Benchmarking turnover

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EEF benchmarking data is designed to provide busy HR professionals with easy to digest tools that highlight some of the key trends in the industry.  Our annual labour turnover benchmark is a classic example of this.  This concise report provides information on the movement of employees in manufacturing, with statistics on overall labour turnover and by employee type, as well as breakdowns by company size, sector and region.   

What is labour turnover? It’s a calculation that looks at the ratio of people leaving an organisation (for reasons that could include retirement, redundancy, dismissal, or people choosing to move onwards and upwards for their careers), relative to the total headcount over the year.  New to our 2018 report we also have data on the churn of employees excluding redundancies.

In 2017 13.2% of employees left or moved companies in manufacturing, which is up on the previous year when the turnover rate was 12.3%.  However the 2017 figure is still somewhat lower than in 2015 when the turnover was 15.0%.  When redundancies are removed from the calculation, the overall churn for 2017 was 11.9%.

Labour_Turnover_overall_stats_18 

Some further highlights from the report:

  • In 2017 overall non-manual turnover was 0.6% higher than manual turnover (0.4% higher when redundancies were taken out of the data).
  • The greatest churn of employees has been in companies with 101-250 employees, at 15.6%, which is markedly higher than the smallest employers (1-50) where turnover was 9.3%
  • Motor Vehicles & Other Transport & Equipment leads the sectors with the lowest turnover rate at 11.4%
  • There are significant differences in how the regions have fared on turnover, with the East and South East & Greater London seeing the highest movement of employees (17.1% and 16.5% respectively)

Lee Hopley – Chief Economist:

The rate of churn across the manufacturing workforce picked up again after dropping quite sharply in 2016, with turnover in the manual workforce contributing to a greater extent to the increase. Our latest data shows that the rate of turnover of manual employees has increased in 2017 across every manufacturing sub-sector for which we collect data. In contrast the sector picture was more varied by sub-sector for non-manual employees.

An increase in labour turnover rates can simply be an indication that activity is on the rise and employees have some confidence to move to new opportunities and employers are in a position to offer packages that can lure people into new vacancies.

However, as ever, there are also some things that could be leading to higher rates of churn that we’ll be keeping an eye out for this year and will be standing ready to offer support and guidance to manufacturers:

Last year we highlighted potential concerns about the Brexit process leading to a bit of caution amongst employees when it comes to thinking about moving jobs. Another consequence that manufacturers flagged in our Executive Survey is the potential loss of EU workers. We know from official statistics that net migration from the EU, and the A8 in particular has been heading lower following the referendum. Our forthcoming research on manufacturing and migration will be taking a look at how industry is been affected. 

Inflation busting pay offers

With manufacturing output growth looking pretty robust across most sub-sectors at the moment we know that skilled employees are in demand (see our Manufacturing Outlook). While our Pay Bulletin is not yet showing a rapid acceleration in pay growth across the sector, if demand for a particular skill set outstrips supply, which is further constrained by a reduction in EU nationals, then demands for bigger pay packets could follow.

Manufacturers can keep track of how their rates of pay across a whole spectrum of occupations compare with the industry average with our annual pay benchmarking reports. Make sure you’re feeding in your company’s information so we have the more accurate picture possible.

Productivity impact

Clearly one challenge for companies from an increase in turnover is potential disruption to business processes and knock on consequences for productivity – something we know manufacturers are continually striving to improve (click here for more information).

Forthcoming research from EEF will be looking at how manufacturers can improve well-being across their workplace in order to secure gains in productivity performance. High performance workplaces can reduce turnover rates and deliver improvements to the bottom line. Sign up for our regular updates here so you don’t miss the latest research .

Author

Head of Information & Research

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