How to Calculate Leave Rate

The company’s turnover rate is the percentage of the company’s employees who voluntarily quit their jobs. The turnover rate is also known as the severance rate or job hopping rate. If your company’s turnover rate is high, it can cost you a lot of money to constantly change employees. Furthermore, customers may assume that the value of your product or service is reduced because of a reduced workforce or a lack of morale or motivation among the remaining employees. And if your brand is harmed it can seriously affect your own business results.

Table of Contents

Calculating leave rate

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Calculate the monthly leave rate. To calculate the turnover rate for any given month, you need to know the total number of employees at the beginning of the month. Then you also need to know how many new employees were added that month. Finally, determine the number of employees leaving the company. The number of employees leaving the company is the number of employees leaving.

Substitute the data into the following formula: Attrition rate = Number of Leaves/Average Number of Employees * 100.
For example, suppose a telecommunications company had 150 employees as of April 1, 2015. During that month, 20 employees voluntarily left the company. In addition, the company hired 25 new employees.
First, calculate the average number of employees. The initial count is 150. If 20 people leave and 25 are new hires, the number of employees at the end of the month is 155. The average number of employees for that month can be calculated by the equation: $($ $150$ $+$ $155$ $)$ $/$ $2$ $=$ $152$ $,$ $5$ ${displaystyle (150+155)/2=152.5}$ $(150+155)/2=152.5$ .
The next step is to calculate the monthly turnover rate. This month, 20 people were laid off, and the average number of employees was 152.5. The monthly turnover rate can be calculated according to the following equation $($ $20$ $/$ $152$ $,$ $5$ $)$ $*$ $100$ $=$ $0$ $,$ $1311$ $*$ $100$ $=$ $13$ $,$ $11$ ${displaystyle (20/152.5)*100=0.1311*100=13.11}$ $(20/152.5)*100=0.1311*100=13.11$
Thus, the company’s absenteeism rate in April 2015 was 13.11%.

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Calculate the quarterly turnover rate. Use the same formula, but instead of using a month’s data, you need to look at data for a quarter, i.e. three months. Suppose the telecommunications company in the above example wants to calculate the employee turnover rate in the second quarter of 2015. That is, April, May and June 2015.

The number of employees on April 1, 2015 was 150. During the whole second quarter, 30 people quit and 40 new employees were hired. Therefore, the number of employees at the end of the quarter as of June 30, 2015 was $150$ $-$ $30$ $+$ $40$ $=$ $160.$ ${displaystyle 150-30+40=160.}$ $150-30+40=160.$
The average number of employees in the quarter was $($ $150$ $+$ $160$ $)$ $/$ $2$ $=$ $155$ ${displaystyle (1550+160)/2=155}$ $(150+160)/2=155$ .
The turnover rate in the second quarter of 2015 was $($ $30$ $/$ $155$ $)$ $*$ $100$ $=$ $19$ $,$ $35$ ${displaystyle (30/155)*100=19,35}$ $(30/155)*100=19.35$ , or 19.35%.

Forecast of turnover rate

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Understand the value of forecasting turnover. While it is useful to look at past turnover rates, you also need to forecast turnover to gauge your company’s future performance. You can use your expected turnover rate to compare it to other businesses in the same industry or sector. If the unemployment rate is predicted to be unfavorable, businesses can implement strategies to limit the number of employees leaving.

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Learn the formula for converting figures by year. If you know the number of employees leaving over the course of a few months, you can use that to infer the turnover rate for the rest of the year. Remember that this data is a projection and may not account for the impact of seasonal changes on actual turnover. ^{[2] X Research Source}

Use the formula $CHEAP$ $a$ $=$ $first$ $+$ $CHEAP$ $c$ $twelfth$ $/$ $WOMEN$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1+R_{c}^{12/N}-1*100}$ $R_{a}=1+R_{c}^{{12/N}}-1*100$ .
$CHEAP$ $a$ ${displaystyle R_{a}}$ $Go out}$ = annual leave rate
$CHEAP$ $c$ ${displaystyle R_{c}}$ $R_{c}$ = cumulative leave rate
$WOMEN$ ${displaystyle N}$ $WOMEN$ = observation time.

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Convert turnover from monthly data to year-to-year rates. Let’s say a company wants to use data from January to May to convert to annual turnover rate. On January 1, the company had 2,050 employees. The number of layoffs is 125, and the number of new hires is 122 people. Hence the final number of employees is 2,047.

Calculate the cumulative leave rate. The average number of employees is 2,048.5 ( $($ $2.050$ $+$ $2.047$ $)$ $/$ $2$ $=$ $2,048$ $,$ $5$ ${displaystyle (2.050+2.047)/2=2,048.5}$ $(2.050+2.047)/2=2,048.5$ ). The cumulative turnover rate is 6.1% ( $($ $125$ $/$ $2.047$ $)$ $*$ $100$ $=$ $6$ $,$ $ten$ ${displaystyle (125/2.047)*100=6,10}$ $(125/2.047)*100=6,10$ ).
Convert turnover rate to annual rate. The cumulative attrition rate was 6.1% and the observation period was 5 (January to May was five months).
$CHEAP$ $a$ $=$ $first$ $+$ $0$ $,$ $061$ $twelfth$ $/$ $5$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1+0.061^{12/5}-1*100}$ $R_{a}=1+0.061^{{12/5}}-1*100$
$CHEAP$ $a$ $=$ $first$ $,$ $061$ $2$ $,$ $4$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1,061^{2,4}-1*100}$ $R_{a}=1,061^{{2,4}}-1*100$
$CHEAP$ $a$ $=$ $first$ $,$ $153$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1,153-1*100}$ $R_{a}=1,153-1*100$
$CHEAP$ $a$ $=$ $0$ $,$ $153$ $*$ $100$ $=$ $15$ $,$ $3$ ${displaystyle R_{a}=0,153*100=15,3}$ $R_{a}=0.153*100=15.3$
The annual turnover rate is 15.3%.

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Forecast quarterly turnover. Using the same formula above, the only difference is that instead of 12 months, we use 3 months here. For example, let’s say the same company in the example above wants to use April and May data to forecast turnover for the entire second quarter. As of April 1, the company had 2,049 employees. The number of employees leaving April and May was 37, and the number of new hires was 35. So the number of employees on May 31 was 2,047.

Calculate the cumulative turnover rate for the quarter. The average number of employees is 2,048 ( $($ $2.049$ $+$ $2.047$ $)$ $/$ $2$ $=$ $2,048$ ${displaystyle (2.049+2,047)/2=2,048}$ $(2.049+2.047)/2=2.048$ ). The cumulative absenteeism rate in these two months is 1.81% ( $($ $37$ $/$ $2,048$ $)$ $*$ $100$ $=$ $first$ $,$ $807$ ${displaystyle (37/2.048)*100=1,807}$ $(37/2.048)*100=1.807$ )
Infer the turnover rate for the rest of the quarter. The cumulative attrition rate was 1.81% and the number of periods observed was 2 (April and May).
$CHEAP$ $a$ $=$ $first$ $+$ $,$ $0181$ $3$ $/$ $2$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1+,0181^{3/2}-1*100}$ $R_{a}=1+.0181^{{3/2}}-1*100$
$CHEAP$ $a$ $=$ $first$ $,$ $0181$ $first$ $,$ $5$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1,0181^{1.5}-1*100}$ $R_{a}=1,0181^{{1.5}}-1*100$
$CHEAP$ $a$ $=$ $first$ $,$ $02727$ $-$ $first$ $*$ $100$ ${displaystyle R_{a}=1,02727-1*100}$ $R_{a}=1.02727-1*100$
$CHEAP$ $a$ $=$ $0$ $,$ $02727$ $*$ $100$ $=$ $2$ $,$ $727$ ${displaystyle R_{a}=0.02727*100=2.727}$ $R_{a}=0.02727*100=2.727$
The predicted turnover rate for the second quarter is 2.73%.

Analysis of the effect of absenteeism

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Too high a turnover rate can damage a company’s brand. Customers judge their satisfaction with a company largely on their relationship with employees. Customers may assume that they are purchasing a poor product or receiving poor service due to a personnel change. And according to customers, a high turnover rate can make the company short of staff or lack the morale and motivation of the remaining employees. ^{[3] X Research Sources}

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The turnover rate affects business results. If the business loses customers due to the high turnover rate, then this will affect the business results. According to a study, it has been shown that a high turnover rate affects up to 400% of a company’s profits. This study looked at the different branches of a temporary support services company. Affiliates with the highest turnover rates tend to be four times less profitable than those with the lowest turnover. ^{[4] X Research Sources}^{[5] X Research Sources}

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Improving employee retention rates can save businesses a lot of money. With an employee leaving, the company can spend up to 1/5 of that employee’s salary to replace another employee. Thus, if the turnover rate is high, the business can spend a lot of money to replace new employees. In addition, employee turnover leads to reduced productivity, higher costs of hiring and training a new employee, and slower productivity until the new employee learns to master the job. The company can avoid these costs by implementing an employee retention policy. Workplace flexibility, cumulative sick leave, and paid family leave are policies that can help reduce employee turnover. ^{[6] X Research Source}

Steps

Calculating leave rate

Forecast of turnover rate

Analysis of the effect of absenteeism

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