Keeping turnover rates low can translate into other benefits, such as cost savings, higher productivity and improved team morale. So instead of looking at how employee retention efforts can be time-consuming, consider how they can work in your favour. <\/p>\n\n\n\n
How To Calculate Retention And Turnover Rates?<\/h3>\n\n\n\n
Retention and turnover rates\ncan help assess the effectiveness of your workforce management approach.<\/p>\n\n\n\n
Retention Rate<\/strong> is the percentage of employees who stay during a period of time. Divide the number of current employees by the total number of employees at the beginning. Retention rates show how satisfied and engaged your employees are.<\/p>\n\n\n\n Turnover Rate<\/strong> is the percentage of employees who leave over a period of time. Divide the number of leaving employees in a period by the average number of people over the same period. Turnover rate helps to identify your organisation\u2019s problems and areas for improvement.<\/p>\n\n\n\n Here’s an example at calculating both figures:<\/p>\n\n\n\n Total number of employees at the start of 2024: 50<\/strong><\/em><\/p>\n\n\n\n Total number of leaving employees in 2024: 5<\/strong><\/em><\/p>\n\n\n\n Retention rate: 45\/50 x 100 = 90%<\/strong><\/em><\/p>\n\n\n\n New hires: 10<\/strong><\/em><\/p>\n\n\n\n Total number of employees at the end of 2019: 50 \u2013 5 + 10 = 55<\/strong><\/em><\/p>\n\n\n\n Average number of employees throughout 2019: (55 + 50) \/ 2 = 52.5<\/strong><\/em> <\/strong><\/p>\n\n\n\n Turnover rate: 5 \/ 52.5 x 100 = 9.5%<\/strong><\/em><\/p>\n\n\n\n According to the Ministry of Manpower (MOM), the average monthly resignation rate in 2024 was 1.3%<\/a> – translating to about 16% turnover in the year. This was actually the lowest it has been in the past 10 years.<\/p>\n\n\n\n While the MOM statistic may be factually accurate, we have to be mindful that people tend to switch jobs when there are many openings and the economy is doing well, and conversely, will try to stay in their current roles when there are limited job openings and the economy is not performing.<\/p>\n\n\n\n We also have to look past the average turnover rate, and into the turnover rate in our industry. For example, the average turnover rate in the Accommodation and Food Services<\/strong> sector was the highest at 2.3% per month, while it was 0.9% in the Financial and Insurance Services<\/strong> and Community, Social and Personal Services<\/strong>.<\/p>\n\n\n\n According to another LinkedIn report<\/a>, small and medium-sized businesses are also more likely to have a higher turnover rate, compared to large enterprises. <\/p>\n\n\n\n Turnover costs don\u2019t just involve dollars and cents, they also include \u201cindirect costs\u201d such as training and productivity costs, as well as the cost of hiring a replacement. Below are a few components of turnover costs, along with possible implications to your workforce and finances.<\/p>\n\n\n\n According to Gallup<\/a>, the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary.<\/p>\n\n\n\n It\u2019s not just the monetary costs. Hiring the right candidate takes time and can potentially distract you from your core responsibilities. For smaller companies, this could result in bigger productivity loss that can eat into your margins.<\/p>\n\n\n\n Like hiring, onboarding processes can take up a lot of time as well. With every new employee comes a wave of administrative paperwork, orientation and training to be done. <\/p>\n\n\n\n If you have to send new employees to external training programs, that hikes up the cost too. There could be equipment maintenance courses for those in the electronics sector, or relevant certification if you are in financial services or even in construction sector.<\/p>\n\n\n\n New recruits do not become productive employees overnight. Even the best new hires take time to be familiar with their responsibilities. Getting newcomers up to speed can take eight to 26 weeks,<\/a> depending on the complexity of the role.<\/p>\n\n\n\n Assigning a mentor to your new\nrecruit may help ensure proper training and a speedier onboarding process. The\ndownside is that the mentor may need to take time away from his or her regular\ntasks, which could affect productivity.<\/p>\n\n\n\n A higher turnover rate may disrupt team dynamics and morale, and can have ripple effects that cause other employees to fixate on job switching. <\/p>\n\n\n\n The reasons that this happens are not going to be a shock, since the remaining team members will have to pick up the slack or take on additional tasks to cover for a departing employee.<\/p>\n\n\n\n An increased workload could affect quality of work and satisfaction levels. Some employees may also feel it is unfair or become resentful about having to put in extra hours to complete additional tasks.<\/p>\n\n\n\n A high turnover rate may also discourage\nnewer employees from putting in an effort to establish rapport. Some may start\nto worry about job security, which may prompt them to start seeking\nopportunities elsewhere.<\/p>\n\n\n\n This is why it is important for small businesses in Singapore to keep employee retention high. Employees are a company\u2019s strongest asset and retaining them is key to driving success. <\/p>\n\n\n\nWhat Is A \u2018Healthy\u2019 Employee Retention Rate?<\/h3>\n\n\n\n
The True Cost Of Losing An Employee<\/h3>\n\n\n\n
![\"employee](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2019\/12\/True-cost-of-employee-turnover-1.png\")
<\/figure>\n\n\n\nReplacement Costs<\/strong><\/h4>\n\n\n\n
Training Costs<\/strong><\/h4>\n\n\n\n
Productivity Costs<\/strong><\/h4>\n\n\n\n
A High Turnover Rate Can Hurt Team Morale<\/h3>\n\n\n\n