CALCULATING TURNOVER RATES In its simplest form, turnover is the percentage of separations against the total number of employees. Therefore, should you want to know the percent turnover among ITS 3s in your agency you would determine a specific time period and divide the number of separations by the total number of ITS 3s during that time period. Separations may include voluntary resignations, dismissals, non certifications, retirements and transfers to other agencies. Separations normally do not include internal movements such as promotions, transfers, etc. Depending on what you want the turnover numbers to illustrate you may define separations differently. For example, if you want to illustrate retention within an agency, division, or classification you would normally define separation as voluntary resignations since non voluntary separations and retirements would not illustrate losing employees to other employers. However, if you simple want to illustrate overall turnover, you may want to include all separations. If you do include retirements in your turnover calculation, you should note this so it is clear to whoever is reading the data. When preparing workforce planning data you need to develop a variety of reports to illustrate what is happening within your workforce. I would recommend doing a turnover report using only voluntary resignations and then having separate reports on retirement patterns, external transfers, and non voluntary separations. You may also want to do some reports on internal movements if there are issues within your agency that require such data. There is no workforce planning report that calculates turnover within the state or agencies. It was a deliberate decision not to include such a report since agencies calculated turnover differently and there was no one accepted way to do it. To calculate turnover you should use the report titled Annual Separation Counts. The Churnover within State Service Report will give you information on transfers between agencies. For internal movements, you should use the Annual Appointment Counts Report. The Annual Loss Rate report should not be used to calculate turnover. The data in this report is simple a calculation of how many employees existed at one point in time compared to another separations including abolishment of positions, internal promotions, title changes, etc. For example, if an agency moved all employees in one class to another class due to a reclassification or title change, the report would show a 100% loss rate. Or if you lost 5 people and replaced them within the timeframe of the report, this would not show in the numbers. Therefore, this data is not turnover.

Calculating Employee Turnover Rates

Calculate your turnover rate For the last 12 month period, add up the number of voluntary resignations. Next divide by the total number of employees at the end of the same 12 month period.

Resignations = ________

Number of Employees = ________

Your Turnover rate = ________% (divide resignations by number of employees)

For Example

Resignations = 55

Number of employees = 500

55 500 = .11 or 11%

COST OF EMPLOYEE TURNOVER Turnover cost indicates how much turnover is costing and its impact on the operations of the agency. The cost of turnover includes the direct costs of recruiting new employees interviewing time, administrative work that is associated with hiring and processing, training, supervisory time, and overtime that is paid to employees who have to cover for employees who are no longer there. For example: Number of employees.500 Annual turnover11% Number of employee turning over.55

Average turnover cost per employee.$1,694

Total annual cost$93,170 Savings from reducing turnover by 5%....................................$ 42,350 (Turnover reduced to 6%; 500 x .06 = 30 55 - 30 = 25 fewer employees turning over 25 x $1694 = $42, 350) Turnover costs also take into account indirect costs. Research indicates that the indirect costs of turnover can be 2 to 5 times higher than direct costs. These costs are more difficult to quantify and assign a dollar figure to, but they are very real.

CALCULATING DIRECT TURNOVER COSTS

Recruiting Costs

Advertising, radio, direct mail, newspaper, etc.

Interviewing Costs (time spent x wage of the interviewer(s)

Interviewing

Reference Checks

Administrative Costs (time spent x wage of administrator(s)

Processing of paper work for newly hired employee

Processing of paper work for exiting employee

Supervision Costs (time spent x the wages of the supervisor/manager

Training Costs

Time spent training (xx hrs) x wage of employee

Time spent training (xx hrs) x wage of trainer(s)

Materials, equipment, job aides

Separation Costs

Average cost of unemployment, separations pay, etc.

Overtime costs to do work of exiting employee

Total for Direct Costs

1998 The People Solution Inc.