Category: HR KPIs.

The First Year Voluntary Termination Rate is yet another Human Resources metric – of course, it’s also one that’s very important to a company, as it shows the percentage of people that chose to leave your company after working there for only one year.

As this metric’s name implies, the termination of the contract is entirely voluntary – therefore, while there might be some issues on the employee side, it is more likely that the company did not offer the latter the proper work environment or such for he or she to feel welcomed.

Let’s look into this matter more and see how it can help you determine the future of your company – both when it comes to resources spent on hiring new employees and manner of employee retention.

The Basics of First Year Voluntary Termination Rate

Let’s say that, for example, your company offers its employees, both old and new, everything that they could wish for in terms of payment, holiday, bonuses, and such. However, you find out that there are people that terminate their contract after working for you for only one year.

First of all, let’s see how you calculate the First Year Voluntary Termination Rate.

The Formula

In order to come up with this percentage, you have to divide the number of employees that have voluntarily left your company before working for 12 months in your company in a year by the total number of people that leave within the same year – after doing this, you have to multiply the end result with 100.

This will leave you with the First Year Voluntary Termination Rate – you basically rule out the people that left your company after being hired for a couple of years, due to various reasons, and take into account only those that didn’t get through their first year.

The Issues

You already know that recruiting people for a certain job costs your company money and other resources – therefore, having to do this thing every single year will add some problems to the funds and resources that your company has available for hiring new people.

If a certain employee leaves their position, you will be forced to search for someone to fill it in – and during the time period you are searching for someone new, you will basically be understaffed and, therefore, have certain operations within your company disrupted.

When you are faced with a high rate of First Year Voluntary Termination, this can mean one thing – namely, that the management team has found the right people for a certain position in your company, but that the latter as an entity has failed to embrace them and give them a reason to keep on working there.

The Bottom Line

There may be various reasons that hide behind a high First Year Voluntary Termination Rate – both in the case of employees and the company as well. In order to determine which things have caused some of your employees to leave in their first year, you could rely on questionnaires.

Calculating the rate is easy but finding the reasons behind it is hard – you may find out that several people were faced with personal issues that made them leave the company. On the other hand, you may find out that your company was not as welcoming as they expected.

In most of the cases, a pay raise or the option to work flexible hours is what employees are looking for – after all, giving them a bit of what they want will save you some money in terms of management and recruitment processes.

Related Articles