It will be specifically useful for organisations that have significant workforce in high-turnover positions (e.g. call centre operators) or that recruit from talent markets highly susceptible to cyclical shifts.
Voluntary separations during the reporting period as a percentage of average headcount.
Separations . Voluntary / Average headcount * 100
Voluntary Separation Rate measures the percentage of employees who left the organisation on their own initiation during the reporting period, for reasons such as resignation or retirement. Voluntary separations are thus different from involuntary or employer-initiated separations such as firings or layoffs. A result of 15 per cent means that voluntary separations equated to 15 per cent of the workforce.
Many employees who voluntarily terminate their employment are replaced in their positions, creating not only departure costs (e.g.,accrued vacation) but also vacancy costs (e.g.,lost productivity, recruiting advertising) and new hire costs (e.g.,screening, relocation, ramp-up productivity losses).
Voluntary turnover often represents lost organisational knowledge of history, culture and process. Depending on the calibre of replacement, this turnover may also carry a net loss of skills and knowledge among the workforce. Lastly, voluntary turnover may negatively impact the morale, workload and stress levels of remaining employees.
Excessively low voluntary turnover can have a negative impact on the organisation as well. Low turnover can encourage insularity, potentially inhibiting innovation and creating a stagnancy of skills and ideas.
Low turnover may also be the result of ineffective performance management programs that fail to manage poor performers to improve or find a better employment fit elsewhere.
Organisations use Voluntary Separation Rate to help approximate the costs of replacements and productivity losses. The measure can provide a lagging indicator of employment brand and the fit of the employment ‘offer’.
Use of separation reason codes (e.g. poor manager, dissatisfied with compensation, returning to school) and post-exit surveys can help pinpoint problem areas for the organisation that are driving undesirable voluntary turnover.
Another important reason for the HR function to monitor this measure is that it is an informative statistic for the workforce planning process.
While many employers monitor voluntary turnover trends to plan for future recruitment needs, organisations might overlook natural attrition as a means of reducing staff numbers when needed.
Organisations typically source separation actions from either separation reason or date field in a job table. Voluntary separations are typically mapped to include retirements, resignations and other employee- initiated separations. Information may also be gathered from cross-referencing climate and opinion survey results on satisfaction indicators and intention to leave.
Employers may analyse Voluntary Separation Rate by a large number of subgroups and characteristics to identify high- or low-result pockets within the organisation for best practice sharing or corrective action.
Understanding voluntary turnover within these populations can also help organisations to monitor potential skill gaps, diversity issues or threats to business strategy success.
Common dimensions used for analysis on this measure include organisational unit, tenure, performance rating, grade, occupation, job family, job function, employment level, ethnic background, age and gender.
Without additional analysis, Voluntary Separation Rate does not indicate the specific reasons for separations or whether certain separations were considered desirable or undesirable. Also, this measure provides only an indirect indication of the offer fit with employees and the organisational costs of turnover.
Specific or estimated expenses and productivity losses must be taken into account to assess turnover costs.
Most organisations target moving their Voluntary Separation Rate results toward the 25th percentile or lower within a relevant benchmark group of similar talent pools. Organisations might have higher targets if they expect temporary fluctuations (e.g. early retirement options) or if they are working from a very high result gradually to a lower level over a period of years.