The dropout rate is an indication of the number of employees who leave a company. High dropout rates are a problem in many industries, especially in the IT sector. Employee turnover does not always provide a complete picture of a company's status; and it is certainly not an advantage when different companies use different calculation methods and formulas to estimate abandonment. It is difficult to find information on company abandonment rates, as companies tend not to publish this type of information. Calculating your company's churn rate, however, is important for data analysis. This article examines how to calculate the dropout rate.
Steps
Method 1 of 1: Calculating the dropout rate
Step 1. Determine the average number of employees hired by the company in a single year
In most cases, it doesn't matter if you use the normal or weighted average.
- A normal average is simply the average change in employees over the year. Take the number of employees under contract at the beginning of the year, add the number of employees at the end of the year; divide the result by 2.
- Unlike a normal average, a weighted average will take into account the period in which the company has had a certain number of employees under contract. For example, if a company had 30,000 employees for the first half of the year and 40,000 employees in the second half of the year, the weighted average would be (30,000 x 0.5) + (40,000 x 0.5) = 35,000 employees.
Step 2. Determine the average number of employees who left the company in a single year
This number can be an estimate or can be calculated specifically by consulting the company's books and files. Note that it is better to use more accurate figures, for example 938 rather than 900.
Step 3. Calculate the dropout rate
The calculation is simply the ratio of the average number of employees who left the company in one year to the average number of employees who were hired by the company in the same year.
