What is Churn Rate?

In terms of recruitment, the churn rate measures the number of employees that leave a company within a specific time frame – often a year. Covering both the attrition rate and the turnover rate, it includes many reasons for leaving, from retirement to resignations. It provides companies with essential insight into their employee retention.

Understanding the churn rate is critical for businesses. With a high churn rate, a business’s productivity and time get wasted due to replacing staff time and time again. Hiring a new employee is no simple task, and it is always an enormous loss when a company loses a talented individual. On top of that, a high churn rate equals fewer loyal employees and a damaged reputation as an employer. Due to all of this, companies must decrease their churn rate and keep people on board where possible.

To understand their churn rate, employers should look into similar organizations’ rates to see if theirs is below average, ordinary, or higher than it should be. If a company has a high churn rate, its job is to lower it where possible, and that means assessing why too many people leave the company. If companies aren’t paying competitive salaries, they need to do what they can to change this.

Employers can decrease their churn rate (and build a team of loyal employees) by focusing on better company culture, offering development opportunities, paying an attractive salary, and streamlining the entire recruitment and onboarding process.