What is the Ideal turnover rate

There are many opinions about what is the “ideal” turnover rate. Here is how a CEO might look at it.

• Voluntary turnover should be zero for the top 10% of our best performers.
  
• Turnover should be 100% for the bottom 10% (our Worst performers).
  
• Voluntary turnover should be zero for the key jobs and key competencies that we have identified.
  
• Our voluntary turnover should be 10% or more below that of our closest competitors and 10% lower than our firms rate of last year.
  
• Managers that have a turnover rate (for top performers and key jobs) that is 10% below our corporate average should be rewarded. All employees of low (voluntary) turnover departments should get a bonus.
  
• Managers that have a turnover rate (for top performers and key jobs) that is 10% above our average should be given special consulting and training help from HR.
  
• The turnover rate for HR people that worry too much about turnover numbers and not about worker and departmental productivity (and it’s causes) should be 100% :-).

Real company turnover rates are available through the Saratoga Institute and in the Jan. issue of Fortune Magazine

Other possible retention measures

T/O = Turnover Rate

1. Performance turnover – Voluntary t/o rate of top 25% of a companies performers as measured by performance. appraisal.
   
2. Key position turnover – Voluntary t/o rate for each identified “essential/ hard to hire” position.
   
3. Key competency turnover – Voluntary t/o of individuals that possess skills/competencies essential to the company.
   
4. Competition turnover – % of voluntary t/o that immediately go to work for our direct competitors.
   
5. Retention turnover – % of “targeted for retention” EE’s who leave anyway.
   
6. Exempt turnover – % of all exempt employees who leave each year.
   
7. Retention ranking by manager – Ranking of managers by the voluntary t/o rates in their divisions/ depts.
   
8. Benchmark turnover – Our t/o rate compared to: – our industry average – our key competitor – last years rate.
   
9. “Positive/Good (involuntary) turnover” – % of identified “low performers’ (or those lacking key competencies) who leave each year.
   
10. Other – Turnover’s impact on our customers, image, recruiting and the performance of other employees.

© April, 1998

by Dr. John Sullivan