Improving Work-Life Fit in Hourly Jobs
The Center for WorkLife Law
Copyright © 2011 Susan J. Lambert
Drawn from S.J. Lambert & J.R. Henly (2010).
Retail managers' strategies for balancing business
requirements with employee needs: Manager survey
results. Report of the University of Chicago Work
Monthly Turnover = Number of employees who
exit the company during a month divided by the
number of jobs
Annual Cumulative Turnover Rate = Sum of monthly
turnover rates across the year (fiscal or annual)
Turnover is an exit rate. It is the number of
employees who exit the company divided by the
number of jobs. One begins by calculating turnover
month by month.
EX: If there are 10 employees and 2 leave in
January, the turnover rate for January is 20 percent.
If 4 employees are hired by the beginning of
February and 6 leave that month, the turnover rate
for February would be 50 percent (10-2= 8 jobs at
end of January, hired 4 employees by beginning of
February so 12 jobs. 6 employees left/12 jobs =
50%). At end of February, the
Cumulative Turnover Rate is 70%. If turnover rates
continue to be in the range of 20 to 50 percent for
the remainder of the year, the turnover in this job
would well exceed 100 percent.
Monthly Retention = Proportion of employees in
Month 1 who remained with company in Month 2
Annual Retention = Proportion of employees in
Month 1 who are still with company in Month 12
Retention is a survival rate. It is the proportion of
workers who remain the same month to month.
On the face of it, one might think that if the annual
turnover rate is 100 percent or more, none of the
employees who were employed in January would be
with the company the following December. This
would be the case were turnover evenly distributed
across the workforce, but in many workplaces,
a core group of employees with longer seniority
works alongside another group that tends to turn
over rapidly, leading to high cumulative turnover
rates across the year (Lambert, 2008; Lambert &
Waxman, 2005). It is thus possible for a job to have
a high rate of turnover as well as a relatively high
rate of retention.
Tips for Analyzing Turnover and
Who goes? This is the key to costing out turnover. Is it
your high performing or low performing employees?
Is the problem with turnover concentrated in
part-time jobs? Among workers with childcare
responsibilities? Among newly-hired workers? You
can calculate rates separately for low performing
and high performing workers, part-time and full-
time workers, and for those hired within the last
year. Subgroup analyses are necessary in identifying
the costs of turnover.
Who stays? High turnover rates often hide stability
in your workforce. Calculating retention rates
can thus reveal hidden stability in your lower-level
workforce. Calculating retention rates for subgroups
of workers can help you identify employees to
reward for retention and among whom to target
your retention efforts.