Author:
Monica Porter
Date Of Creation:
13 March 2021
Update Date:
1 July 2024
Content
The company's quit rate means the percentage of employees the company voluntarily quit. The quit rate is also known as the severance rate or the job jump rate. If your quit rate is high, it can cost you a lot of money to keep changing employees. Furthermore, customers may assume that the value of your product or service has decreased due to a reduced workforce or a lack of morale or motivation for the rest of the staff. And if your brand is damaged, it can seriously affect your business results.
Steps
Part 1 of 3: Calculating quit rate
Calculate the rate of leave every month. To calculate the quit rate for any given month, you need to know the total number of employees at the beginning of the month. Then, you also need to keep track of the number of new employees added that month. Finally, determine the number of employees leaving the company. The number of employees leaving the company is the number of leave.
- Replace the data into the following formula: Quitting rate = Number of laid-off / Average number of employees * 100.
- For example, let's say a telecom company has 150 employees as of April 1, 2015. During that month, 20 employees voluntarily left the company. In addition, the company has hired 25 new employees.
- First, calculate the average number of employees. The initial number is 150. If 20 people quit their job and 25 are newly hired, the number of employees at the end of the month is 155. The average number of employees for that month can be calculated using the equation:.
- Next is to calculate the monthly leave rate. This month, 20 people quit their jobs, and the average number of employees was 152.5. The monthly leave rate can be calculated using the following equation
- Thus, the quitting rate in April 2015 of the company is 13.11%.
Calculate the rate of quitting every quarter. Also use the above formula, but instead of using one month's data, you need to see data for one quarter, ie three months. Suppose the telecom company in the above example wants to calculate the employee's quit rate in the second quarter of 2015. That is, April, May and June 2015.- The number of employees as of April 1, 2015 was 150. During the second quarter, 30 people quit their jobs and 40 new employees were hired. Therefore, the number of employees at the end of the quarter as of June 30, 2015 was
- The average number of employees in the quarter was.
- The quitting rate in the second quarter of 2015 was 19.35%.
Calculate the annual leave rate. To calculate the annual leave rate, you need to know the total number of employees quitting for the whole year. Then, you need to calculate the average number of employees. Using the average number of employees is mathematically more accurate as it limits the influence of seasonal changes in the number of employees in a company throughout the year.- Suppose the telecom company in the above example has a total of 62 employees quitting for the whole year.
- They typically hire 20% more employees in the last quarter of the year - the busiest season.So the company averaged 155 employees in the first three quarters, and averaged 186 employees in the last quarter.
- There are four quarters in a year, so you can calculate the average number of employees using the following formula.
- You can also use the number of work weeks to calculate. There are 52 weeks in a year, 39 weeks in the first three quarters, and 13 weeks in the last quarter. Calculate the average number of employees by the formula.
- Finally, based on hours worked to calculate. There are 2,080 hours of work in a year, 1,560 hours in the first three quarters, and 520 hours in the last quarter. Calculated according to the formula
- The average number of employees of this company is 162.75.
- Calculate the rate of annual leave according to the formula, ie 38.09%.
Part 2 of 3: Forecasting the severance rate
Understand the value of forecasting quit rates. While it is useful to look at the retrenchment rate in the past, it is also important for businesses to forecast the quit rate to evaluate the company's performance in the future. You can use your expected quit rate to compare with other businesses in the same industry or industry. If the unemployment rate predicts unfavorable, businesses can implement a strategy to limit the number of employees quitting.
Learn the formula for converting figures by year. If you know the number of employees who quit for several months, you can use that to figure out the rate of leave for the rest of the year. Remember that this data is a projection and may not take into account the effect of seasonal change on actual leave rate.
- Use a recipe.
- = rate of annual leave
- = cumulative leave rate
- = time of observation.
Convert quit rate according to monthly data to annual rate. Let's say a company wants to use data from January to May to convert to annual leave rate. On January 1, the company had 2,050 employees. The number of layoffs is 125, and the number of new recruits is 122 people. Hence the final number of employees is 2,047.
- Calculate the cumulative leave rate. The average number of employees is 2,048.5 (). Cumulative leave rate is 6.1% ().
- Convert the quit rate to the annual rate. The cumulative leave rate was 6.1% and the observation period was 5 (January to May is five months).
- The annual resignation rate is 15.3%.
Quarterly resignation rate forecast. Also use the above formula, the only difference is that instead of 12 months, we will use it for 3 months. For example, suppose the same company in the above example wants to use the April and May figures to forecast the severance rate for the entire second quarter. As of April 1, the company had 2,049 employees. The number of employees who quit April and May is 37, and the number of new hires is 35. So the number of employees by May 31 is 2,047.
- Calculate the cumulative leave rate in the quarter. The average number of employees is 2,048 (). The cumulative quit rate in these two months is 1.81% ()
- Inferring the rate of leave for the rest of the quarter. Cumulative leave rate is 1.81% and the number of times observed is 2 (April and May).
- The estimated resignation rate for the second quarter is 2.73%.
Part 3 of 3: Analyzing the effects of the quit rate
Too high a quit rate can damage the company's branding. Customers rate their satisfaction with a company largely based on their relationships with employees. The customer may claim that they are buying a poor product or receiving a service loss due to a change in personnel. And according to customers, the high quit rate can cause the company to lack staff or lack the spirit and motivation of the remaining employees.
The quit rate affects business results. If the business loses customers due to too high quit rate, this will affect business results. According to one study, a high rate of resignation affects up to 400% of a company's profits. This study has conducted a review of the various branches of a temporary support service company. Affiliates with the highest quit rate tended to profit four times lower than the affiliate with the lowest quit.
Improving employee retention can save a business a lot of money. With an employee quitting, the company may have to spend up to one fifth of that employee's salary to replace another employee. Thus, if the quit rate is high, businesses can spend a lot of money to replace new employees. In addition, the employee quitting leads to reduced productivity, expensive hiring and training for a new employee, and productivity will be slower until the new employee learns the job. The company can avoid these costs by implementing an employee retention policy. Workplace flexibility, cumulative sick leave and paid family leave are policies that can help reduce employee leave rates. advertisement
