Turnover is a term used by businesses to describe the process of losing or replacing employees This can be calculated in terms of either financial costs or as a percentage of the staff. Generally, employee turnover is a measure of the rate at which employees leave the company and need to be replaced. High turnover can be costly to a company and has the potential to damage its reputation among both customers and potential employees. It is, therefore, important for businesses to minimize the rate of employee turnover in order to promote a stable, productive and successful working environment.
Example 1: Expansion of Business
As businesses grow, turnover can be a natural consequence. This is particularly true as a business branch begins to expand. As the business grows, new roles can be created and existing roles can be changed or upgraded. Existing employees may want to seize the opportunity to pursue these new roles and positions, and new talent may be needed to fill in positions that were previously unfilled. The turnover that occurs during this period of growth can be beneficial, as it allows businesses to bring in new skills and developments that can contribute to the success of the company.
Example 2: Retirement
When employees retire, they may be replaced by younger talent and with new ideas, which can lead to turnover. This is especially true for employees who are in leadership positions or have particular expertise in a certain area, as these roles can be most impacted by the changes in staff. Retirement can also result in staff turnover due to the need for new roles or the need to replace a particular employee with one who can fill their shoes; ultimately, this will have an effect on the overall rate of turnover.
Example 3: External Factors
External factors can also drive turnover, such as the economy, changes in demand for certain services, the infiltration of new technology, or changes in the need for particular skills. If a company is in a position to capitalize on certain economic opportunities, then it may be advantageous to hire new talent or to replace certain staff members so that the business can remain competitive. Changes in the external environment can also be a major factor in the rate of turnover, as it may be necessary to update skills or expertise to remain relevant.
Example 4: Dismissal
Dismissal is another factor that can drive employee turnover. If an employee is not meeting the standards of the company or is not fulfilling their role, then it may be necessary to terminate their employment and bring in a replacement. This can be quite costly for the company as well, as they may need to pay out certain sums, such as severance packages or legal fees.
Example 5: Career Progression
Finally, employees may turnover due to their own desires to progress in their career. An employee may choose to leave a company in order to pursue a different position or even a different career path. This kind of turnover can be beneficial to a company, as it can create opportunities for new employees to come in and develop their skills, while providing the company with new ideas as well. Additionally, if the company can provide a positive reputation to prospective employees, then it is more likely to attract new talent.