Employee turnover is in one way or another, a part of business, and usually, it is viewed in a bad light. This is mostly because trying to replace employees, especially key employees, can be an expensive and almost impossible endeavour, and more often than not, adversely affects the company's bottom line. As highlighted in Jimmy Smith's 2009 article, 12 Reasons Employees Leave Organisations, high turnover could well cost a company a third (33%) of its complete wage bill (both salaries and benefits). In addition to this, high turnover companies can be outperformed by their lower turnover counterparts, with the latter being found to be up to four times more profitable. While all this is happening, businesses have to contend with maintaining employee morale to prevent the effects of a demoralised workforce. This shows just how important it is for every company to be aware of its employee turnover rate. But what is employee turnover?
Employee turnover refers to the number of employees who leave the company within a specified period of time. Turnover encompasses quits, discharges, layoffs and other forms of separation. Quits typically refer to voluntary turnover which the employee initiates. It then follows that the quits rate may be used as a gauge or indicator of the inclination or tendency of the employees to end up leaving employment. Layoffs and discharges are involuntary turnovers which the employer initiates. These are the two most common forms of separations but turnover can also arise from death, retirement, impairment & disability as well as transfers to other sites of the same organisation. A high employee turnover rate indicates that many employees leave the company within a specific period. Low employee turnover, on the other hand, speaks of a fairly stable workforce and may indicate that employees prefer to stay within the company. It may be worth noting that high employee turnover is not necessarily a bad thing, whilst, low employee turnover is not necessarily a good thing.
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