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Use Turnover Rates by Industry in Recruitment

by | Feb 14, 2018 | Recruiter Training, Top Echelon Blog

As a recruiter, you’re charged with sourcing talented individuals who are good fits for your clients. Failing to recruit the perfect fit can lead to high turnover rates. But before you start kicking yourself, it’s important to remember that some industries have more separations than others. Study turnover rates by industry to root out the causes of separation and help improve your recruiting strategy.  

What is turnover?

Turnover is when an employee separates from a business and needs to be replaced. Separation can be voluntary (the employee decides to leave) or involuntary (the business decides the employee must leave) and can be due to a number of different factors.

Employees may voluntarily leave because of receiving better job offers, being dissatisfied with the job, moving, etc. Involuntary separations can be due to firings or layoffs.

In one study, SHRM reported that the annual overall turnover rate was 19%. A business can find its own turnover rate by dividing the number of separations by the average number of employees in the business. Then, multiply that number by 100 to get a percentage.

Turnover Rate = (# of Separations / Average # of Employees) X 100

The turnover rate shows a company how many employees leave within a time period, like a month, quarter, or year.

The higher the turnover rate, the more time the company will spend replacing employees. And, the cost of employee turnover takes its toll on a business’s operations. According to one SHRM survey, the average cost per hire is $4,129, and the average time to fill a position is 42 days. As you can see, replacing just one employee is expensive and time consuming.

Businesses also do not want high turnover because it can discourage employees and paint a negative picture of the company.

By putting more time into the recruiting process, a company hopes it can reduce its turnover rate. As a recruiter, you can devote more time and resources to finding lasting employees. But if employees you place leave, your client might decide against your recruiting solutions in the future.

How to use turnover rates by industry in recruiting

Looking at the average turnover rate by industry can show you which industries have the most separations. This could help you strengthen your recruitment and selection process by making necessary changes to how you source, interview, and even partake in onboarding.

You can also use employee turnover rate statistics and compare to a client’s turnover rate. For example, you might gather data from Clients A, B, and C, who are all in different industries. You can tell each client whether they are above or below industry averages.

Looking at the average employee turnover rate by industry can also help you gauge your recruiting success. If each business you recruit for has higher turnover rates than the average, you might want to change your process.

Take a look at each employee turnover rate by industry.

Turnover rates by industry

There are many reasons for turnover, one of which is industry. Some industries may be more taxing on employees than others. Or, employees might feel undervalued in some lines of work.

Compare client metrics to the Bureau of Labor Statistics (BLS) turnover rate by industry report. The BLS breaks down data by providing the rates and total number of separations, job openings, and hires by industry. The information below reflects the rates during October 2017.

The BLS reports a total of 5.2 million separations in October with an average turnover rate of 3.5%.

Now, take a look at the turnover rates for each industry (note that this is not an all-inclusive list):

  • Mining and logging: 4.7%
  • Construction: 5.0%
  • Manufacturing: 2.5%
  • Trade, transportation, and utilities: 3.7%
  • Information: 2.4%
  • Financial activities: 2.7%
  • Professional and business services: 5.2%
  • Education and health services: 2.7%
  • Arts, entertainment, and recreation: 6.1%
  • Accommodation and food services: 5.7%
  • Federal government: 1.4%
  • State and local education: 1.3%

As you can see, turnover rates ranged from 1.3% – 6.1% in October, depending on the industry.

Looking at just one month might not paint the whole picture, either. You might find that turnover rates are higher or lower in certain months for some industries. For example, the BLS reported that the turnover rates ranged from 1.4% – 8.3% in July 2017.

Use these turnover benchmarks by industry to guide your recruitment goals and objectives, make changes to your processes, and highlight to your clients.

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