Tracking and understanding employee turnover is one of the most important metrics your company can follow. Not only is it vital to track turnover, but you should also be actively working to decrease it. As a federal contractor, the impact of turnover affects not only your company but also your affirmative action plan. In this article, we will address both of these areas.Understanding turnover at your company will help you stay on top of costs, your AAP, and provide a bigger picture of why turnover is happening and how you can address it.
Five key reasons why turnover matters
- It is costly
- It affects a business’ performance
- It may become increasingly difficult to manage
- It impacts your workforce
- It impacts the data you collect for your Affirmative Action Plan
Why employees leave
Employees leave companies for many reasons, including retirement, quitting on impulse, better opportunities, being fired, laid off, and relocation, to name a few. Whatever the reason, each has a different impact on your company. When someone leaves a company they generally fall into one of the following categories- voluntary, or involuntary termination.
- Voluntary turnover- is initiated by the employee, for example, a worker quits to accept another job.
- Functional voluntary turnover– typically does not hurt the organization because these individuals are typically poor performers or employees whose skills can easily be replaced at a relatively low cost.
- Dysfunctional voluntary turnover– is harmful to the organization as a whole due to the exit of high performers and employees with hard-to-replace skills and turnover rates that lead to high replacement costs.
- Involuntary Termination is usually attributed to poor selection decisions. This problem can be corrected by revising the hiring process to ensure that the best candidate is selected for the position. In addition, extensive training for managers is needed to ensure a standard interview process. The training would include not only being able to identify if the candidate can perform the essential functions of the job but also to utilize predictors from this study and future data gathering to determine if the employee will be a long term employee. (We will address this more in an upcoming article).
Is turnover a problem at your company?
To determine if turnover is a problem at your company, you need to ask the following three questions:
- How many people are leaving your company and at what rate?
- Who is leaving, and from what positions?
- What are the relative costs and benefits of historical turnover patterns?
In order to understand if there is a problem with turnover, review the turnover at your company for a selected period of time by EEO category for each year; the aggregate period by EEO category, and the aggregate period by department and job title. Ensure the time frame was chosen extends over several years in order to acquire sufficient data.Next, separate the data between voluntary and involuntary terminations by department and job title to better understand where to focus future strategies, develop training for managers, and take corrective action. If your company is a federal contractor, it is also important to review your data to ensure there is no systemic discrimination in your hiring or termination practices. Identifying these issues early on will allow you to take proactive measures and be prepared in the event of an OFCCP audit.
Based on the data gathered, you should be able to determine if turnover is a problem in your company and if there are any obvious concerns that need to be addressed. Now, you will be ready to take the next step and dive deeper into turnover with the following articles: “Costs associated with turnover,” “Reasons Why Employees Stay and Why They Leave” and “How to Develop a Retention Management Plan.”If you have any questions concerning your turnover and how it impacts your affirmative action plan, we would be happy to assist you. Contact Career Resources at firstname.lastname@example.org