Many employers unaware of turnover rates

By BenefitsPro

By Amanda McGrory-Dixon

Most employers are unaware of their employee turnover rates, with only 42 percent reporting the follow a formal process to identify turnover, according to a survey of by AMA Enterprise, a division of American Management Association.

The survey also found that there is disagreement on the optimal turnover rate.

While 46 percent of respondents believe a turnover rate of 10 percent or less is ideal, 19 percent of respondents say 10-20 percent is preferred, and almost one-third of respondents say they do not know what turnover rate would be best.

“In reality, employees always come and go, and some managers pay close attention to what happens, while others appear not to,” said Sandi Edwards, senior vice president of AMA Enterprise. “Certainly no company wants or could achieve zero turnover, and every organization needs new people, new ideas, new energy.

"But runaway turnover can be a nightmare with skyrocketing recruitment and training costs, causing significant impact on the rest of the organization.”

Edwards notes that employee turnover tends to vary by industry, and employers should look at their unique situations to determine the optimal turnover rate. Respondents report not having a clear idea on what is happening with turnover and the related costs.

“Forty-two percent of organizations appear to have a good understanding of the comings and goings of employees,” Edwards said. “Another third tell us they have ‘informal’ ways of doing so, which at the very least demonstrates a lack of clarity.

"On top of that, 12 percent told us they don’t track turnover, and 17 percent of these managers admit they don’t know if their organization tracks it at all.”

In Edwards’ view, the survey findings reveal that there is often a gap between what the employer states as its commitment to employees and what it does to follow up on that commitment.

“Annual turnover is another way of looking at retention,” Edwards said. “An organization doesn’t want to retain everyone, but a healthy organization should want to retain the great majority of its workers.

"Addressing turnover needs to be a priority and driven by the most senior levels of management. It requires a partnership between management and HR. In particular, managers need to be sure they have identified the critical talent needed for future success and make every effort to retain and develop those employees.”

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