The Impact of the COVID-19 Pandemic on Employee Turnover Rate

Written by andra.rotar on June 13, 2022. Posted in Articles, KPI

Image Source: Pexels | Gustavo Fring

The COVID-19 pandemic led to business closures and financial losses. As a result, the number of people quitting their jobs or getting laid off has increased. According to the International Labor Organization’s “ILO Monitor: COVID-19 and the world of work, “…there were unprecedented global employment losses in 2020 of 114 million jobs relative to 2019.” 

For organizations monitoring this labor issue, it would reflect the % Employee turnover rate, a key performance indicator (KPI) that refers to the rate at which employees leave an organization in a given period. Consequently, % Employee Turnover Rate increased due to the effects of the pandemic. The increase was sustained by Involuntary Employee Turnover, which occurs when employees are terminated from their positions.

The economy-wide closures further disrupted the employment structure for all but essential workers. This caused an increase in the disparities between industries and social classes, with the turnover being greater among women, youth, and minorities. Moreover, the impact of the pandemic on the work system has a significant variation between regions.

The most affected were the low-wage industries requiring high human interaction, such as transportation, hospitality, food service, construction, retail, and creative industries. The State of Working America report revealed that between February 2020 and February 2021, the U.S. hospitality industry registered the highest employment loss in the nation. It is the hardest-hit sector due to a large period of restricted international mobility, losing nearly 3.5 million jobs or 20.4% by the beginning of 2021.

Changing jobs or moving to another employer seemed difficult during the pandemic. However, even if movement restrictions are subsiding and life seems to get back to normal, the employee turnover remains on an ascending trend. 

Nonetheless, the job market is confronted with another challenge, and this time, it is generated by the Voluntary Employee Turnover. This type of turnover happens when an employee leaves a job mainly because they found a new job. However, the turnover can also result from promotion within the company or retirement. 

Employee Turnover in the Hospitality Industry

In the hospitality industry, a bounce-back was expected as restrictions began to be lifted, but a shortage of employees countered the previsions. According to the U.S. Department of Labor, the number of employees from the sector who quit their jobs is on an ascending trend. In March 2020, 534.000 employees quit their job in the hospitality industry. The number raised to 703.000 in March 2021, while the preliminary data for March 2022 show that 889.000 employees from the sector quit.

The situation does not seem to improve as the results of the University of Central Florida study on the state of industry employment reveal that former hospitality employees are reluctant to return to work due to the pandemic and are seeking professional opportunities in different industries.

Going through the experience of a global pandemic has shifted people’s perspective of what work should be like. Although the reasons for leaving a job are subjective to each person, the most common changes seem to be oriented towards flexibility and well-being. 

Even if employee turnover is seen as a result of poor business performance in an economy affected by restrictions or a change in priorities among employees, the effect of the pandemic is beyond doubt. It would continue to change the global work system and employee turnover. The change is characterized by the implementation of permanent remote or hybrid work policies, making job opportunities from around the world available, changing the jobs of essential workers, and even the phasing out of certain jobs due to automation.

Therefore, now organizations have to focus on employee retention. Together with employees, companies have to find ways to adapt to the new normal, reach a mutual understanding, and find a balance between employee expectations and business performance.

To overcome the impact of the pandemic on the % Employee Turnover Rate, organizations in the hospitality sector and even in other industries, especially in low-wage ones, could improve their compensation for employees. Meanwhile, employers could also go beyond the financial perspective and develop non-financial incentives by creating healthy and safe working environments, incorporating flexible working schedules and work-from-home options, and supporting employees as they pursue work-life balance. 

To ensure employee retention, organizations must improve their communication with employees to better understand their needs, keep them motivated and engaged, create the right growth opportunities, and offer them deserved recognition.

The KPI Institute’s Professional and Practitioner training courses in Employee Performance Management are designed to help professionals in designing, implementing, and monitoring performance systems that are matched with the company’s strategic goals.

Invite your colleagues and join the Certified Employee Performance Management Live Online course on 18-22 July, 2022 to strengthen knowledge and skills in managing individual and team performance. For more information, visit our website.

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Turnovers and Leveraging Data for Improving Organizational Performance

Written by Fakhri Ramadhan on January 10, 2022. Posted in Articles, Organisational performance

Image Source: Timon Studler | Unsplash

When used effectively, data can bring valuable improvements in all areas, including Human Resources (HR). Hugely relevant data is to be found in the area of human capital and is usually collected and managed by the HR department in your company. In essence, all organizations seek to keep top performers while reducing the number of low performers as much as possible. The first thing that comes to mind when discussing measurement in the HR area is the Turnover Rate.

Turnover Rate is a common organizational measurement that tracks the loss of talent in the workforce over time, and it may also be used to gauge an organization’s culture. Employee turnover encompasses resignations, layoffs, terminations, retirements, relocation transfers, and even deaths. Businesses frequently measure their employee turnover rate to estimate its impact on production, customer service, and even morale. Turnover is frequently referenced negatively, owing to its high expense of replacing personnel; however, it is a natural part of the employee life cycle and organizational renewal.

Now, how can data be used for maximum insight from employee turnover?

1. Gather internal HR data.

   Preparing the data is always the first step. If your organization has an HR Information System (HRIS), you should be able to simply get the data and elicit the desired reports from combining different available metrics. However, if your organization does not have an HRIS, the HR department should be able to provide relevant data that can be analyzed.

   The turnover data you require is the headcount of the organization, as well as the record of persons who have departed the organization: employee name, date of departure, and position should all be included in the record. If you can gather supplementary information, such as the reason for leaving, the direct manager, and so on, it will help to improve the depth of analysis.

2. Document and organize the data properly.

   After obtaining the turnover data, it is advised that you set up a separate storage folder for this data. It should be well-documented, including periodic details (e.g. for the year 2021). With a well-structured document system, you will be able to access it and even repeat the procedure for the next period.

3. Run the analysis of data at various levels of granularity.

   This stage is dependent on the data you have available as well as your objective. The number of separations and headcount are the most vital components in calculating the Turnover Rate. The number of departures divided by the average employee headcount is a typical formula for calculating the turnover rate.

   If your data is much more detailed, you can perform a more granular analysis, such as turnover by month and structure. This allows you to gain more specific insight rather than an overall view of the organization. Another example of granular analysis is examining the number of separations and visualizing it by using Structure. The graph will tell you whether there is a certain Structure that needs extra attention; you can also try by Manager, by age, and so on.

This is only a rough idea of how you might use your own internal data to enhance your organization’s retention and engagement. The possibilities for expanding the turnover analysis are limitless. A genuinely effective, high-value data initiative, on the other hand, requires a comprehension of data dynamics as well as how to apply today’s best practices to carefully utilize and assess data.

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