What is First-Year Turnover Rate?
First-year turnover rate measures the percentage of new hires who leave within their first year. It’s a critical metric for talent acquisition managers and HR, as it reflects hiring effectiveness and impacts business performance. High turnover increases costs, disrupts teams, and affects company culture.
How to Measure First-Year Turnover Rate
Calculate first-year turnover rate with this formula:
First-Year Turnover Rate = (Number of Employees Who Left Within the First Year / Total Number of Employees Hired in the Same Period) x times 100
For example, if you hired 100 employees and 15 left within their first year, your turnover rate would be 15%.
Industry Benchmarks
First-year turnover rates vary by company size and stage. A general benchmark for a healthy rate is 10-20%. Larger corporations might see higher rates, while start-ups or scale-ups aim for lower rates.
Why First-Year Turnover Rate Matters
Managing first-year turnover is crucial because:
- Cost: Hiring and training are expensive. High turnover increases these costs.
- Productivity: New hires take time to reach full productivity. Frequent turnover disrupts workflows.
- Morale and Culture: High turnover can hurt team morale and company culture.
- Employer Brand: High turnover can damage your reputation, making it harder to attract talent.
Strategies to Improve First-Year Turnover Rate
Enhance Recruitment
- Improve Job Descriptions: Ensure job descriptions are clear and accurate. Misaligned expectations lead to early departures. Check out our guide on this here.
- Streamline Interviews: Develop a structured interview process that assesses both skills and cultural fit. Involve team members who will work with the new hire.
Invest in Onboarding
- Structured Onboarding: Create a comprehensive onboarding program with training, mentorship, and social integration.
- Regular Check-ins: Schedule regular check-ins during the first year to address concerns and provide feedback.
- Clear Career Paths: Help new hires see growth opportunities within the company to increase engagement.
Focus on Employee Engagement
- Build a Positive Culture: Foster an inclusive environment where employees feel valued. Recognise achievements and encourage collaboration.
- Professional Development: Offer opportunities for continuous learning. Employees who feel they’re growing are more likely to stay.
- Work-Life Balance: Promote work-life balance through flexible arrangements and wellness programs.
Conduct Exit Interviews
- Identify Patterns: Use exit interviews to understand why employees are leaving. Look for patterns that indicate underlying issues.
- Implement Feedback: Take action based on feedback from exit interviews to reduce turnover.
Monitor and Adjust
- Review Turnover Data: Continuously monitor your turnover rate and adjust strategies as needed. Track which initiatives work.
- Stay Updated on Industry Trends: Keep an eye on industry trends and benchmarks to stay competitive.
Conclusion
Reducing first-year turnover is challenging, but with the right strategies, you can improve retention, enhance culture, and save costs. Focus on recruitment, onboarding, engagement, and continuous improvement to build a stable, productive workforce. Managing your first-year turnover rate is a strategic decision that drives long-term success.
