INSTITUTE –University School of Business

DEPARTMENT -Management
M.B.A
HR Analytics- 20BAC725
Faculty Name : Dr. Neema
(Associate Professor)

Topic: Employee Turnover

UNIT-2 : Employee Turnover DISCOVER . LEARN . EMPOWER

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 Course Objective

COB No. Title

The objective of this paper is to acquaint students about

workforce analytics, or talent analytics, analyzing people
COB1
problems using data to answer critical questions about
organizations.
 Course Outcomes
CO No. Title Level
Understand/
To understand the concepts and practical relevance of HR analytics in an Remember
CO1
organizational set-up.
 

To apply appropriate research methods and methodologies to solve HR

CO2  Apply
problems in business organizations

CO3 To analyze and interpret the statistical results in context to the problems of
Analyze
human resources being faced by organizations

CO4
To select best insights for typical HR issues for people management Evaluate

CO5 To develop and validate predictive models based on HR challenges to drive

Design/Create
teams effectively
 Overview of Turnover

• Employee turnover is a serious problem in many countries of the world.

• In fact, it is a global phenomenon. This problem has captured the attention of

human resource experts and practitioners.

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 What is Employee Turnover?
• Employee turnover refers to the number or percentage of workers who leave an
organization and are replaced by new employees. Measuring employee turnover can be
helpful to employers that want to examine reasons for turnover or estimate the cost-to-
hire for budget purposes.

• Measuring employee turnover can be helpful to employers that want to examine the
reasons for turnover or estimate the cost- to-hire for budget purposes.

• Turnover is measured for individual companies and their industry as a whole. If an

employer is said to have a high turnover relative to its competitors, employees of that
company have a shorter average tenure than those of other companies in the same
industry.

• High turnover may be harmful to a company’s productivity if skilled workers are often
leaving and the worker population contains a high percentage of apprentice workers.
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 Why do Employees Leave ?

Research says that most of the employees leave an organization out of

frustration and constant friction with their superiors or other team members.
In some cases low salary, lack of growth prospects and motivation compel an
employee to look for a change. The management must try its level best to retain
those employees who are really important for the system and are known to be
effective contributors.
It is the responsibility of the line managers as well as the management to ensure that
the employees are satisfied with their roles and responsibilities and the job is
offering them a new challenge and learning every day.

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 Forms / Types of Turnover

Forms / Types of Turnover

Positive and Negative

Voluntary versus Involuntary
Turnover

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 Forms / Types of Turnover
• Voluntary employee turnover occurs when an employee chooses to leave the
company. Employees who resign, retire, or simply leave the organization for other
reasons are all voluntary turnover examples.
While some voluntary turnover instances may occur because employees are dissatisfied,
several employees resign for reasons unrelated to working conditions.
Examples of voluntary turnover for non-work-related reasons are:
Employees who leave their jobs to travel
Students who leave the workplace to return to school
Employees who choose to leave the workplace to become stay-at-home parents

• Involuntary employee turnover happens when the employee's decision to leave is not

in his/her hands. It usually occurs when a company implements budget cuts, structural
reorganization, or similar actions where the company decides for an employee to leave.
Employees who witness regular involuntary turnover or terminations might be stressed
out and concerned about their job security.
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 Forms / Types of Turnover
Positive Types of Employee Turnover
Positive turnover occurs when the workforce changes due to new employees bringing fresh
ideas and perspectives to the company and replacing workers who are terminated for poor
performance. Bringing new talent in an organization can re-energize the workplace, increase
productivity, and boost profitability.
Replacing a stagnant workforce can be costly; however, employers ultimately realize the return
on investment in recruitment and selection processes for new and fully engaged employees.
Negative Types of Employee Turnover
It is easy to understand why turnover is considered negative: mass layoffs, business closure,
and plant shutdowns might be classified as negative or undesirable turnover – layoffs have a
devastating impact on workers and the surrounding community. The adverse effects of losing
jobs in certain areas can create a downward spiraling impact on economic conditions for
employees of other nearby companies. For example, when employees suffer job loss from a
plant shutdown, surrounding companies that provide services such as meals, transportation, and
other services also suffer from lost revenue.
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 Causes of Turnover
The following is a list of what might be considered causes for employee turnover:

Rude behavior
Work-life imbalance
A mismatch between the job expectations
Employee misalignment
Feeling undervalued
Coaching and feedback are lacking
Decision-making ability is lacking
People skills are inadequate
Organizational instability
Raises and promotions were frozen
Faith and confidence shook
Growth opportunities not available

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 Demerits of Turnover

1. Losing engaged and hard-working staff

2. Rehiring time and expenses

3. Indicating existing staffs’ dissatisfaction and unhappiness

4. Pressurising remaining staff

5. Delaying other business plans and developments

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 Merits of Turnover
Not all turnovers are negative, we generally feel that an employee leaving the
organization is detrimental to the organization, but there is a flip side to it.

Employees leaving an organization may lead to benefits. This type of job attrition is
called ‘healthy attrition’ and is needed for growth and development of an organization.

1. Higher manpower costs

2. Negative effect of people

3. New idea

4. Higher performance

5. Setting the culture right

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Drivers of Employee Turnover

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Data driven decision making in HR

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 Mitigating Employee Turnover with HR
Analytics
The right workforce analytics framework should help an organization develop turnover solutions
tailored to its staff and culture. Here is a data-driven approach recommend:

1.     Identify the retention problem and define a goal

2.     Look for the causes of turnover 

3.     Build, evaluate and deploy the right analytic model 

4.     Determine who can be saved 

5.  Design a tailored employee retention program 

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 Few challenges prove to be stumbling block
and need to be taken care
• Setting up clean and accurate data streams is, and will remain, a challenge for
data analytics. Companies should look into specific data quality techniques to
make the data fit for modelling.

• A degree of inaccuracy is associated with predictive modelling. Organizations

must recognize that adequate coaching and oversight mechanisms should be in
place to help users leverage the technique correctly and thoughtfully.

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 Few challenges prove to be stumbling block
and need to be taken care

• Since HRs deal with huge amount of sensitive and confidential data, security and
privacy are two main concerns. Any HR analytics system which handles such data
must be designed to prevent any unauthorized access.

• High acquisition and maintenance costs mostly act as a deterrent, especially for
smaller companies to implement such a system. Also, operating a sophisticated HR
analytics tool requires special expertise and that results in additional training costs of
designated employees, or the cost of hiring an external expert.

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 Let us understand the concept of employee
retention with the help of an example
Misha was a talented employee who delivered her best and completed all her work within the
desired time frame. Her work lacked errors and was always found to be innovative and thought
provoking. She never interfered in anybody else’s work and stayed away from unnecessary
gossips and rumours. She avoided loitering around at the workplace, was serious about her work
and no doubts her performance was always appreciable. Greg, her immediate boss never really
liked Misha and considered her as his biggest threat at the workplace. He left no stone unturned
to insult and demotivate Misha. Soon, Misha got fed up with Greg and decided to move on.

 Situation 1 - The HR did not make any efforts to retain Misha and accepted her resignation.

 Situation 2 - The HR immediately intervened and discussed the several issues which
prompted Misha to think for a change. They tried their level best to convince Misha and
even appointed a new boss to make the things better for her.
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 3 phases of reducing employee turnover with
HR analytics

1. Identify your retention problem

• Resignation Rate

• Impact on Business Metrics

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 3 phases of reducing employee turnover with
HR analytics

2. Look For the causes of employee turnover

• Resignation Drivers

• Resignation Correlations

• Determine Who Can Be Saved

• Resignation Segments

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 3 phases of reducing employee turnover with
HR analytics

3. Tackle turnover with a tailored employee retention program

• Promotions Actioned

• Training Impact on Performance and Promotions 

• New Hire Performance

• Retirement Trends

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Case Study: Scofield Financial –
Improving Retention and
Hiring

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 Introduction
Scofield Financial is a 20-year-old, mid-sized, regional financial services company
with retail banking, residential lending, and commercial business lending divisions.
The company employs approximately 8500 U.S.-based workers at 110 locations.
Historically, it has outperformed peers and larger competitors during recessionary or
challenging economic periods due to its conservative lending practices and top quality
loan servicing and risk management groups.

Scofield was going through a period of growth and expansion, but it was unclear how
they could recruit and retain the best talent. High turnover rates were reducing much
of the company's recruitment efforts to replacement efforts, and there was little
information on how to acquire those employees who would remain with the
organization and perform at high levels.

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 Key Questions

• What are the main drivers of employee turnover?

• How can we improve employee retention?

• What types of employees should we be hiring?

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 Data Model and Analysis
• Statistical analysis of Scofield's employee
data to determine the major drivers of
turnover and retention (see Figures 1 and 2).

• A large number of variables, including

recruitment source, commute distance, and
pay, were included.

• Effects were broken down by workforce

category to see where each factors had the
largest impact.

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Data Model and Analysis

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 Results: Key Drivers of Turnover
• Contrary to conventional wisdom, commute distance and compensation were not
major factors related to turnover.

• Employees with frequent job changes prior to joining Scofield, had the highest risk
of turnover.

• One third of managers were responsible for 80% of company turnover.

• It was further discovered that compensation was only a major factor if employees
were seriously underpaid. Once pay reached about 80% of the market rate, it was
unrelated.

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 Results: Key Drivers of Turnover
So how could Scofield increase retention?

HCMl's analysis found that the most related factors were:

• Across all workforce categories, restricted stock grants and stock options were
significant drivers of retentions

• Filling open positions with existing temporary staff.

• Opportunities for promotions and transfers

These factors had a negative relationship with turnover, indicating that the presence of
these factors was associated with lower turnover (higher retention)

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 Results: Key Drivers of Turnover
HCMI further broke these
factors down by job category,
demostrating that stock
ownership had a particularly
high impact on operations, sales,
and skilled staff (See Figure 3).

This would allow Scofield to be

strategic about where to focus its
investments.

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 Conclusion

• HCMI combined multiple data sources and conducted a series of simple statistical
analyses for Scofield and was able to discover key drivers for turnover and
retention. Most importantly, they were able to make strategic data driven decisions
for recruitment and retention that were targeted to each workforce category. The
findings resulted in a number of changes that Scofield implemented.

• It was found that managers with high and low turnover rates were evenly distributed
throughout the company, not just among sales managers.

• To hold managers accountable for turnover rates, a manager turnover scorecard was
implemented that was also incorporated into manager incentive programs to help
reduce and penalize the worst offenders. Changes were also made around award
programs and hiring practices.
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 Conclusion

• Scofield launched a service award program for stock options and hiring practices
were changed to consider the number of jobs prior to joining Scofield and
temporary staff were hired to fill select positions.

• These improvements lead to a 40% reduction in voluntary turnover and

increased performance that to an annual savings of approximately $12 million.

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 References
Books Moore,D., McCabe, G., Duckworth, W., and Alwan, L. 2008. The Practice of Business Statistics: Using
Data for Decisions, 2nd Ed., New York: W.H. Freeman. ISBN: 9781429221504

Fitz, J., Mattox II, J. 2014. Predictive Analytics for Human Resources. Wiley Publication.
ISBN: 9781118893678
R1 Becker, B., Huselid, M., Ulrich, D. 2001. The HR Scorecard: Linking People, Strategy, and
Performance. Harvard Business Press. ISBN: 9781578511365

Fitz, J., 
The New HR Analytics- Predicting the Economic Value of Your Company’s Human Capital Requirements
. Harper Collins Publishers.
ISBN: 9781118893678

Fitz, J., Mattox II, J. 2014. Human Capital Analytics-. How to Harness the Potential of Your
Organization's Greatest Asset, Wiley Publication, ISBN- 9781118466766,
Websites https://www.fm-magazine.com/issues/2018/dec/using-predictive-analytics-in-employee-retention.html
https://www.linkedin.com/pulse/mitigating-employee-turnover-hr-analytics-aditi-rathor
https://www.visier.com/clarity/reduce-employee-turnover-with-workforce-analytics/

Video https://www.youtube.com/watch?v=arKqICnbgBw
https://www.youtube.com/watch?v=aK3LtFddamc
Links https://www.youtube.com/watch?v=HSJMfunQyDM
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 Assessment Pattern

Components HT-1 HT-2 Assignment Surprise Business GD Forum Attendance Scaled

Test Quiz Marks

Max. Marks 10 10 6 4 4 4 2 40

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 Thank you !!
Please write back to me in case of any queries

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