Analyzing Employee Turnover

walking guy January 4, 2016 By: Lisa G. Phillips

Do you know why your employees leave your association? Are there trends you can learn from? Collecting and analyzing the right data can help you develop a solid employee retention strategy.

An analysis of employee turnover data can help pinpoint why employees are leaving your organization and what you can do to retain the best. Even better, the results will help you proactively join your organization’s decision makers in their struggle to achieve quality and profitability.

To create a turnover-analysis spreadsheet, obtain data on all employees who exited the organization during the last three to five years. Include employee name, position, department, supervisor’s name, reason for termination, Fair Labor Standards Act (FLSA) status, EEO information, date of birth, date of termination, tenure, annual salary, cost factor for replacement, and total cost to replace the employee. Once you have created the spreadsheet, a wealth of information is available that will help you examine averages and trends.

Department, supervisor, position. Departments with high turnover may require HR attention. Supervisors with high turnover may need management training. And positions with high turnover may need to be restructured to be more interesting.

Reason for termination. If many employees are leaving for family reasons, the organization may need to adopt more family-friendly policies.

FLSA status. High turnover in nonexempt positions may indicate a need to restructure jobs. High turnover in exempt positions can be a serious drain on financial resources and organizational productivity.

EEO status. High turnover in minority groups may indicate policies that unintentionally have a disparate impact on those groups.

Date of birth. An analysis of this data may reflect trends particular to gen X, gen Y, or baby boomers that need to be addressed.

Date of termination. This can be helpful in determining if you have seasonal departures. For instance, many employees leave in the period immediately after annual bonuses are paid out.

Tenure. Departures during an employee’s first year may indicate problems with the hiring process, orientation, or employee training.

Annual salary. Your compensation plan may not be attracting and retaining the right people.

Cost factor and total cost for replacement. Multiplying the employee’s salary by a cost factor will determine the total cost to replace the employee. The Saratoga Group estimates that it can cost anywhere from one to three times an employee’s annual salary to replace them. Obviously, the greater the level of responsibility, the greater the cost factor.

Average turnover for the organization and average employee tenure. Determine the average in these areas and apply it to specific departments or managers to determine if they are doing better or worse than the organization as a whole.

Average age of employees. Determining the average age of your employees may highlight a need to offer benefits more appropriate to employee life needs.

Yearly/quarterly trends. A look at trends may help you anticipate times of high turnover, so you can plan both recruiting efforts and budgets. It will also show if your annual turnover rate is increasing or decreasing.

Supervisors with high turnover may need management training. And positions with high turnover may need to be restructured to be more interesting.
After completing your analysis, create a brief cover memo that summarizes relevant data and suggests how to resolve problems, along with any associated costs. Attach relevant articles and highlight appropriate information. Then, track and regularly report back on the ROI generated by your solution. This analysis and subsequent reporting can help you establish credibility as a business partner who understands organizational strategy, provides valuable information to upper management, and creates workable solutions for employee retention.

Editor’s Note: This article, originally published in 2007, has been updated.

Lisa G. Phillips, SPHR, is a former director of human resources with ATIS, Washington, DC.