Retaining talent within your organisation is extremely important. Increasingly businesses are needing to work harder to ensure that their best employees stick around. Businesses that don't effectively track their exiting employees open themselves up to significant risks, both to their bottom line directly as well as factors that are more difficult to measure but are equally important, such as company culture and engagement.
The intelliHR Analytics section lets you track your retention statistics at the click of a button, based on live data as well as allowing you to cross filter your data against important metrics in order to drill deeper to the cause of any attrition in your organisation.
This article aims to provide some general context around retention and the impact it can have on your business, as well as how to best use the intelliHR Analytics tools to equip you with actionable data to make effective HRM decisions.
Why is monitoring turnover important?
Losing employees is expensive. Hiring and training new employees can place significant cost on a business through direct outlays such as agency fees and training investment. There are also indirect costs, such as lowered productivity while training, loss of specific client knowledge and reduced morale, which can be particularly dangerous due to their difficulty to measure. Most estimates place the cost of losing and replacing an employee at between 1.5x and 2x their annual salary.
Turnover can signpost deeper issues within the business. When overall turnover data are combined with other key metrics such as tenure, business unit, or supervisor, it can diagnose more serious underlying issues within an organisation.
For example, if an organisation has significantly higher turnover of employees with less that 1 year's tenure, it could suggest cultural issues within the business or a misalignment of expectations laid down during recruitment. On the other hand, if elevated turnover exists with employees of 3+ year's tenure, it may suggest a lack of progression opportunities or development.
Some turnover is 'healthy'. An organisation that experiences no turnover at all could run the risk of becoming stagnant. Most organisations agree that a small amount of employee turnover actually aids the business, in that it removes under-performers or cultural mismatches. It also allows for new ideas and fresh thinking to be inserted into the business.
Looking beyond the numbers...
While being aware of your overall attrition rate is a great first step, the number alone doesn't tell you much about the context of the termination and therefore whether or not it's a cause for concern.
Cross referencing attrition data with complimentary metrics such as tenure, pay grade, business unit or supervisor allows you to drill deeper into the source of your turnover rate and make more directed strategic decisions.
Going one step further and augmenting your attrition data with qualitative variables such as voluntary/involuntary or regrettable/non-regrettable terminations as well as specific reasons for leaving will equip you with a deeper insight into your workforce dynamics.
Traditionally, this information has been gathered through paper-based forms such as exit interviews. Without extensive data handling, exit interviews serve only as a snapshot of a specific termination instance, and because they're not linked to the population data set, provide no insight into trends forming within an organisation.
As previously discussed, high turnover can place massive stress on a business, so to be able to observe trends and proactively resolve issues before they become more serious is a significant competitive advantage.
Don't forget to look within!
It can sometimes be easy to focus solely on employees leaving the business and how to react accordingly, without recognising the potential for movement within the organisation.
Mobility is the measurement of movement of employees within your business rather than into or out of it. Mobility within an organisation comes in a variety of forms.
Firstly, lateral or transitional movement is where employees move different teams or business units. Lateral movements expose employees to new skills environments and leadership styles, ultimately building more rounded employees, capable of progressing upwards into positions of greater responsibility. Secondly, there is upwards progression, where businesses consider the internal talent pool to fill senior positions.
Both modes of internal mobility can benefit an organisation through reduced recruitment costs, faster time-to-productivity, retaining established client networks and maintenance of company culture. Positive trends in mobility are often correlated favourably with retention, as employees see the potential for development and progression within the business. A recent study surveying over 7000 job leavers found the top reason for exiting was wanting greater opportunities for advancement.
Retention Analytics:
The intelliHR platform has a suite of analytics reports dedicated to retention, allowing you to drill deeper into any patterns that may exist within your business.
Attrition – focuses on the number of employees leaving the organisation over a set period of time. Data are collected from Job Attribute fields as well as Job End dates.
How is attrition calculated? The attrition rate is the proportion of employees that have exited the business divided by the total number of people employed at the beginning of the reporting period:
Note: this means that generally a shorter reporting period will return a lower attrition rate, as there has been less time for employees to leave. A useful tool to compare trends over different time periods is to calculate an 'Annualised Attrition Rate'. This is calculated by:
Using your Attrition report:
1. Reporting Period: Choose the period you wish to report on using the calendar at the top right of the screen.
2. Cross-filtering: You can cross filter your data to provide more specific insight into turnover trends.
- Business Unit / Supervisor / Pay Grade: using any of these cross filters will let you investigate specific groups within your organisation to see if attrition in any of these areas is higher or lower than the business average. Any anomalies can then be investigated further.
- Attrition by Month: displays a chronological view of your attrition data. With the help of trendlines you can visually investigate any time related patterns in your attrition. You can filter specific time periods by clicking on those months.
- Attrition by Tenure: allows you to investigate any trends between attrition and the duration of employment. It is important to consider tenure when analysing your organisation's attrition as any skew in this trend may often point to strategic opportunities. For more information on the relationship between tenure and attrition, see Return on Recruitment Investment.
3. Export data: you can export any of the charts returned by your filters as well as the corresponding line data in csv format. For instructions on how to do this see, the Analytics section in the System Administrator guide.
Attrition Reasons – focuses on the feedback given when an employee is exiting the business. There may sometimes be a discrepancy between the reasons provided by an employee and their supervisor when exiting a business. Note that this discrepancy itself can be telling if it signifies a misalignment of expectations between employees and management.
The intelliHR Analytics section provides two reports; Attrition Reasons - Manager View and Attrition Reasons - Employee View. The data for each report is collected from the 'Employee Leaving Business Feedback' forms sent to the employee and supervisor respectively.
Trends observed in either report, or any discrepancies between the two can provide insights into causal links between employee experience and the decision to terminate.
Using your Attrition Reasons report:
1. Reporting Period: Choose the period you wish to report on using the calendar at the top right of the screen.
2. Cross-filtering: You can cross filter your data to provide more specific insight into turnover trends.
- Business Unit / Pay Grade / Gender / FTE: using any of these cross filters will let you investigate specific groups within your organisation to see if attrition reason in any of these areas is noticeably higher that it should be. Any anomalies can then be investigated further.
3. Export data: you can export any of the charts returned by your filters as well as the corresponding line data in csv format. For instructions on how to do this see, the Analytics section in the System Administrator guide.
Mobility – focuses on the movement of employees within your business rather than out of it. Any change to a job or employment conditions are recorded as movement and will register in the mobility report. Data are collected from any changes made to an employee's job attributes.
If multiple changes are made to an employee's job attributes, each change will be recorded as a separate mobility instance. For example, if an employee receives a promotion and as a result moves up a pay grade, is assigned to a new supervisor and has a new position title, this will be recorded as a change in all three of these areas.
Using your Mobility report:
1. Reporting Period: Choose the period you wish to report on using the calendar at the top right of the screen.
2. The report displays two key views; Job Changes and Condition Changes. A job change typically denotes vertical movements such as a promotion, whereas a condition change is typically a lateral movement such as increasing work capacity from part time to full time. Any movement type can be filtered by clicking on the corresponding segment of the pie chart.
3. Cross-filtering: You can cross filter your data to provide more specific insight into turnover trends.
- Business Unit / Supervisor / Pay Grade: the data can be filtered by each of these categories to investigate where any movement is taking place in the business. The filters apply to the 'New Value' for all job attributes, after the movement has been made.
4. Export data: you can export any of the charts returned by your filters as well as the corresponding line data in csv. format. For instructions on how to do this, see the Analytics section in the System Administrator guide.
Using your Tenure report:
1. Choose the date you wish to report on using the calendar at the top right of the screen. Investigating tenure at different dates can show you any changes in your workforce's experience level over time.
2. The report lets you filter current and past employees and displays the longest, shortest and average tenure of the group that you have selected.
3. Export data: you can export any of the charts returned by your filters as well as the corresponding line data in csv format. For instructions on how to do this see, the Analytics section in the System Administrator guide.
Tenure – focuses on the length of time employees have worked in your organisation, that is, how experienced your workforce is. Typically, tenure is correlated with retention. A business with high attrition generally will have a higher proportion of less tenured, less experienced employees. Conversely, a business with low attrition will have a more tenured workforce. Tenure can give you an insight into the output potential of your employees, for example, if you have a high proportion of low tenure employees, you can expect that they will still be in their ramp-up phase, and this might be reflected in your training investment. Tenure data are collected from the start and finish dates in an employee's job attributes and is calculated daily.