Final answer:
The Turnover rate is an Annualized formula that calculates the percentage of employees leaving an organization within a given period. It is critical for businesses to monitor as it impacts turnover costs, with high turnover often leading to significant expenses related to hiring and training.
Step-by-step explanation:
Understanding the Turnover Rate:
The subject matter discussed in the question relates to a Turnover rate, which is an Annualized formula that helps to track the number of separations (employees leaving a company) and the total number of workforce employees each month. This rate is typically expressed as a percentage, illustrating the proportion of the workforce that is leaving the company.
To calculate the turnover rate, you take the number of separations during a month and divide it by the average number of employees for that month. You then multiply the result by 100 to obtain a percentage. For example, if a company with 100 employees has 5 separations in a month, the turnover rate would be calculated as (5/100) * 100, equating to a 5% turnover rate for that month. the turnover rate is important for businesses to monitor because high turnover can be associated with increased Turnover costs, reflecting the resources invested in recruiting, hiring, and training new employees. By understanding and managing turnover rates, businesses can work on strategies to improve employee satisfaction and retention, thus reducing associated costs.