For staffing agencies, employee turnover is of the utmost importance. It helps you in figuring out how often you need new workers. A higher turnover rate means that your employees average a shorter tenure with your company. Conversely, when the turnover rate decreases, employee tenure goes up. So what does this mean for your business? well, the lower the turnover rate, the lesser money your company spends on hiring new employees, training them and all the other costs associated with recruiting employees. A low turnover can also increase the profit of your company.
Turnover rate tells you how many times a specific position was filled by a different employee in a year. if one position is filled by the same person throughout the year, the turnover rate is zero. If it is filled with 2 people, the turnover rate would be 100 percent. This is calculated by the number of people hired and dividing it by the number of jobs and multiplying the amount by 100. Finally, you subtract 100 from the equation. This 100 represents the person who was hired initially for the job.
You can easily calculate your company’s turnover rate for both your internal staff as well as your temporary and contract employees. But you must make sure you calculate them separately as they are different. To calculate your firm’s turnover, you need to find out your company’s average weekly employment rate. In most companies, the number of temporary and contract positions fluctuates far more than the rest. To calculate your average weekly employment, find out how many employees your company had during the week and add them up and divide them by 12.
Once you determine that, you need to find out how many temporary and contract employees you had throughout the year. the best way to do this is to count the number of w-2 forms your company issued to these employees. Once you have these 2 figures, you can easily calculate your firm’s turnover rate for temporary and contract employees using the following formula:
Turnover Rate = (Total number of W-2s issued/Average weekly employment*100) – 100
You can use this formula to determine the turnover rate of your internal employees as well.