New hire turnover impacts an organization’s productivity, employee morale, finances and resources. Hiring a new employee costs the organization approximately $4,000. It excludes the understaffed team impact and reduced productivity brought on during the recruitment process.
Additionally, for a new employee to reach full productivity in their appointed role, can take up to eight months. Organizations with lower turnover rates are estimated to be up to four times more productive. These figures also don’t account for the time and resources the organization invests in employee onboarding and training, which it must repeat every time the hiring process starts over.
High new hire turnover also leads to low employee morale. Existing employees feel the stress of increased responsibilities which lowers their morale and lead to employee burnout. A new hire leaving removes the sense of relief an employee may feel at having extra help.
How to Calculate New Hire Turnover Rate
New hire turnover rate measures the percentage of employees who leave an organization within a specified time frame after joining, typically within the first 30, 60, or 90 days. A high turnover rate in this period often indicates issues in recruitment, employee onboarding, or employee engagement.
To calculate new hire turnover rate, HR requires the following information,
Number of New Hires Who Left
The total number of new employees who left the company during the period (e.g., annually or monthly). This includes those who voluntarily resigned or were terminated.
Total Number of Employees Who Left
The total number of employees who left the company during the same period, regardless of whether they were new hires or long-term employees.
Time Period
The specific time frame you are calculating turnover for (e.g., annually, quarterly, or monthly).
To calculate new hire turnover rate involves completing the following formula:
Turnover Rate = (Number of Employees Leaving / Average Number of Employees) × 100
For example, if a company begins the work year with 150 employees and 25 employees leave by the end of the year, the turnover rate is calculated as follows:
Average Number of Employees: 150
Number of Employees Leaving: 25
Using the formula:
Turnover Rate = (25 / 150) × 100 = 16.7%
HR can use a similar approach to calculate the monthly turnover rate by considering the number of employees leaving in a month.
Factors Contributing to New Hire Turnover
There are several factors contributing to early employee departures. Employees may leave a new position voluntarily or involuntary, their supervisors may ask them to leave for various reasons.
Reasons for high new hire turnover may include:
- Poor Onboarding: Insufficient onboarding leaves employees feeling unsupported.
- Mismatch in Job Expectations: Disparities between job descriptions and actual roles can lead to dissatisfaction.
- Inadequate Support: A lack of managerial or peer support can deter new hires from settling in.
- Cultural Misalignment: Employees who don’t feel connected to the company’s culture are more likely to leave.
6 Steps to Reducing High Employee Turnover
To effectively reduce employee turnover and retain top talent, organizations must go beyond competitive salaries and career growth.
Here are 6 key strategies to minimize high new hire turnover:
- Strategic Talent Acquisition
Recruiting the right talent requires careful planning and alignment with the organization’s needs and values. HR managers should assess future project requirements and conduct a gap analysis to identify skill shortages.
