Employee Churn

Employee churn is the overall turnover in an organization’s staff as existing employees leave and new ones are hired.

The churn rate is usually calculated as the percentage of employees leaving the company over some specified time period. Although some staff turnover is inevitable, a high rate of churn is costly. Recruitment, hiring and training all require a financial outlay and a new hire may not be immediately productive in terms of creating profit. Depending on the job and other factors, it can take a year or more for the organization to break even on a hire and longer before any return on investment (ROI) is realized.

An unusually high rate of employee turnover is also considered indicative of problems within the organization.

Employee churn can be defined as a leak or departure of an intellectual asset from a company or organization. Alternatively, in simple words, you can say, when employees leave the organization is known as churn. Another definition can be when a member of a population leaves a population, is known as churn.

As per research, it was found that employee churn will be affected by age, tenure, pay, job satisfaction, salary, working conditions, growth potential and employee’s perceptions of fairness. Some other variables such as age, gender, ethnicity, education, and marital status, were essential factors in the prediction of employee churn. In some cases such as the employee with niche skills are harder to replace. It affects the ongoing work and productivity of existing employees. Acquiring new employees as a replacement has its costs such as hiring costs and training costs. Also, the new employee will take time to learn skills at the similar level of technical or business expertise knowledge of an older employee. Organizations tackle this problem by applying machine learning techniques to predict employee churn, which helps them in taking necessary actions.

Important points to consider

• Business chooses the employee to hire someone while in marketing you don’t get to choose your customers.
• Employees will be the face of your company, and collectively, the employees produce everything your company does.
• Losing a customer affects revenues and brand image. Acquiring new customers is difficult and costly compared to retain the existing customer. Employee churn also painful for companies an organization. It requires time and effort in finding and training a replacement.

Employee churn analysis helps to design better employee retention plans and improving employee satisfaction. Exploratory Data Analysis is an initial process of analysis, in which you can summarize characteristics of data such as pattern, trends, outliers, and hypothesis testing using descriptive statistics and visualization. It can be applied for employee churn analysis.

Employee Churn Analysis Process

The analytics process includes

• Define a goal. Identifying what HR management business problem you are trying to solve. Without a problem or issue to solve, we don’t have a goal.
• Collect and Manage data. A ‘dataset’ of information is needed relevant to problem. The collection and management of data could be a simple extract from the corporate Human Resource Information System, or an output from an elaborate Data Warehousing, or Business Intelligence tool used on HR information.
• Build The Model. Select a approach or tool to address that type of problem. For employee churn common approaches used in modeling are classification, regression, anomaly detection, time series, clustering, and association analyses to name a few.
• Evaluate and Critique Model. Each approach can have advantages, evaluate and select with most accurate outcomes and least bias.
• Present Results and Document. Document all activity and present results
• Deploy Model. Use the model on future data to predict or prevent something from happening before it occurs or to better understand our existing business problem to tailor more specific responses

Combating Employee Churn

• Carefully scrutinize all your candidates for required skills
• Compare compensation and benefits to competitors
• Map out career advancement plans for all employees
• Provide training and upskilling opportunities to all employees
• Create a culture of work-life balance for the employees
• Be aware of employee morale
• Review national or industry trends to gain a better understanding as to why there is an increase.