highturnover

High turnover is a business term used to describe a high rate of replacement or movement within a company's activities. The phrase can refer to two distinct concepts: employee turnover, which is the rate at which staff leave and are replaced, and inventory turnover, which measures how quickly inventory is sold and replenished.

Employee turnover: The turnover rate is typically expressed as a percentage of staff leaving in a period relative to average headcount. High employee turnover can signal problems such as weak job fit, poor management, inadequate compensation, or burnout, and it tends to raise recruiting, onboarding, and productivity costs while potentially harming service quality and morale.

Measurement and causes: Key metrics include voluntary vs. involuntary separations, retention rate, vacancy duration, and time-to-fill. Causes vary by industry but include labor market conditions, organizational culture, leadership, and career opportunities.

Inventory turnover: Inventory turnover is the ratio of cost of goods sold to average inventory, indicating how many times inventory is sold and replaced over a period. A high turnover generally reflects strong demand and effective stock management but can also indicate frequent stockouts or narrow margins. A low turnover suggests overstocking, obsolescence, or weak demand.

Implications and management: Organizations seek to balance turnover to maintain expertise while adapting to change. For employees, strategies include improved hiring, onboarding, development, compensation, and engagement. For inventory, strategies include demand forecasting, supplier management, SKU rationalization, pricing, and inventory optimization.