I know how to do the math.
The question is what type of separations to include in these calculations:
Only voluntary separations (resignations, retirements)? This version gives a measure of workforce job satisfaction.
Or also include involuntary (termination for cause, layoffs due to loss of work)? This gives an overall view of company stability.
This would be for purposes of marketing to government clients.
It depends on what point you are trying to make with this statistic, but I would think that all types of separation should be included. If you fired half your employees but those remaining are hanging on for dear life that wouldn’t necessarily represent a happy workforce.
What are you trying to show, and what are the numbers? If the latter category is significant then you’re being deceptive by leaving it out. If you’ve had layoffs, downsizing, etc., when was that and under what circumstances. Also, what is the time frame, how long has the organization been around and how have these numbers changed over time?
Not sure there’s a GQ here unless there’s a statutory (or maybe FASB) definition of how to calculate “turnover”.
IMO …
From the customer’s POV …
The “good” reason to have turnover is retirements, particularly those for mandatory age/policy reasons.
The “bad” reasons are resignations.
The “ugly” reasons are firings and layoffs.
How much are you trying to tell the truth, the whole, truth, and nothing but the truth versus baffle 'em with BS?
An inverse statistic that might be valuable instead is average tenure of your employees. For an older established company that speaks to stability. e.g. “Here at Fortune500Co our average employee tenure is 27.5 years.”
For a small and rapidly growing company that number would need some further explanation. e.g. “Due to our meteoric growth fueled by many satisfied customers, we’ve doubled in size each of the last 4 years. Our current average tenure is 8 months.” With that lead-in sentence, 8 months is good news. Without it, 8 months would be pretty scary-bad.
I would think turnover is exactly that - it’s in the name. What proportion of your workforce left this year (or time period). I’m not sure why you would not include firings or layoffs. Firing could mean the person was not satisfactory for the position, or your hiring group did not do proper evaluations when hiring, or internal controls are insufficient to prevent problems (lateness, theft, etc.) or you have some unsuitable supervisors who elicit poor behaviour. Lack of work also says something about the work environment and the company.
In general, high turnover means a workforce not wanting to remain in the job, or circumstances where they cannot perform. There could, however, be external circumstances (i.e covid) that also determine this,
Another interesting point might be the use of temporary workers.
‘Good’ temporary workers might be for a company that has a busy season and the employees that sign on for the busy season know it’s temporary. A college student working over the summer who fully intends to return to school and understands they’re just working for a couple of months.
‘Bad’ temporary workers might be long term contractors who are basically part of the workforce but don’t get the benefits of regular employment. How many of those does a company use?
I suspect that there is a factual answer to this question: If a government agency is asking for this information, it’s probably because they have an official written policy to ask for it, and that written policy also contains an official definition of turnover.
That said, I don’t know what that official definition would be. Why not ask the agencies you’re working with?
“What is your retention rate?”
By retention, it seems to me that they want assurance that key employees we bid on the contract will still be around next month or next year.
This is coming via a prime contractor so I’m not sure if we have an opportunity to ask the government specifically what they want.
From Wall Street’s (and hence top management’s) perspective those are the best kind of temporary workers. From the regular employees’ and temps’ POVs they’re the worst. From middle management’s POV they’re probably neutral to slightly favorable.