Churn Rate

What Is Churn Rate?

The employee turnover rate, also called the churn rate, the annual, quarterly or monthly attrition rate, is the ratio showing the number of employees who leave the organization within a given time. The churn rate is calculated by dividing the number of employees who have resigned (voluntary/terminated/retired) by the total average number of employees in this time period and then multiplying 100. One of the reasons for high employee turnover rate might be something much deeper like low engagement of employees, unfavorable working conditions or compensation, lack of career development opportunities or culture misalignment. At the same time, the low turnover rate demonstrates that employees are happy and engaged.

Example

For example, in the case of a retail company, it should determine its employee churn rate for the preceding fiscal period in order to get the employee turnover and attrition information. Take for example a period starting with 1000 employees only to experience terminations, resignations, or retirements of 150 people. The churn rate would be found in the formula (150/1000) * 100 = 15%. This comes down to 15% turnover rate, implying that 15% of the company's staff have a tendency to quit during a year. The organization can also explore the explanation for employee termination by conducting exit interviews, surveys and employee feedback to uncover the root causes and develop retention strategies to overcome the problem of the employee churn. By assessing the churn rate trend for a period, organizations can tell if retention initiatives are effective, compare the result with an industry standard, and then deal with the turnover challenge. As a result, the company can provide a stable and engaging workplace.