 13) =
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39
|
|
- 7 employees worked for 10 months (7 x 10) =
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70
|
|
- 1 employees worked for 8 months (1 x 8) =
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8
|
|
- 2 employees worked for 3 months (2 x 3) =
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+ 6
|
|
Total =
|
123
|
|
Total months worked
|
Divided by
|
Number of “leavers”
|
Equals
|
Average tenure of “leavers”
|
|
123
|
÷
|
13
|
=
|
9.46 months
|
Analyzing Special Characteristics
Special characteristics of your turnover rate can also be analyzed. This can be applied to any characteristic, for example, voluntary turnover by supervisor, longevity, or shift work.
Calculating special characteristics of “leavers”
The number of “leavers” that display the identified characteristic divided by the total number “leavers” during the calculation period times 100 equals the voluntary turnover rate for that special characteristic.
Example of Special Characteristics Calculations
For this example, we will look at the number of employees supervised by Mary Jones who leave voluntarily. Of the 12 employees who voluntarily left the organization, 3 were supervised by Mary Jones.
|
Number of leavers supervised by Jones
|
Divided by
|
Total number of leavers
|
Times 100
|
Equals
|
Your turnover rate for Jones
|
|
( 3
|
÷
|
12 )
|
X 100
|
=
|
25%
|
The special characteristic analysis may be used to help you look at what can be “fixed” to reduce turnover. Not all employees who were supervised by Mary Jones may have a problem with her supervision, but you may need to look for long-term trends. In this case you may need to examine the supervision quality or quantity that Jones provides.
There may be other variables affecting your voluntary turnover rate. For example, if you determine that your voluntary turnover for a non-traditional work schedule or shift work is high, you may need to use a survey to determine what supports you can provide to retain your shift workers, offer additional incentives, or re-think your recruitment procedures to identify those workers who would prefer the indicated work schedule.
Vacancy Rate
For some positions, you may wish to determine a vacancy rate to see if there is a trend in a job position. Or, you may wish to determine your overall vacancy rate to see if there is a trend in your organization.
Calculating your vacancy rate
The number of vacant job-specific positions (or positions within the whole organization), divided by the total number of job-specific positions (or within the whole organization), multiplied by 100 equals your vacancy rate.
Example of Vacancy Rate Calculation
|
Number of vacant positions
|
Divided by
|
Total number of positions
|
Multiplied by 100
|
Equals
|
Your vacancy rate
|
|
( 7
|
÷
|
25 )
|
X 100
|
=
|
28%
|
Retention, turnover, and vacancy rates provide insight into who is leaving and when they leave, which gives you information to determine how to intervene.