Employee turnover rates: definition, perks, and formula

Read our guide to employee turnover rates - what they are, why they are important, and how to calculate them.

Ron Pearson

Keeping your employee turnover low and employee retention high is crucial for business growth. Your employee turnover, therefore, is a key metric that can be used to improve your strategy for HR. We have compiled a short guide to employee turnover and retention strategies.

What is employee turnover?

Employee turnover shows how many staff members a business loses over a specific amount of time. This can be calculated monthly or annually, or both. Being aware of the turnover in your company is likely to help you improve your employee retention strategy and reduce employee turnover. While there is an endless number of reasons for which an employee would leave a business, and sometimes these are out of your control, there are measures you can take to improve employee experience and decrease turnover.

Two colleagues in office space
Employee turnover shows how many staff members a business loses over a specific amount of time.

Why is it important to know my company's employee turnover rate?

HR professionals and departments can learn a lot from these figures. Both the recruitment process and the hiring process come with a significant cost, monetarily and in terms of employee time spent on them. This is then followed by the costs for training new staff. Turnover costs should not be underestimated. Research suggests that high employee turnover rates can cost an organization about 90% to 200% of yearly salary. This is why it is key to have solid employee engagement within your company. Having data on employee turnover will also be informative and show you eg who is leaving your business at which time and for which reasons.

Woman and man sitting in office
Both the recruitment process and the hiring process come with a significant cost, monetarily and in terms of employee time spent on them.

Guide to calculating your staff turnover

To identify your staff turnover rate, you need two variables: the average number of employees and the staff population that left within your specified time period under review. The average number of employees is calculated by adding up the staff population at the beginning and the end of the period and dividing that figure by 2. So, the rate for calculating your turnover rate is Turnover (%) = (employees that left/average number of employees) X 100. You can use this formula for a monthly, quarterly or annual calculation.

Calculating staff turnover rate
To identify your staff turnover rate, you need two variables: the average number of employees and the staff population that left within your specified time period under review.

What is a good employee turnover rate?

Research has shown that the average yearly employee turnover rate is c. 11%. Nevertheless, what a low or high turnover rate is still differed significantly depending on the industry and country you are operating in.

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