How and Why to calculate Employee Churn Rate (ECR) KPI
Employee Churn Rate (ECR) is an excellent measure to show how often employees in the organisation change. Apart from the costs to replace them, the hidden costs of knowledge and know-how gained at the company may take many years to replace.
Why is it important?
It’s cheaper to retain an employee than to hire a new one when taking into consideration hiring fees and training costs. This ECR KPI may help in investigating and uncovering some of the underlying reasons for employees leaving if the figure grows and becomes too high.
What questions does KPI answer?
1) How well are we retaining our staff?
2) How often do employees leave?
3) Are employees satisfied with our company?
KPI target
Should be lower than the industry benchmark or threshold set by the organisation.
Not all employees leaving is considered bad. Some employees who are departing, an organisation may be happy to lose. Should be measured together with similar KPIs like Tenure, Hiring Cots, Training Costs, Churn Reasons, etc.
Data sources
HR Systems.
KPI Formula
ECR = (# of Employees Leaving in Period / Avg # of Employees Employed) * 100,