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What Is Involuntary Turnover?
Involuntary turnover (firing people) generally occurs when an employee or employees are terminated for just cause. This could be due to an employee’s inability to meet performance standards, for breaking a company policy, as a result of being unable to manage their subordinates, or if they’re unable to work with management. It could also occur if there is simply a reduction in workforce due to an acquisition, downturn in business, or restructuring. Understanding involuntary turnover at your company is important in order to mitigate risk, improve business processes, increase the effectiveness of recruiting, and increase retention.
Involuntary vs Voluntary Turnover
Separations are generally categorized as being either voluntary or involuntary. Voluntary turnover occurs when an employee voluntarily quits or retires. Involuntary turnover occurs when the employer initiates the separation. If you decide to terminate an employee without first understanding the impacts of these types of turnover, you could be putting the business at risk.
Examples of Involuntary Turnover
There are several categories of reasons for involuntary turnover. Here are some examples of each.
- Poor performance
- Lack of improvement after coaching and/or PIP
- Inability to work with management/insubordination
- Poor management of others
- Policy violations
- Poor attendance or frequent tardiness
- Drug or alcohol use at work
- Theft or property damage
- Personal use of company property
- Harassment or bullying
- Downturn in business. There are times when financial instability necessitates lightening the payload; layoffs are a form of involuntary turnover. (Learn more about layoffs and furloughs here.)
How to Calculate Involuntary Turnover Rate
Step 1: Figure Out Number of Involuntary Separations
The first step is to find out the number of how many employees were terminated involuntarily from the company over the past year. For example, let’s say that your company had 50 involuntary separations.
Step 2: Figure Out Average Number of Employees
The next step is to calculate the average number of employees that were employed by your company during that same time period. Let’s say that your company averaged 300 employees during that year.
Step 3: Involuntary Separations / Average Number of Employees
Next, divide the number of involuntary separations by the average number of employees at your company.
50/300 = .1666
The final step is to multiply this number by 100 in order to get a percentage.
.1666 x 100 =16.67%
Step 4: Benchmark
Now that you’ve calculated your involuntary turnover rate, you can benchmark this data against other companies or the industry average. The U.S. Bureau of Labor Statistics can be a fantastic resource for this. Benchmarking can be a great way to present your data to senior management.
Step 5: Identify Factors
The next step is to identify the factors that are causing your involuntary turnover. Best practices include:
- Document the reason for each involuntary turnover that occurs in your company. (If you don’t, this could result in even more money lost in unemployment claims.) Examine those reasons for trends.
- Always conduct exit interviews to reveal additional information that could be affecting involuntary turnover.
Step 6: Strategize
Let’s assume you’ve benchmarked your involuntary turnover rate against similar businesses, found it to be high, and identified factors that are causing an involuntary turnover. The next step is to create and execute a strategy to reduce it. For example, if your managers are terminating employees due to low performance without first giving them the tools to overcome deficiencies or opportunities to succeed, your business will suffer in the long run. A strategy should be built on supporting employees, giving them the tools necessary to succeed, and creating a supportive work environment. Another example would be if you find that many involuntary terminations involve a policy violation of excessive tardiness or attendance issues, then you may consider either training management to administer this policy more effectively or revising the policy to allow greater flexibility.
Best Practices to Reduce Involuntary Turnover
Resignations and terminations are inevitable, but if your involuntary turnover rate is high, look to improve your hiring and onboarding experience. Hiring the right people and helping them learn the organization’s culture and expectations are the best ways to avoid involuntary turnover.
Assigning a well-qualified mentor to a new hire can put the mentee in a position to learn about an organization more quickly, receive career guidance, and increase their networking opportunities. Ideally, a mentorship helps a new hire gain valuable skills and sets them up to be successful with the company for the long term. It also helps them understand what tools they need in order to be successful.
A structured onboarding program lays the foundation for new hires and helps them understand where they fit into a company’s mission. They are taught an organization’s values and vision, what’s expected of them, and what the culture is like. Effective onboarding creates quality habits for new hires by training them on policies and what is acceptable at your company. New hires should be given a copy of your employee handbook to review these policies.
Reducing involuntary turnover must begin with recruiting. Applicants should be informed that lying on their application is grounds for termination even after they are hired. If you hire employees contingent on passing a drug test and background check, then candidates must be made well aware of this beforehand so they are aware of the consequences. The interview process is an excellent way to lay the groundwork for conduct in the workplace, along with expectations for performance, ethics and attendance. Being upfront with employees will increase their understanding about what is expected and decrease involuntary turnover.
Employee experience is the employee’s perception of what working for your company is like from application to separation. Prioritizing employee experience is likely to reduce poor performance and other reasons people get fired. Marcus Buckingham once said, “People leave managers, not companies.” It’s important to train managers to help employees understand that the work they do is important, inspire them to do their best work, and help them feel included. Company benefits and culture also have a large impact on your employees’ desire to stay with your company. For example, if your culture looks down on employees for using vacation time, this could lead to less employees using it and could result in an unhealthy work/life balance and increase turnover rates.
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James has worked in the HR field going on 5+ years and currently serves in the role of HR Manager. His areas of expertise are in managing recruiting, onboarding, HR metrics, performance and engagement, employee relations and development. He has earned a masters degree in HR along with the nationally recognized certification of SHRM-CP.
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