The calculation of the turnover rate (or more simply "turnover") is a fundamental part of the periodic evaluation of many companies. If you are in a managerial role or have been given the task of evaluating this aspect of a business or company, you may need help. Experienced finance and business professionals often offer advice on how to calculate the turnover rate and how to anticipate or cope with its effects. In this guide you will find how to calculate turnover, in order to evaluate its effects on the company's performance and plan an appropriate strategy.
Steps
Step 1. Calculate the total of expiring contracts and layoffs
To calculate the turnover rate, you have to start by calculating the total number of people who no longer work in the company. Many professionals also consider those who spontaneously quit their job among them.
Step 2. Determine the time period your calculation should refer to, to understand what the significance of this number is in relation to the whole year
For example, if 12 people left the company or a particular department between January 1st of one year and January 1st of the following year, the turnover will be 12 per year. This is not valid if your calculation refers to a period of 6 months, for example.
Step 3. Divide the number you found by the total number of staff in the company or department
In the example above, if the company has 60 employees, divide 12 by 60 to find the turnover percentage, which in this case is 20%.
Step 4. Determine the cost of turnover
When you have come to an accurate calculation of the turnover in the company or department you are evaluating, you can begin to evaluate the influence this number has on the company itself. Many professionals also calculate the exact cost of each position change within the company, considering the cost of training and the cost of working hours lost due to the vacancy left.
