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Is Your Employee Turnover Good or Bad?

JacquelynKung's picture

By Jacquelyn Kung

When I needed a doctoral dissertation topic, I knew I wanted to pick something important to our industry. Of course, when I chose employee retention to study, I had no idea how difficult a topic it would be. 

There are many nuances which we can discuss in a future article, but here let's try to simplify down what matters. 

In fact, how about we start by looking at what are good versus bad employee turnover levels?

Defining how to calculate employee turnover. 

There are no standards, so let's create one for the purpose of this piece. Let's define employee turnover as the percent of employees who leave after the first 90 days. This way, we filter out bad or I'm-desperate, hair-on-fire hires, as well as those who fail to show up for work after a couple weeks.

Notice that this definition includes both voluntary and involuntary turnover, as well as both exempt and nonexempt employees. The denominator is all employees who made it past 90 days, and the numerator is the number of employees who left, quit, or were terminated past their 90-day tenure. How you define the time period is also important

Exploring the holy grail employee turnover level.

Nuances aside, most researchers and experts in our industry would agree that 15-20% employee turnover is ideal. This leaves room for employee terminations who, after the honeymoon period, turn out to be not-great fits, medical leaves of absences, which turn into permanent leaves, and school/military obligations, among other external factors. 

Putting forth a more realistic employee turnover target.

Most organizations in our industry are not at 15-20%, so I would posit that 30% employee turnover is fairly good. 

Above 40-50% would be fairly bad. Of course, over the years of studying this topic, I would frequently find places with over 100% employee turnover. In other words, half of the staff would last six months or so, or the entire staff would turnover within the year.

Regardless, most good employers in our space are always looking for ways to decrease unwanted employee turnover. 

Let's breakdown the ways to improve -- using 30 as our magic number.

Recruiting: 30-min radius.

Research has shown that the farther an employee lives from work, the more likely he or she is to turn over. Effects begin to emerge at the 15-minute mark; sometimes the 15-mile mark.

I would suggest recruiting within a 30-minute radius of where your community is. Granted, logistically it may be hard to do this. But have in place a strategy to grow your employees -- in the long term, employees stay for good people, growth, and opportunities.

Hiring: 30-day temp roles.

Labor laws in our industry sometimes get tricky. But if it all possible, hire temp to full-time. It's essentially a prolonged interview process, and the hiring quality is better. The candidate knows the day-to-day of the job, and employers see the real work ethic and skills of the candidate.

Retaining: 30-day ramp cycles.

Many organizations in our industry monitor the first three months as a ramp period. Rather than be surprised at the end of the 90 days, I would suggest creating three cycles of 30-day ramps. 

By the end of the first 30 days, all orientation sessions should be done, ideally totaling around 30 hours of training in the classroom or on the job. Plus the new employee should have been assigned a buddy and feel comfortable asking this new buddy any stupid questions (where is the closest bathroom; when do I get a paycheck and how).

By the end of the second 30 days, the new employee should've had a performance and expectations discussion with his or her supervisor. The supervisor should have made very clear what the performance review process is, and for a new employee what the expectations of the job are, including how the first month or two have been so far.

By the end of the third 30 days, the new employee should be feeling comfortable at work, including actions with resident as well as comfort with coworkers. This means that he or she feels like someone cares about them as a person, and ideally has one or two new work friends.

Developing: top 30% and 30-month growth cycles.

To be cultivating talent, every organization should have a plan for growth for each employee. And definitely for the top 30%. The process may sound onerous, but it something that employees can take the lead on when given the tools. It's engaging and empowering when this happens.

We usually recommend development cycles of every one to four years, depending on the department and specific roles. To keep to our magic number of 30, let's talk about a 30-month growth cycle. This means looking at new roles and responsibilities for growth to be assumed every 30 months.

Please leave your thoughts below! And, please share your ideas!

 

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