Frame retention rate: formula. Average number of employees

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Each company has its own human resources department, but many people don't understand what exactly the employees who work there do. Of course, the first thing that comes to mind is hiring and firing, but in fact, the functions of the employees of this department are much wider. At the same time, they need to know a lot of different theoretical information, and most importantly, to be able to apply them in practice. Therefore, only the highest professionals should always work there, so that they can positively influence the life and growth of the company. However, in this article we will not talk specifically about the personnel department, but about one small specific coefficient that affects a lot and is part of the system for analyzing and controlling staff turnover. It is this topic that will become the main one in this material. As for the coefficient, you will learn about it a little later - for now it is better to focus on a global view of the issue. Do you know what staff turnover is? How does this affect the he alth of the firm? What can be done about it? It's time for you to understand these concepts, especially if you are going to work in the human resources department or plan to run your own firm.

Staff turnover

Staff turnover is a problem that exists in absolutely all organizations, and it is with it that many entrepreneurs first of all try to fight. What it is? Staff turnover refers to the process of constant change of employees within the same organization. It is easy to understand that turnover is not a good and positive indicator. First, it means that there are less than ideal conditions in the firm, which is why employees prefer to leave in order to move to another, more favorable position in another company. Secondly, this means that it is very difficult to organize teamwork, as the staff changes immediately, as soon as they start to get used to each other and establish interaction. Thirdly, it causes direct damage to the company, since you have to constantly look for new employees, spend money and time on their training, try to compensate for downtime, and so on. In general, turnover is one of the biggest problems in any organization, so it definitely needs to be fought with all your might, which is often the focus of the actions of the personnel department. How is it produced? First of all, it is worth noting the analysis and accounting of personnel.

Employee movement analysis

Personnel accounting is one of the most important functions of this department. Specialists must use a huge number of different formulas to determine the state of the firm at a particular moment in matters of turnover. The analysis is usually carried out on a multilevel basis and touches on many issues. Actuallyspeaking, the basis of this analysis is the calculation of the turnover of personnel, that is, the ratio of employees hired and those who left work. However, it is immediately worth noting that HR specialists have several very useful formulas that allow you to calculate extremely interesting and important coefficients, which are then much more convenient to work with. And it is one of them that will be discussed in this article. About what exactly? From this material, you will learn what the frame permanence ratio is, as well as study in detail what it consists of and how to calculate it using an example. Remember that this coefficient is very important for analyzing the movement of employees in the company, so not a single competent specialist will neglect it. It is no less important than the employee turnover rate next to it.

Coefficients in the analysis of the movement of employees

The employee retention rate is just one of a large number of factors that the human resources department works with in the process of analyzing employee movement, identifying turnover and effectively dealing with it. First of all, it is worth noting two basic coefficients - turnover on admission and on dismissal. The first shows how many employees the company hired for various positions during the reporting period, and the second shows how many of them quit. It should be noted that the coefficient is a much more convenient unit of measurement. The usual number of employees does not tell you anything, since you may not know in what framework the company operates, what size it is, and so on. The coefficient, on the other hand, offers you a clear value from zero to one (or it is 0% to 100%) - that is, you know the specific boundaries, and it is easier for you to navigate and use this indicator for further analytical work. The same goes for the turnover rate, which shows how serious the problem of turnover in the firm is at a given moment. But what is the retention rate? This indicator is given the most attention in this article.

What is the consistency factor?

Well, it's time to find out exactly what the retention rate is. Just as in the case of turnover, this indicator shows how well the company is doing with the ability to retain important employees in the workplace. It is not difficult to guess that this coefficient is very important in analytical work, so you should pay enough attention to it to fully understand how to calculate it. Naturally, he has his own formula, according to which the calculation is made. If you are not too strong in personnel activities, then the further description may seem like a complicated set of words for you, but do not rush to despair - later in the article each item will be analyzed in detail and separately. So, in order to find out the coefficient of constancy, or, as it is also called, the coefficient of personnel stability, you need to subtract the number of employees dismissed during the billing period from the headcount at the beginning of the calculated one, and the resultingdivide the result by the average number for a specific period. The result can be used as a ratio - or can be multiplied by a hundred to get a percentage result. As you can see, at first glance, everything is rather confusing, but if you carefully study this issue, then you are unlikely to have any difficulties in the future. Well, it's time to take each point apart, then calmly put them together for a complete and absolute understanding of this issue.

Employee headcount

So, the first indicator that you come across when you are interested in the staff stability ratio is the payroll for the reporting period. Separately, this parameter no longer causes such confusion, and you can easily guess that it means the number of employees that were in the company at the beginning of the reporting period - this can be any period, but most often the reporting period in the personnel department is either a month, or a year. Therefore, a specialist needs to make an accurate count of personnel throughout the organization in order to be able to use this parameter in the formula in the further calculation of the coefficient. Of course, this isn't the only thing you should be interested in when you're trying to calculate the frame consistency ratio - the formula includes other elements, which you'll learn about in a little more detail now. Always remember that each element is extremely important in the calculations, so you should not letmistakes even in small things, because this will entail even more impressive problems and mistakes.

Number of layoffs

This is one of the easiest elements to calculate what the frame consistency ratio is. The formula includes much more complex parameters, but for now you should focus on even such a trifle. Most likely, you have already guessed that in this case you need to calculate the number of all laid-off employees for the entire reporting period. And we are talking about absolutely all employees, that is, all reasons for dismissal are taken into account. These can be both standard options, such as dismissal of their own free will, due to incompetence, for absenteeism and violations of labor discipline, and dismissal provided for by law - in most cases, this is conscription, moving to the spouse’s place of work, enrolling in an educational institution with the impossibility of continuing to fulfill work obligations. Physiological causes, such as prolonged illness or even death, are also taken into account. In any case, all layoffs are taken into account in this parameter and are included in further calculations using the above formula. And when you already have the number of employees who left the organization, there comes a time when you need to calculate the number of employees who have worked for the entire reporting period.

Number of employees for the entire reporting period

In this paragraph, you have to calculate the differencehired / fired employees for the reporting period. Here you will not need any new information, you will work with indicators that you already have. So, to calculate the number of employees who worked in the organization for the entire reporting period, you will need to perform a simple subtraction operation. Take the headcount, which indicates the number of people who were registered at the workplace at the beginning of the reporting period, and subtract from it the number of laid-off employees who left their positions in the company during the reporting period. As a result, you will get the desired value - the number of employees who worked at the enterprise during the entire reporting period. With this value, you will need to work further - and you really only have one step left to find out the result of all this work. But this step is big, serious, and also requires a lot of calculations. After all, now you need to find out what is the average number for the year.

Average headcount for the reporting period

You already know what the payroll is, but so far you have no idea what the average headcount is. Now you have to find out about this, because without this indicator you will not be able to find out the constancy coefficient. So, the average headcount gives you a value based on the headcount for each individual stage of the reporting period. If the reporting period is a month, then the average number will be calculated based on the payrolleveryday. How exactly is this value calculated? To do this, you need to calculate the number of employees in the company during each day, then add up the results of all days, and divide the amount by the number of days in the reporting period. As a result, you will get the average headcount, which you can then use in the formula. However, this simplistic approach only works if you don't have contract or temporary workers. Temporary workers are those employees of the company who work part-time. Here, the calculation is made not by the number of employees, but by the hours that they worked, in relation to the total amount of hours that are worked out within the framework of an ordinary working day.

Coefficient calculation

Well, now you have all the data you need to fully understand the formula. You understand what attrition is, how this parameter interacts with headcount, and much, much more. You know absolutely all the data, and all that remains for you is to substitute the necessary numbers. Now, in order for you to understand everything as accurately as possible, one specific example will be analyzed. It is only worth mentioning right away that when calculating the average headcount, for simplification, only permanent employees will be considered - still, not every company has employees who do not work on a permanent and full basis. If your firm does have them, make sure HR keeps them separate from permanent employees.

So, we should assume that the averagethe company at the beginning of the reporting year had a hundred employees - this is a convenient number for further calculations. During the year, twenty of them quit. These are already two values that you can substitute into the formula to get the third. Subtract from the headcount of employees (100 people) the number of laid-off employees (20 people) to get the number of employees for the entire reporting period - it will be eighty people. This value is abstract, meaning you won't be able to use it for any other calculations, so just mark it so you don't lose it.

It's time to move on to the next step - calculating the average headcount. This is a slightly more complex and lengthy process, as you will need to take the number of employees for each day of the reporting period to get the desired result. It makes no sense even in the example to try to give any number of employees, but most often it is less than a hundred. The calculation for this example resulted in the number 93, which you can now use to get the final result. As far as you remember, the numerator of your formula is the number 80, but now you add the number 93 to the denominator. The result of the division is a factor of 0.86 rounded to two decimal places. If you're more comfortable with a percentage, you can multiply that by 100 to get eighty-six percent. Or you can leave everything exactly as it is and use a fractional factor. In any case, you havefinished result. However, one very important question remains - what does it mean? That is, you have some specific meaning, but will the HR specialist bring good or bad news to his boss? Upon further analysis, find out that the firm is in a deplorable state? Or prosperous?

Striving for unity

Of course, you need to understand the whole industry to immediately tell how good this result, which was obtained in the previous example. However, now you will know the answer to this very interesting question. So, based on the practice that exists today, the coefficient tends to one, so your result of 0.86 (or eighty-six percent) is close to normal. Of course, it is impossible to predict how this coefficient will turn out, but you know that it reflects the stability, constancy of the team in the company, and you can work with this coefficient further in the analysis. It is usually used in conjunction with the flow rate, because the permanence factor by itself is incomplete and does not show the whole picture. That is, you cannot go to the boss from the personnel department and say that the coefficient of constancy this year is very good - the specialist must provide a full report, and this coefficient only matters to him. The boss is waiting for a report on what the level of staff turnover is, how bad it is, and what is planned to be done about it.