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Termination Breakdown by Performance
Application
This measure will be most useful for organizations that have performance ratings that are applied reasonably accurately and consistently in the performance review process.
Description
Distribution of terminations during a reporting period by performance rating of terminating employees.
Formula
Terminations. [Performance Rating] / Terminations * 100
Interpretation
Termination Breakdown by Performance Rating indicates the performance rating distribution of employees who left the organization during the period. For example, the breakdown may indicate that 20% of terminations were from A-rated employees, 50% were from B employees and 30% were from C employees (totaling 100% of terminations).
Understanding how terminations and performance rating relate can be very informative to an organization in its attempts to retain top performers and manage poor performers out of the organization. If a high percentage of terminations come from top performers, the employer might focus on where the employment offer of the organization fails to meet the expectations of those high performers. If an excessively low percentage of terminations come from poor performers, the organization might investigate whether poor performers are improving performance to remain valuable or whether continued poor performance is tolerated and accepted by managers.
Interpretation of the results for Termination Breakdown by Performance Rating must also consider the results for Performance Rating Distribution. For example, the fact that 20% of terminations are from A performers will be a greater concern if only 10% of employees are given A ratings versus if 30% are given A ratings. Organizations should therefore consider how termination distribution differs from headcount distribution by rating.
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From Paraguay
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