Find out the employee separation definition and formulas used in its calculation.
Employee separation is a critical issue in organizations. Usually, employee separation definition entails the exit of an employee from the company because of death, retirement, permanent disability, removal or resignation. Besides, an employee may be separated upon the completion of an employment contract. It is the duty of the organization to make the process of separation as seamless as possible. How do you ensure effective employee separation?
How to evaluate employee separation
Regardless of the reasons why the employees are leaving an organization, it is crucial to evaluate the exits since they have significant impacts on the business growth. Companies can determine their accession and separation rates. Accession rate is calculated by dividing the number of employees who access the organization for a given period such as a month by the total number of employees who were present in the previous month. It is often expressed in percentage.
In addition, separation rate is evaluated by dividing the number of employees who separated from the organization in the month by the total number of employees who were there in the previous month. Again, this attribute is expressed in %. To arrive at the turnover rate, you should find the average of the sum of the accession and separation rates. For example, let’s say that the number of employees who have joined your team this month is 20, and that of last month is 400. In this case the accession rate= 20/400x100=5%. Assume also that the number of employees who left the company within the same month was 5 and the employees who worked in the company last month was 400. Separation rate= 5/400x100=1.25%. Considering the formula outlined earlier, the general turnover rate will be 5+1.25/2=3.13%
The main goal of assessing the employee separation is to reduce turnover and enhance retention. Since accession and separation rates are not adequate to provide you with information about why the employees are leaving, you can measure other metrics. They include retention and voluntary turnover rates, average time worked by the employee in the organization before leaving.
Let’s focus on the average tenure of the employees. Tenure refers to the length of time an employee has been in the company. To calculate the average tenure for your workforce, you should list all the employees together with the period they have been in the company. Next, divide the sum you get by the number of employees. The result will be the average tenure. For example, you might have an employee who have stayed in the organization for 3 years or 36 months, 4 others might have a tenure of 1 year or 12 months each, 5 employees may have stayed for 10 months= 36+(4x12)+(5x10)=134/10/13.4 or approximately 13 months. Therefore, your average tenure of employees is 13 months. From these results, you can plan on how to lower employee separation caused by voluntary turnover.