How to calculate and improve employee turnover with market intelligence solutions

Imagine you are a superhero with special spy glasses that let you see everything happening worldwide, especially in the areas you’re most interested in. Market intelligence is just like those spy glasses but for businesses.

With market intelligence, companies can calculate and see what strategies they should apply to improve employee turnover, enhancing their overall success and performance. This information is invaluable because employee turnover is like a revolving door. Just like how a revolving door constantly moves and changes people going in and out of a building, employee turnover refers to the rate at which employees leave and are replaced in a company.

High employee turnover can lead to increased costs, reduced productivity, and the loss of valuable talent. However, companies can calculate and improve employee turnover with the right strategies and market intelligence, enhancing their overall success and performance.

Below, we’ll explore the benefits of utilizing employee retention software. Discover how marketing intelligence solutions can enhance the overall employee experience, foster an environment that attracts and retains talented team members, and ultimately contribute to your business’s seamless operation.

• 4.2 million people left the workforce in November 2022, according to the Bureau of Labor Statistics report.
• Employee turnover in the business sector could reach 24% by the end of 2023, according to Gartner’s findings.
• 57% of employees who quit in 2021 indicated that they did so because they felt disrespected at work.

Various factors, including job dissatisfaction, lack of growth opportunities, inadequate work-life balance, and poor company culture, can trigger employee turnover. To improve retention, companies should focus on addressing these issues. Implementing flexible work arrangements, providing professional development opportunities, and fostering a positive work environment are effective ways to reduce employee turnover.

Employee turnover can significantly affect a business, both positive and negative. Employee turnover refers to the rate at which workers leave the company and are replaced by new ones.

The average cost of losing an employee can cost thousands of dollars. Some studies estimate that every time a company replaces an employee, it costs an average of 6 to 9 months of salary. For an employee making $60,000 annually, that’s $30,000 to $45,000 in hiring and training. However, employee turnover depends on their salary and position. For example, in some reports, the average cost to replace an employee is:

• One or two amounts of the employee’s annual salary
• $1,500 for hourly workers
• From 100% to 150% of the official salary of the employee for technical positions
• Up to 213% of the employee’s salary for C-suite positions.

Here are more ways in which employee turnover can affect a business:

• Disruption to workflow. When experienced employees leave, it can disrupt the workflow and productivity of a team or department. Remaining employees may need to pick up the slack, leading to potential burnout and decreased morale.
• Loss of institutional knowledge. Long-term employees often possess valuable institutional knowledge about the company, its processes, and their customers. When they leave, that knowledge can be lost, leading to a learning curve for their replacements.
• Impact on company culture. Frequent employee turnover can negatively impact company culture. A high employee turnover rate may create an environment of uncertainty and job insecurity, leading to decreased employee morale and satisfaction.
• Recruitment challenges. A reputation for high employee turnover can make it more challenging to attract top talent. Potential candidates may be wary of joining a company with a history of employee turnover.
• Employee engagement. A high employee turnover rate can negatively impact employee engagement. Employees may feel less committed to the organization if they perceive it as unstable or uncaring about employee retention.

Businesses should manage and reduce employee turnover effectively and create a positive work environment that promotes employee satisfaction and engagement. Strategies may include:

• Competitive compensation packages
• Opportunities for growth and development
• A supportive company culture
• Regular feedback and recognition
• Market intelligence (which will be discussed in more detail below).

Calculating the employee turnover rate involves determining the percentage of employees who leave a company over a specific period, typically a year. To calculate the employee turnover rate, follow these steps:

Step 1: Choose a period. Select the period for which you want to calculate the turnover rate. It’s usually calculated annually, but you can also calculate it for shorter periods, like monthly or quarterly.

Step 2: Collect data. Gather the necessary data for the chosen period. You will need:

• The number of employees at the beginning of the period (Total Employees at the Start, TES).
• The number of employees who left the company during that time (Employees Who Left, EW).
• The average number of employees during this time (Average Employees, AE). This is calculated by adding the number of employees at the start and end of the period and dividing it by 2.

Step 3: Calculate the employee turnover rate. Once you have the required data, you can calculate the turnover rate using the following formula: Employee Turnover Rate (%) = (EW / AE) x 100. Here’s a breakdown of the formula:

• Calculate the ratio of the employees who left the company (EW) to the average number of employees during the period (AE).
• Multiply the ratio by 100 to convert it to a percentage.

Step 4: Interpretation. The resulting percentage represents the specified period’s turnover rate. A higher turnover rate generally indicates that a higher proportion of employees left the company during that time, which could suggest potential employee satisfaction, engagement, or retention issues.

Remember that employee turnover rates vary significantly across industries, company sizes, and job roles. Therefore, it’s valuable to compare your turnover rate with industry benchmarks and historical data to understand your company’s performance better.

Employee turnover is a key issue for many companies, especially in competitive and dynamic markets. Losing valuable talent can impact productivity, morale, customer satisfaction, and profitability. Here’s the data you can use to understand and address the factors influencing employee turnover.

Identify the retention factors

The first step to reducing employee turnover is to identify retention factors or the factors that influence why employees stay or leave your organization. It can include compensation, benefits, recognition, career development, work environment, culture, and feedback. You can use data analytics to measure and analyze these factors, for example, by conducting:

• Surveys
• Interviews
• Performance reviews
• Exit interviews
• Sentiment analysis.

By identifying the drivers of retention, you can prioritize areas for improvement and align your retention strategies with the needs and expectations of your employees.

Benchmarking

Compare employee turnover rates with industry benchmarks to understand how your organization fares in the market. Identify if the issue is unique to your company or is prevalent in your sector, which will help develop context-specific solutions.

Competitor analysis

Analyze your competitors’ employee retention strategies. Identify what they are doing differently and whether their retention rates are better. Thus, you can get ideas for implementing effective retention measures within your organization.

Internal talent analytics

Use data analytics to assess patterns and trends related to employee turnover within your organization. Look for common themes such as specific departments, roles, or tenure levels that experience higher turnover.

Recruitment strategy

To reduce employee turnover:

• Start with a robust recruitment strategy that emphasizes hiring the right candidates.
• Look for individuals who align with your company’s values and culture and possess the necessary skills and experience.
• Conduct comprehensive interviews and assessments to ensure a good fit from the beginning.
• Try boomeranging recruiting, as it offers valuable benefits related to institutional knowledge and cultural fit.

Market salary and benefits analysis

Ensure your salary and benefits packages are competitive with industry standards. If your compensation is not in line with the market, it could significantly drive employee turnover. smartHire helps you ensure cost-efficiency in hiring, especially if your organization operates in multiple locations. Thus, you can gain insights into the average annual salaries and the salary range (including the lowest, average, and highest rates) for specific areas. This data empowers you to offer competitive compensation packages while keeping your hiring expenses in check.

Changing needs of your employees

Responding and adapting to your employees’ changing expectations and demands. It may include monitoring external and internal factors that affect your employees, such as:

• Market trends
• Customer feedback
• Competitor actions
• Technological changes
• Organizational changes
• Employee feedback.

Use data analytics to learn and adapt to the changing needs of your workforce, for example, using predictive analytics, prescriptive analytics, machine learning, and artificial intelligence. By learning and adapting to the changing needs of your employees, you can anticipate and meet their future needs and keep them interested and engaged.

smartData, as a market intelligence solution, helps reduce employee turnover and leverages big data to help organizations build and acquire skills for the future. It provides smart labor market data at the user’s fingertips and allows them to process, compare, and integrate their internal data with a global external pool. The goal is to empower businesses to gain a competitive edge by making informed, data-driven decisions concerning talent strategy and workforce planning.

Key features include:

• smartData solution offers valuable insights through a convenient and scalable pricing model. It allows users to access real-time market data, which can help in understanding how specific job roles and skills are evolving and gaining workforce trends of competitors in their industry.
• By empowering organizations to make data-driven decisions, smartData assists in optimizing talent development, training, and recruiting based on future job requirements. It also helps businesses explore possible future operating and organizational models.
• The service encourages users to discover and explore the HRForecast universe of data, which may provide additional insights and ideas for future talent strategies.