How to Calculate Human Resource Turnover

A company's human resources are most valuable. Subsequently, employee turnover is a costly expense especially when recruiting, training and the loss of productivity are factored in. While attrition is a cost of doing business, some businesses maintain lower human resource turnover rates than other firms in their industry. This translates into lower costs and higher savings. The first step in lowering turnover is measuring it.

Instructions

1. Determine the average number of people employed with your organization on a monthly basis. You can calculate an average on a monthly basis by taking the beginning and ending number for each month. Let's say there are 500 people in your organization on any given month.

2. Determine how many employees left the organization in the past year. If you don't have full-year data, take the sum of the total number of months you do have. Let's use 50 over the last 6 months.

3. Divide the average number of people who left the organization (10) by the average number of people who are employed by the organization (500). You can get this information from company attrition or staffing reports. The equation is 10 / 500 = 0.02. If you have full year data, this is your final answer; that is, you have 2 percent human resource turnover per year. However, if you only have less than 12 months of attrition data, you will need to annualize your number. In our example, we only have 6 months of attrition data.

4. Annualize your number. Divide 12 by the number of data periods. The equation is 12 / 6 = 2.

5. Multiply Step 3 by Step 4. The equation is 0.02 * 2 = 0.04 or 4 percent human resources turnover per year.

References

• Journal Article: Human Resources Turnover as an Asset Acquisition, Accumulation and Divesture Process
• The Real Cost of Replacement Hiring

Resources

• Reasons For Turnover
• HR: Analyzing Employee Turnover