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Survey Finds No Such Thing as “Optimal Turnover”

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Contact:Jennifer Jones
jjones@amanet.org

4/22/2013

NEW YORK, April 22, 2013 – A survey of nearly 1,000 U.S. companies has found little agreement on what companies consider optimal annual turnover among their workforce. In fact, many managers may not even be sure of their turnover since only 42% have a formal process to determine it, according to the survey conducted by AMA Enterprise, a division of American Management Association.

Nearly half of respondents believe their ideal turnover would be 10% or less, and one-fifth consider it 10-20%. Almost one-third of respondents do not know what is best for their organization.

Is there an optimal level of turnover at your organization?

0-10 % 46%
10-20% 19%
20-30%  4%
Greater than 30%  2%
I don’t know 29%

“In reality, employees always come and go, and some managers pay close attention to what happens, while others appear not to,” said Sandi Edwards, Senior Vice President of AMA Enterprise, which provides organizations with assessment, measurement and tailored training solutions. “Certainly no company wants or could achieve zero turnover, and every organization needs new people, new ideas, new energy. But runaway turnover can be a nightmare with skyrocketing recruitment and training costs, causing significant impact on the rest of the organization.”

Moreover, employee turnover varies by industry, acknowledges Edwards. “Each organization must find what works best and seek the right equilibrium. What surprises us among the findings is the vagueness on the very subject of turnover. For instance, too many managers don’t seem to have a clear fix on what’s happening, and presumably on the relating costs, fiscal and otherwise.”

Does your organization track annual employee turnover?

Yes, we have a formal process 42%
Yes, we have an informal process 29%
No 12%
I don’t know 17%

“Forty-two percent of organizations appear to have a good understanding of the comings and goings of employees,” said Edwards. “Another third tell us they have ‘informal’ ways of doing so, which at the very least demonstrates a lack of clarity. On top of that, 12% told us they don’t track turnover, and 17% of these managers admit they don’t know if their organization tracks it at all.”

According to Edwards, the survey findings cast light on an all-too-common gap between a company’s declared commitment to employees and the steps actually taken to support that commitment. “Annual turnover is another way of looking at retention. An organization doesn’t want to retain everyone, but a healthy organization should want to retain the great majority of its workers. Addressing turnover needs to be a priority and driven by the most senior levels of management. It requires a partnership between management and HR. In particular, managers need to be sure they have identified the critical talent needed for future success and make every effort to retain and develop those employees.”

The survey was conducted from December 18 to January 6 and respondents consisted of 977 management professionals drawn from the AMA database of contacts.

With more than 85 years’ experience and headquartered in New York, American Management Association is a global leader of comprehensive talent development. AMA Enterprise, a specialized division of AMA dedicated to building corporate and government solutions, transforms enterprise-wide talent to fuel a culture of innovation, high performance and optimal business results.
Media Contact:  Phil Ryan, 845-339-7858, pgryan@aol.com.