‘New hire turnover’ refers to the percentage of employees who leave a company during a certain period of time, typically within their first year on the job. This recruiting metric is calculated by dividing the number of new hires who left within that period by the overall number of employees who left during the same period.
After weeks of sourcing and interviewing candidates, you finally land your perfect hire. Everything seems in place. Fast-forward to a month later. Your seemingly perfect hire is leaving and you need to start recruiting all over again. This awkward situation is called new hire turnover.
What went wrong?
New hire turnover is common. About 20% of employees leave within their first 45 days of employment. Although there’s no explicit definition, “new hire turnover” usually refers to the number of employees who leave a company within their first year on the job.
Here’s a guide to the most common reasons new hires leave and how to prevent new hire turnover:
Why do new hires leave?
Employees quit for all kinds of reasons. Although you can’t predict or prevent every scenario, new hires often leave when:
1. The job isn’t what they signed up for.
New hires will feel deceived and might leave if they find out there are discrepancies in working hours, wages, benefits or job duties. Make sure you cover important aspects of the job and responsibilities during your hiring process.
2. They have a poor relationship with their manager.
As the common saying goes “People don’t quit jobs, they quit managers.” Bossy, rude or distant managers quickly turn new employees off. Instead, managers who spend time onboarding their newest team members and meet with them regularly kickstart a healthy collaboration.
Tip: Provide regular management training to help your leaders empower their teams.
3. They haven’t been trained well.
No matter how experienced new employees are, you need to train them on the job, including your procedures and ways of working. Before expecting them to perform on their own, make sure new hires have the tools to succeed in their roles.
Tip: Use checklists to follow a structured onboarding process that eases new hires into their responsibilities.
How to calculate new hire turnover
To calculate new employee turnover rate, first determine what period of time you define as new hire turnover (usually when hires leave anywhere before one year of employment.) If your industry has a high employee turnover rate (e.g. hospitality) or if you offer fixed-term contracts, it might make more sense to track how many employees leave within their first 30, 45, 60 or 90 days, instead of the first year.
Once you’ve determined what period counts for new hire turnover, divide the number of new hires who left within that period by the overall number of employees who left during the same period.
Here’s a formula to measure first year turnover rate. You can adjust this formula to calculate your unique turnover rate (e.g. 30, 60, 90-day turnover):
Consider comparing the number of new hires who left to the total number of new hires you made during the same period. Let’s say, for example, that last year, five employees left before completing 90 days of employment.
If you hired 100 employees in total, your new hire turnover might not be that alarming.
But, if you hired 10 employees in total, you might start thinking critically about why half of your new employees left. In that case, consider revisiting your job ads and interviewing practices.
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To reduce turnover rates for new employees, you need to fight the root cause of turnover. And there could be several:
Improve your hiring process
Hiring the wrong person for a role can cost companies big. Here are some steps to take to reduce employee turnover by hiring the most qualified people:
Be clear about what the role entails.Well-written job descriptions attract people who are interested in and qualified for your position. Also, during interviews be honest about job requirements, working hours, benefits and salary so that there’s no mismatch between expectations and reality.
Evaluate candidates based on job-related criteria. Assignments, role-playing activities and skill assessment tests help you understand if candidates who are good on paper can use their skills on the job as well. Include background and reference checks to build complete candidate profiles before making hiring decisions.
Plan onboarding programs
First days at work can set the stage for success. Support your newest team members by offering good onboarding experiences:
Organize employees’ first days at work. Make new-job excitement last by giving new hires a warm welcome. Prepare their workstations, automate HR processes so they spend more time on learning their roles and schedule team-building activities to help them adjust to their new positions.
Follow up with new hires after 30, 60 and 90 days.New employee orientation on the first day is good, but don’t stop there. Meet regularly with new hires to find out how they’re doing. If necessary, assign them a work buddy or mentor for the first few months.
Reducing new hire turnover rates should be a collaborative effort between HR and hiring managers. Advise hiring managers to:
Give new hires meaningful tasks. Challenge new employees with interesting projects that get them excited and allow them to show off their skills. Make sure to offer guidance to help them complete their tasks and boost their confidence.
Discuss career paths. It’s not too early to start talking about how to grow professionally. Ask them where they’d like to see themselves in the next few months. Long-term goals might be vague at this point, but new hires will appreciate that you’re interested in their career development.
Build a healthy workplace
Give employees good reasons to stay. Consider the following to improve your retention rates:
Build an inclusive culture.Company policies that reject favoritism and bullying and promote open communication will make new hires feel included and valued. Also, train managers to become good leaders who’ll encourage team members, acknowledge their accomplishments and make sure all voices are heard.
Offer meaningful perks and benefits. Consider benefits that make employees more productive. Good health insurance, flexible working hours and work from home options are among the most popular employee benefits. Also, talk to your current employees to learn what kinds of perks would serve as incentives.
Why does new hire turnover matter?
Watching new hires leave so soon is concerning for good reasons. That’s because hire turnover can hurt your:
Employer brand. Disgruntled new hires who’ve left your company suddenly might have an axe to grind. They’re more inclined to leave negative reviews on social media (Twitter, Facebook and Glassdoor) that make qualified candidates think twice before applying for your open roles.
Recruitment budget. Turnover hits recruitment budgets hard. Every time employees leave and you need to fill their positions, you spend more money than you anticipated on hiring (e.g. job boards fees and skill assessment software.)
Team balance. New hire turnover takes a toll on your teams by leaving them short-staffed. It also takes time to hire and onboard new employees. These changes can hurt your team’s productivity and morale.
You don’t need to promise new hires the moon to entice them to stay. Just be consistent. Make sure the job lives up to how you described it during your hiring process and you’ll nurture a positive work environment for all employees.