Involuntary Turnover: The Going Rate
Is there an echo in here?
Let's chat about a data source that goes largely unrecognized or underappreciated: involuntary turnover data. Most companies spend endless time analyzing voluntary leavers, the employees who remain (stay interviews), and who they are hiring — but what about the people you had to exit? It’s important to take note of your involuntary turnover rate for a number of reasons.
What is Involuntary Turnover?
Involuntary turnover comes in two forms: (1) for cause, in which someone underperformed or violated policy or conduct, and (2) not for cause, where someone was let go due to no fault of their own, but rather because of changes in business demands or restructuring. If a company’s involuntary turnover rate is too high, you experience the same issues that exist with voluntary leavers — productivity decreases, increased hiring costs, and reputation challenges. Additionally, a high involuntary turnover rate may increase fear and anxiety among existing employees, harming company culture.
How to Calculate Involuntary Turnover Rate
Your involuntary turnover rate is calculated the same way as your voluntary rate. Essentially, you want to determine the percentage of your workforce that left the company involuntarily over a certain time period..
To calculate involuntary turnover, you want to divide the number of employees that involuntarily left the business by the average number of employees over a set period of time.
# of involuntary leavers
divided by
average # of employees
Let’s say over the course of the month, there were 15 involuntary leavers. That will be your numerator (top number).
To determine the average number of employees, you want to do the following. If you started the month with 100 employees and ended the month with 124 employees, you’ll find the average of those two numbers. 100 + 124 = 224. Then divide by two, and you land on 112 as the average headcount for the month.
When you plug those numbers in, you get the following:
# of involuntary leavers = 15
divided by
average # of employees = 112
= .13
To convert .13 into a percentage, you multiply by 100, yielding an involuntary turnover rate of 13%.
Involuntary Turnover Examples
Further, you can conduct deeper analysis on this data by analyzing types of involuntary turnover. Examples include:
Reduction in force
due to skill set
due to relocation
due to client loss
For cause
due to performance
due to behavior
due to violation of company policy
Using Involuntary Turnover Analytics to Mitigate Risk
Analyzing involuntary turnover rate by leader or manager can also provide proactive risk avoidance. Do you have a manager who seems to target a particular type of employee? Maybe this manager struggles with patience, has a hard time developing people, or has a tendency to eliminate people who pose a risk to their management style. These things may not be immediately apparent, but if you notice a trend, you can work to address it before it backfires — potentially in the form of a lawsuit.
How to Reduce Your Involuntary Turnover Rate
By analyzing your company’s whole turnover, including involuntary turnover, you may identify opportunities for course correction in hiring, onboarding, training new employees, employee development around new tech, setting expectations and/or modifying definitions around behavioral norms, or even adjusting your business model.
Involuntary Turnover Rate Benchmarks
You might find yourself asking, “What’s a good rate?” There is no easy answer to that. It will depend on things like your industry, changes to your business, internal promotions, etc.
In short, you will find it most helpful to compare your company’s own numbers over time to identify trends.
You can also visit the U.S. Bureau of Labor Statistics website to do some benchmarking. For example, this table provides the annual rates for layoffs and discharges by industry and region. This is a useful tool for determining how your involuntary turnover rate compares to that of your industry as a whole.
Additionally, SHRM offers a number of benchmarking tools, including this Human Capital Benchmarking Report.
As with all data, it’s important to make your comparisons as similar as possible, hence the recommendation to first evaluate your company’s involuntary turnover trends. This allows you to analyze the data with the insider knowledge of certain events or exceptions to the norm.
Onwards HR makes reductions in force easier to handle. Request a demo to learn more.
Written by Jen Bender, an HR executive with 20+ years of experience working in the industry, particularly on projects related to outsourcing and reductions in force
