Understanding Staff Turnover: The Key to Organisational Growth

Staff turnover is more than just a number – it’s a vital sign of an organisation’s health. When employees leave and new ones come in, it can shake up the dynamics of the workplace. That’s why understanding and managing staff turnover is crucial for business growth. It impacts productivity, morale, and overall success.

In this blog, we’ll explore the ins and outs of staff turnover, how to calculate it, and effective strategies to keep your team intact and thriving.

What is staff turnover?

Staff turnover, or employee turnover, measures how many employees leave your company over a certain period. This includes everyone who leaves whether through resignation, termination, or retirement.

Why staff turnover matters

High staff turnover can be a red flag, indicating deeper issues such as poor management, lack of career advancement opportunities, or a negative work environment. Conversely, low turnover often signifies a happy, engaged workforce. Understanding these patterns helps you address potential problems and foster a healthier workplace.

Staff turnover calculation

Calculating your staff turnover rate is pretty straightforward. Here’s the formula to use:

For example, if 10 employees left over the past year and the average number of employees during that time was 200, your turnover rate would be 5%.

This calculation highlights the rate at which employees exit and serves as a benchmark for industry comparisons and internal assessments. Regularly monitoring this metric can help you spot trends, diagnose problems, and implement strategies to improve employee retention. 

By keeping a close eye on your staff turnover rate, you can make informed decisions that promote a more stable and productive work environment.

Employee turnover and retention strategy

Managing turnover is about creating an environment where employees want to stay. Here are our top 5 strategies to help you retain your top talent:

1. Offer competitive salaries and benefits: Ensure your compensation packages are attractive.
2. Provide career development opportunities: Help employees grow within the company through training and promotions.
3. Foster a positive work environment: Cultivate a culture of open communication and supportive management.
4. Recognise and reward contributions: Show appreciation for your employee’s hard work and achievements.
5. Conduct exit interviews: Learn why employees leave and use that feedback to improve.

What is your staff turnover really costing you?

Employee turnover can be a significant expense for businesses. Here’s a clear breakdown of how to calculate its true cost:

Total Direct Costs + Total Indirect Costs – Unpaid Costs While Job Vacant = Total Cost of Employee Turnover

Let’s consider an example:

Example calculation:

• Business Size: 50 employees
• Annual Turnover Rate: 20% (10 resignations per year)
• Average Weekly Earnings: $1,586.20 (Australian Bureau of Statistics, October 2018)
• Employee Benefits and On-Costs: 30

Total weekly cost per employee: $2,062.06

Assuming turnover costs equal one year’s total remuneration for each employee:

This example illustrates the high cost of employee turnover. Investing in employee training and recognition to reduce turnover can be more cost-effective. For instance, reducing the turnover rate from 20% to 10% could save the business nearly $500,000 annually, minus the costs of implementing the retention strategy.

By understanding and addressing these costs, businesses can make strategic decisions that improve retention and save money.

What this means for your business

Understanding and managing staff turnover is essential for any organisation’s growth and success. By monitoring turnover rates, addressing underlying issues, and implementing effective retention strategies, you can build a more engaged and loyal workforce. 

Ready to optimise your team and drive growth for your business? Contact us today and let’s transform your workforce together!