Most organizations frequently look at turnover—but they do this at such an aggregate level the measure in and of itself is useless—and not really actionable.
However, by simply segmenting turnover, by tenure, you can drive insight into the multitude of storylines related to this expensive, disruptive and revealing trend.
Here’s why.
First Year Turnover is essential to understand due to its hard cost, opportunity cost, wasted effort and disruption. Just think about the knock-on effects of making the wrong hire—for your company, the team, the hiring manager, the open position, the new employee who might have left another organization for this new opportunity.
Armed with information about your First Year Turnover, you might, amongst other things:
- Identify weaknesses in your onboarding activities;
- Identify inconsistencies between the Talent Acquisition team and hiring managers;
- Realise that you are overselling and/or not delivering employment value proposition;
- Identify a crucial inability to help talent achieve their potential and build value for your organization.
Now add the performance dimension to this turnover, whether it be in the form of talent segmentation, performance feedback, or hard-and-fast business outcomes like attributed sales, utilization or other relevant business outcomes for that individual—and you have something incredibly powerful.
Powerful to the point that by segmenting your First Year Turnover by Performance, you get a whole new picture on the impact of that First Year Turnover.
- Are the First Year Top Performers leaving? What did that cost us? What is the opportunity cost from lost revenue? Was this churn in key value-creator roles and are we still going to make this year’s business plan?
- Are we rapidly dealing with individuals who we might have made a legitimate hiring mistake or simply don’t fit?
- And what are the reasons and rationale for these issues, and strategies to move forward?
Don’t use metrics just because they have always been used, or simply because they are considered best practice—the best practices in HR metrics are built more around the efficacy of HR processes and functions, than business value or the outcomes created by people.
And in our experience, business savvy and action oriented HR folk are rapidly moving towards business value, and helping their organizations understand how their people create competitive advantage, and what the ROI of their workforce programs and people investment are.
It’s your workforce data. You should use it.
John Pensom, CEO
QuIRC, a Canadian company delivering cloud-based workforce and business analytics through their insight-as-a-service offering called PeopleInsight
PeopleInsight Workforce Analytics
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that’s great Neil – using that data and driving changes to recruitment and on-boarding is a sign of a true business partner.
Why did you select first 2 years – any specific connection to engagement drop-off rates? Do you also engage in additional surveying/dialogue with cohorts (or sub-segments like from a department with a high turnover)?
Good practice for sure. Still a good idea to sort your data into avoidable and unavoidable turnover. New hire failures can be affected by many things beyond an employer’s control and several things within its control as well. Sorting the unavoidables out of the picture helps in your complete understanding of reasons for exits. The goal being not the metrics but to respond with changes in practice and policies that help people to stay. For a good explanation of how to define avoidable and unavoidable TO, here’s a link to a good book on the topic.
http://www.silvercreekpress.ca/taming-turnover.html
At my employer, we report People Metrics on a quarterly basis to all our business areas and use them for busniess planning and process reviews. One of my favourite measures is one we call New Hire Failure Rate, which looks at the proportion of staff who do not make it to 2 years of service (for any reason – either resign or terminated). So it is a very similar idea to the one year turnover rate discussed above. We use this metrics to better understand what is going on in the early part of an employee’s time with us, and how we can imporve our recruiting and onboarding processes.
Hi Paula – thanks for your comments and fully agreed – we really believe in the power of segmentation and that homogeneous and disconnected analysis is useless. Connected and segmented data totally changes the conversation, relevance and delivers business insight.
Here are some examples
“Our Average Time to Fill is 45 days”
or
Our On Time fill Rate for xxx roles is 37% and it is costing us $1M in lost productivity per year. If we increase our On Time fill rate in these roles to 80% we will save $800k/year in lost productivity.”
Here’s another perspective:
“We do not know the 1st Year Turnover and Quality of our hires”
or
“Our 1st Year Involuntary turnover for xxx roles is 28% from yyy source.
Our 1st Year Voluntary turnover for xxx roles is 5% from zzz source.
If we shift our investment from yyy source to zzz source we will save $500k/year.”
I would also like to note that regardless of tenure, turnover data must be segmented as avoidable and unavoidable. Each employer needs to create a workplace specific definition of these two terms. Even first year turnover, should be reviewed based on these two categories. Unavoidable turnover includes things like family/spouse relocation, death, serious illness/disability, restructuring of operations, closure of departments/locations etc. For more on this topic, I would recommend the Canadian book “Taming Turnover” available from Silver Creek Press at http://www.silvercreekpress.ca.