# Performance Turnover

## The Cost of Turnover may be higher than you think

### Performance Turnover

Try using “Performance Turnover”, a measure I developed in our retention work, in lieu of the traditional turnover calculation. We have used it in a variety of configurations but it works something like this.

• Start with the assumption that losing a “Hi-Per’s” (High Performing Employees) is three times as bad as losing a “Lo-per” (LoPerformer).
• Split your range of the “normal” performance appraisal scores your employees normally receive into three divisions (Top 25%, Middle 50%, and Bottom 25%). For example, performance appraisal scores of 90-100 are in the top 25%; 70-89 middle 50%; and below 70 in the bottom 25%.
• Now assuming that losing a top performer is three times worse than losing a bottom performer do this calculation.

## Cost of TurnoverSample Calculations

#### An Excel 97 workbook is available that includes the Performance Turnover calculations.Click here to request the Business Costs and Impacts of Turnover workbook.

##### TP = Top PerformerMP = Middle PerformerBP = Bottom Performer

Example 1: 1 Middle Performer plus 3 Bottom Performers left.

1 – Top Performers

PA Score = PA = 100
Weighting Factor = WF = 1.5
Number Who Left = NWL = 0
TP Total Score = PA x WF x NWL
TP Total Score = 100 x 1.5 x 0
TP Total Score = 0

2 – Middle Performers

PA Score = PA = 80
Weighting Factor = WF = 1.0
Number Who Left = NWL = 1
MP Total Score = PA x WF x NWL = 80 x 1.0 x 1
MP Total Score = 80

3 – Bottom Performers

PA Score = PA = 60
Weighting Factor = WF = 0.5
Number Who Left = NWL = 3
BP Total Score = PA x WF x NWL = 60 x 0.5 x 3
BP Total Score = 90

Total Example 1 = TP + MP + BP = 0 + 80 + 90 = 170
(High numbers are bad; 3 Lo-Per Employees out of a total of four who left

Example 2: 3 Top Performers plus 1 Middle Performer left.

### 1 – Top Performers

PA Score = PA = 100
Weighting Factor = WF = 1.5
Number Who Left = NWL = 3
TP Total Score = PA x WF x NWL = 100 x 1.5 x 3
TP Total Score = 450

### 2 – Middle Performers

PA Score = PA = 80
Weighting Factor = WF = 1.0
Number Who Left = MPWL = 1
MP Total Score = PA x MPWF x NWL
MP Total Score = 80 x 1.0 x 1
MP Total Score = 80

3 – Bottom Performers

PA Score = PA = 60
Weighting Factor = WF = 0.5
Number Who Left = NWL = 0
BP Total Score = PA x WF x NWL =60 x 0.5 x 0
BP Total Score = 0

Total Example 2 = 450 + 80 + 0 = 530
(High numbers are bad; 3 Hi-Per Employees out of a total of four who left

The results are calculated monthly and compared to previous months and years.

In this example where 4 employees left in both cases the score when 3 Hi-Per’s left was 530 compared to 170 when 3 Lo-Per’s left. The point difference differentiates the difference between Performance Turnover and the traditional turnover calculation (where the score would have been 320)

Hi-Per turnover = 530

Lo-Per turnover = 170

Well, I hope you can see how a CEO would appreciate knowing that the performance of those that left was factored into the calculation. If you believe, as Bill Gates does, that Superstars perform at a rate 100 times that of the average employee a weighted turnover calculation is essential!

A similar calculation “Performance Hire” can also be done for new hires.

I hope this makes everyone at least think about a better way of doing turnover calculations.

#### by Dr. John Sullivan

As seen on Gately Consulting in 2005. 