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Annual Voluntary Turnover Rate
 

   7/1/2008

Annual voluntary turnover rate is defined as the rate at which employees enter and willingly leave a company in a given fiscal year.  To calculate annual voluntary turnover percentage, divide the number of voluntary separations during the year by the average number of employees during the year and multiply by 100. 

Annual voluntary turnovery    

 =

Number of voluntary separations during the year 

Average number ofemployees during the year

X 100

The costs of turnover are sizeable for organizations.  Turnover expenses accrue due to the costs of separation processing, replacement hiring, training new hires and lost productivity or business.  These expenses vary as a function of the industry and position—replacing positions requiring specialized skills or knowledge tend to be more time-consuming and costly for the organization. Along with these financial expenditures, there are various consequences associated with high turnover, including a decline in employee morale, lost knowledge, skills and abilities, and a disruption in the smoothness of organizational operations.1

Variation in voluntary turnover rate by industry is due in part to some uncontrollable facets of the nature of work.  For example, SHRM’s 2008 Benchmarking Database shows that the agricultural and forestry industry and the transportation and warehousing industry both have a relatively high median voluntary turnover rate of 35% and 36%, respectively.  Whereas the biotechnology and high-tech industries have comparatively low voluntary turnover rates, 5% and 6% respectively.2  While high voluntary turnover may be due to the nature of work, studies have shown a range of factors an organization controls that may also be the culprit.  Employees may feel a lack of perceived organizational support from their employer due to decreased perceived fairness, low levels of management support, unfair workplace practices and a need for better job conditions.  These workplace factors may lead to a spike in voluntary turnover.3

It may be important for HR personnel to conduct exit interviews with former employees so that they can pinpoint their reasons for leaving and address existing problems.  Depending on the cause of turnover, there are several strategies that companies can implement in an attempt to reduce their voluntary turnover rate.  Employers may need to improve their selection process, re-evaluate their training programs, or develop well-planned employee orientations. Also, research has consistently found an increase in job satisfaction and retention rates for employees who receive a realistic job preview (an accurate depiction of both the positives and negatives of their position).  Therefore, by providing potential employees with realistic job previews during the selection process, the rate of voluntary turnover is expected to decrease.1

Executives concerned about a high rate of voluntary turnover may find it helpful to use hard data about voluntary turnover rates from competing organizations in order to justify changes in their own management practices.  For additional benchmarking data and to learn how the SHRM Customized Benchmarking Service can take your HR department to the next level, please visit our web site at www.shrm.org/research/benchmarks/ or call 1-800-283-7476 ext. 6366.

Endnotes

[1] Wiley, Carolyn. “Employee Turnover:  Analyzing Employee Movement Out of an Organization.”  SHRM Online.  http://www.shrm.org/hrresources/WHITEPAPERS_Published/CMS_000116.asp (June 10, 2008).

2 SHRM’s 2008 Human Capital Benchmarking Database (unpublished).

3 Weatherly, L. (2004) The Role of Perceived Organizational Support and Supportive Human Resource Practices in the Turnover Process.  Alexandria, VA:  Society for Human Resource Management.

Project Team

Project Leader: Kelsey Logan, Strategic Research

Project Contributors: Andrew Mariotti, strategic research analyst; John Dooney, manager, Strategic Research; Steve Williams, Ph.D., SPHR, director, Research Department

Editor: Nicole Gray, copy editor

Disclaimer

This article is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information.

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