How To Calculate And Reduce New Hire Turnover Rate

‍

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:

1. 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.

Through improved understanding of these needs, companies can develop targeted talent management strategies, ensuring they recruit the right candidates at the right time and cost. This approach minimizes costly last-minute hires, reduces project delays, and maintains high-performance levels.

2. Assign Resources to the Right Tasks

Allocating resources to tasks that don't match their skills or interests can lead to employee disengagement and decreased productivity. Underqualified employees may feel overwhelmed, while overqualified ones may feel demotivated if assigned to low-priority tasks. Both scenarios increase the likelihood of turnover.

To ensure employee satisfaction, HR managers can employ resources and tools from Zenithr. For example, Zenithr's employee experience solution is a great solution for reducing new hire turn-over rate. Tools like these provide a comprehensive guide to employees' skills and schedules, allowing for optimal resource allocation, maximizing productivity, and improving retention.

3. Offer Competitive Compensation and Benefits Packages

Offering competitive compensation and employee benefit packages is essential for reducing new hire turnover. A LinkedIn report expounds that companies with strong compensation packages experience 56% lower employee exit rates. Employees who feel underpaid may experience disengagement and leave for better-paying options.

To retain top talent, businesses should offer compensation that meets market standards with additional benefits like paid time off, bonuses, health insurance, and retirement plans. These benefits demonstrate the company's commitment to employee well-being, leading to higher satisfaction, engagement, and retention.

4. Maximize Resource Efficiency and Productivity

Optimizing resource utilization is essential for maintaining employee productivity and engagement. Overutilization can lead to stress and burnout, while underutilization results in employee disengagement and low morale, which increase the risk of increased new hire turnover.

HR managers should monitor resource allocation in real-time and adjust workloads to prevent burnout or disengagement. Additionally, periodically shifting resources from non-billable to billable tasks helps improve overall productivity and profitability.

5. Foster an Inclusive and Equitable Workplace

Implementing Diversity, Equity, and Inclusion (DEI) initiatives helps create an inclusive work environment where all employees feel valued and have equal opportunities, regardless of their background. These initiatives also address issues like hostility, microaggressions, and bias.

By fostering a safe and equitable workplace, companies can reduce new hire turnover and improve retention. To get started, organizations should assess their workforce demographics, develop inclusive policies, and adjust hiring strategies to actively recruit from underrepresented groups.

6. Offer Flexibility to Support Work-Life Balance

Accommodating flexible work arrangements, such as remote work, compressed hours, or flexi-time, helps employees manage personal and professional responsibilities. Flex-time reduces stress, increases job satisfaction, and improves retention.

Offering flexibility gives employees more control over their schedules, improving performance and accountability. It also supports a diverse workforce, including parents and those continuing their education, facilitating employee retention who might otherwise leave due to personal reasons.

Conclusion

Reducing new hire turnover starts with understanding the causes and addressing them through improved employee onboarding and engagement strategies. Zenithr’s employee experience solution, featuring tools like the Employee Onboarding Survey, enables organizations to identify gaps, provide timely support, and foster a culture of retention.

By maximizing these insights, companies can create an environment where new hires feel welcomed, valued, and motivated to stay.

‍