S E PA R AT I O N M E T R I C S

P R O F. S O N I Y A D S O U Z A
SEPARATION

The severing of an employment contract with an employee, initiated by either employer or

employee.

Employee Initiated: Voluntary (Ex: Resignations & Retirements)

Employer Initiated: Involuntary (Ex: Deaths, Dismissal, Layoffs, Discharge, etc.)

CAUSES OF SEPARATION

Voluntary Separations:
Better positions
Conflict with Supervisor
Personal reason

Involuntary Separations:
Reduction in staff
Change in business focus
Disciplinary action
DEPICT SEPARATION
2015 Separations
350
45%, 300
# of Employees Separated

300
37%, 250
250
200
150
100 11%, 75
50 5%, 35
1%, 10
0
Resignation Retirement Death Dismissal Layoff
Voluntary Involuntary
Type of Separation

Categorization & Analysis:

Voluntary vs. Involuntary
Reasons for Resignation
Actual retirements vs. Retirement Eligibility
Analyze deaths
BROAD CATEGORY: METRICS
Separation

Turnover Attrition
Rate Rate

Voluntary Involuntary

Long-Term
Resignation Retirement Dismissal Layoff Death
Disability
TURNOVER RATE
Turnover: Number or percentage of employees leaving an organization in a certain period of

time, and are replaced by new employees

Formula: (Total Separations Average Headcount) * 100

Turnover Rate is expressed as a percentage

IMPACT OF TURNOVER
Impact of replacing an employee:

Difficulty of filling the position

The amount of training required for new employees

Costs associated with filling the position (Ex: Recruiter Fee, Advertisement, etc.)

Lost productivity

Profitability

Lowers morale
EXAMPLE: TURNOVER RATE

Example 1:

Calculate employee turnover rate if 25 employees are separated from the organization out of
100 employees.

Turnover Rate = (Total Separations Average Headcount) * 100

Turnover Rate = (25 100) * 100 = 25%

EXAMPLE: TURNOVER RATE

Example 2:
Suppose, XYZ company employed 90 people at the beginning of the year, and employed106
people at the end of the year. Over the course of the year, seven employees who left were
replaced with new people. Calculate XYZs annual turnover rate.

Turnover Rate = (Total Separations Average Headcount) * 100

Average Headcount = (90+106) 2 = 98
Turnover Rate = (7 98)*100 = 7.14%
ATTRITION RATE

Attrition is described as a reduction in workforce

Expressed as a percentage

Formula: (Total Separations Average Headcount) * 100

EXAMPLE: ATTRITION RATE
At the beginning of 2015, ABC Inc. had 1,500 employees on payroll.
We are informed that 175 employees separated from the company.
Of the 175 positions that are vacant due to separations, ABC Inc. has decided to fill only 130, and
eliminate the rest.
The headcount at the end of the year was 1,400.
Calculate Attrition Rate.

Solution:
Attrition Rate = (Total Separations Average Headcount) * 100

Total Separations that will be unfilled = 130

Average Headcount = (1,500 + 1,400) 2 = 1,450
Attrition Rate = (130 1,450)* 100 = 9%
TURNOVER & ATTRITION
Turnover and Attrition
Occurs when an employee leaves the organization.
Can be voluntary and involuntary.
Turnover Company seeks to replace the employee who left the organization.
Attrition Company leaves the vacancy unfilled.

Voluntary Turnover & Attrition

- Resignation to pursue another career opportunity, relocation, personal reasons such as raising a
family, education, etc.
- Retirement is a form of voluntary turnover. If employer decides against filling the position, it is
considered attrition.
Involuntary Turnover & Attrition
Involuntary turnover Poor performance, excessive absenteeism, violation of workplace policy.
Involuntary Attrition Layoffs, job elimination, reduction in workforce.
BROAD CATEGORY
Separation

Turnover Attrition
Rate Rate

Voluntary Involuntary

Long-Term
Resignation Retirement Dismissal Layoff Death
Disability
VOLUNTARY TURNOVER

Voluntary Termination (or Separation) is an employee-initiated termination of employment

either by Resignation or Retirement.

Employees who left the organization voluntarily as a percentage of headcount

Voluntary Turnover Rate = (Total Resignations + Total Retirements) * 100

Average Headcount
INVOLUNTARY TURNOVER

Involuntary Termination (or Separation) is an employer-initiated termination of employment

either by Dismissal or Layoff.
It also includes termination as a result of employee Long-Term Disability (LTD) or death.

Employees who left the organization involuntarily as a percentage of headcount

Involuntary Turnover Rate = (Involuntary Terminations) * 100

Average Headcount
EXAMPLE: VOLUNTARY &
INVOLUNTARY TURNOVER RATE
Calculate voluntary and involuntary turnover rate, if 150 resigned, 200 retired, 20 died, 50 laid-
off and 7 dismissed. Assume average headcount for the period as 3,000.

Voluntary Terminations = 150 Resignations + 200 Retirements

Involuntary Terminations = 20 Deaths + 50 Layoffs + 7 Dismissals

Voluntary Turnover Rate = (150+200) * 100 = 12%

3,000

Involuntary Turnover Rate = (20+50+7) * 100 = 3%

3,000
1 ST YEAR TURNOVER RATE

Percentage of employees with less than 1 year of service who left the organization

1st Year Turnover Rate = (Total Voluntary Terminations + Total Involuntary Terminations)
within 0-1 year of service
Headcount within 0-1 year of service * 100

Note: Headcount within 0-1 year of service means anyone hired within the 1-year period.

Related Metrics:
1st Year Voluntary Turnover Rate
1st Year Voluntary Turnover Rate
EXAMPLE: 1 ST YEAR TURNOVER RATE
Calculate the 1st year Voluntary turnover rate, 1st year Involuntary turnover rate & Overall 1st year
Turnover Rate if:
20 employees resigned, 2 passed away (died) and 3 were dismissed of the total 200 employees that
were hired within 1 year.

1st Year Voluntary Turnover Rate = (20 Resignations 200 new hires)*100 = 10%
1st Year Involuntary Turnover Rate = ((2 Deaths + 3 Dismissals) 200 new hires)*100 = 3%

1st Year Overall Turnover Rate = (20+2+3) * 100

200
= 13%
90-DAY TURNOVER RATE
Percentage of new employees leaving the organization within 90 days of starting their
employment.

Expressed as a percentage.

Formula:
Total terminations (voluntary & involuntary) within 0-90 days of service * 100
Total headcount 90 days of service

Note: Total Headcount 90 days of service means anyone hired within the 90-day period.

Related Metrics:
90-Day Voluntary Turnover Rate
90-Day Involuntary Turnover Rate
EXECUTIVE TURNOVER RATE

Executives who left the organization as a percentage of Executive Headcount.

Expressed as a percentage.

Formula:
Executive Terminations * 100
Executive Headcount

Related Metrics:
Executive Voluntary Turnover Rate
Executive Involuntary Turnover Rate
RESIGNATION RATE
Resignation is the official process by which an employee quits their position and leaves the
organization.
Resignation rate: Employees who resigned from the organization as a percentage of headcount.
Expressed as a percentage.
Formula:
(Resignations Headcount)*100
Example: If 20 employees resigned from a workforce of 250 employees, resignation rate is:
(20 250)* 100 = 8%

Related Metrics:
Total Top Quartile Performer Resignation Rate (Top 25%)
Executive Resignation Rate
RESIGNATION RATE : YEAR OF
SERVICE
Resignation Rates can be analyzed based on the years of service the employee had when
leaving the organization.

Some of the years of service categorization includes:

First two-years of service Resignation Rate
Two to three years of service Resignation Rate
Three to five years of service Resignation Rate
Five to ten years of service Resignation Rate
More than 10
DEPICT RESIGNATION RATE: YEARS OF
SERVICE
Years of # Resignation Rate: Years of Service
Service Resigned Resignation Rate 35

<=2 25 3% 30
25

# Resigned
2-3 30 3% 20

3-5 15 2% 15
10
5 - 10 10 1%
5
>=10 8 1% 0
<=2 2-3 3-5 5 - 10 >=10
Year of Service

Assume Average Headcount is 1,000

RESIGNATION RATE: AGE
Resignation Rates can be analyzed based on the age of employees at the time of leaving the
organization. Some of the age categorization includes:

Under 25 years Resignation Rate

25-29 years Resignation Rate
30-34 years Resignation Rate
35-39 years Resignation Rate
40-44 years Resignation Rate
45-49 years Resignation Rate
50-54 years Resignation Rate
55-59 years Resignation Rate
60-64 years Resignation Rate
65 years or older Resignation Rate
RETIREMENT RATE
Retirement is the point in time in which a person stops employment completely or begins
collecting retirement benefits from the employer and continues to work out of choice.

Employees who retired as a percentage of headcount.

Expressed as a percentage.

Formula:
(Retirements Average Headcount) * 100

Example: If 25 employees retired from a workforce of 250 employees, retirement rate is:
(25 250)* 100 = 10%
RETIREMENT PROJECTION ANALYSIS

1. Define the retirement criteria

Criteria is usually a combination of years of service and age
Example:
Employees who meet any one of the following age and years of service criteria are eligible to retire:
25 years of service and 55 years of age
20 years of service and 60 years of age
15 years of service and 65 years of age
2. Determine employees who are eligible to retire
3.Based on the historical trend, project likely retirements
EXIT INTERVIEW
Exit interviews are interviews conducted with departing employees just before they leave.

Feedback from departing employees.

Aim is to learn reasons for the employees departure.

Helpful driver for organizational improvement.

Generally performed in person with the departing employees.

Managers conduct exit interviews, but most often, a Human Resources staff holds exit
interview.

Some organizations use written or online questionnaires to conduct exit interviews.

EXIT INTERVIEW ANALYSIS
Administer a questionnaire and ask the departing employee to rate the questions.
If the questions are open ended, compile the responses for consolidation.

Define Rating Scale (if closed ended questions):

Highly Satisfied = 5
Satisfied = 4
Neither Satisfied nor Dissatisfied = 3
Dissatisfied = 2
Highly Dissatisfied = 1

Compile the responses, analyze and present them.

Note: Ratings can be applied to closed ended structured questions. Exit interview questions can be both closed
ended or open ended or both.
SAMPLE OPEN ENDED QUESTIONS

Open Ended Questions:

What made you decide to leave the company?
What did your new company offer that encouraged you to accept their offer?
What do you value about the company?
What did you like most about your job?
What did you dislike about your job?
Do you feel you had the resources and support necessary to accomplish your job? If not, what was
missing?
Did you have clear goals and know what was expected of your in your job?
What would make you consider working for this company again in the future?
SAMPLE CLOSED-ENDED QUESTIONS
Present statements and have the departing employee rate them on a 5-point scale.

Rating --> 1 2 3 4 5

Highly Neither Satisfied nor

Questions Dissatisfied Dissatisfied Dissatisfied Satisfied Highly Satisfied

Job role

Feedback from Supervisor

Training Opportunities

Growth Opportunities

Compensation

Benefits
EXIT INTERVIEW: COMPILED RESPONSE

Assume total respondents = 45

Highly Neither Satisfied nor Highly

Questions Dissatisfied Dissatisfied Dissatisfied Satisfied Satisfied
Job role 10 5 5 10 15
Feedback from Supervisor 8 10 4 8 15
Training Opportunities 15 10 10 7 3
Growth Opportunities 12 15 10 5 3
Compensation 8 10 10 12 5
Benefits 13 12 10 5 5
EXIT INTERVIEW: PRESENTATION
EXIT INTERVIEW RESPONSE
16

14

12
NO. OF RESPONDENTS

10

Job role Feedback from Training Growth Compensation Benefits

Supervisor Opportunities Opportunities
CATEGORIES

Highly Dissatisfied Dissatisfied Neither Satisfied nor Dissatisfied Satisfied Highly Satisfied