[IPAC-List] calculating turnover

[Megan Paul]

I'm exploring different ways of calculating turnover and I'm puzzled by the typical approaches to defining the denominator. I'm starting with the assumption that turnover is about what proportion of employees have left the organization (or job, region, etc.). To arrive at that, it seems to me that you need to know the number of employees that left the organization in a given period of time, which should then be compared to the number of employees who could have left the organization in that same time period. Almost every recommendation or practice out there, however, includes a denominator that is a) some form of headcounts and b) for a point in time or multiple points in time. The most common is to create an average of the number of employees at the beginning of the period and the number of employees at the end of the period. I see two limitations to this typical approach: 1) counting the number of employees only gets at the number of filled positions, regardless of who occupies them and b) data for a point in time shouldn't substitute for data for a time period. Static headcounts don't represent the total number of people that could have left in a time period. If you have 100 employees at the beginning of the year and 100 at the end of the year, the typical formula says the denominator is 100. If 50 left, the turnover rate is 50%. But if 50 left and have been replaced, then the total number that could have left is actually 150 (the 100 that started and the 50 more that were hired and are still there), which is really just a turnover rate of 30%. The only number that seems like a truly accurate denominator would be the number of employees at the beginning of the time period plus any new hires in the time period. The only challenge I see with this approach is that there is a ceiling of 100%, which makes sense on the one hand (you shouldn't have more people leaving than there are people) but can be misleading on the other, since an annual rate of 100% turnover could have been reached in the first quarter. To me, the solution is to qualify the number just like that--say the time period within which 100% is reached.

So, given the divide between the common practice and my logic, can folks help me bridge the gap? What am I missing?

Thanks in advance,
Megan Paul



Megan E. Paul, Ph.D.
Research Assistant Professor
University of Nebraska–Lincoln
Center on Children, Families, and the Law
206 S. 13th Street, Suite 1000
Lincoln, NE 68588-0227

(402) 472-9812 Office
(402) 472-8412 Fax
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