Is a turnover rate of zero a sign of a healthy organization? How would you identify a healthy turnover rate for your company?Low or zero turnover rates may be an indicator that your organization is stagnation stage. It could mean that you have a variety of problems, including, but not limited to the following:Ã¢ÂÂ¢Your firm has weak employees that only you find desirable. A zero or low turnover rate could mean that your employees are undesirable. Headhunters are always trying to take away the best employees in the market. Therefore it might mean they aren't worth stealing. This is especially true in growing industries where headhunting is staffing your company.
Ã¢ÂÂ¢You have a weak performance management system. A low turnover rate probably means that you are not firing bad employees. Every company has weak performers, and failing to identify poor performers out of the organization is not acceptable. A low number of firings could also be an indication of a poor HR department, or an unreliable performance measurement system.
Ã¢ÂÂ¢Your managers are not doing enough motivating. Sometimes, even excellent managers may become lazy and slow down their retention efforts. This "laziness" may also have the side effect of lower employee motivation and a decrease in employee productivity.
Ã¢ÂÂ¢You have poor managers who are afraid to fire poor performers.
Ã¢ÂÂ¢You may have a lot of frustrated employees that feel "caged" with few choices.
Ã¢ÂÂ¢You have a weak external image.
Ã¢ÂÂ¢You have lower-than-optimal employee productivity.
It's important that any company keeps track of statistics of the HR activities because we can calculate the actual turnover rate by using this simple formula:Turnover rate = Number of employees leaving the company (divided) by the average number of employees (multiplied) by 100.
What if we need to determine a healthy turnover rate and compare...