Turnover Rate

Turnover Rate refers to the percentage of employees who leave an organization over a specific period of time, either voluntarily (resignations) or involuntarily (terminations, layoffs). It is a key HR metric used to assess workforce stability, employee satisfaction, and the effectiveness of retention strategies. A high turnover rate may indicate underlying issues such as poor management, lack of career development opportunities, inadequate compensation, or low employee engagement.

Conversely, a low turnover rate can reflect a healthy organizational culture and strong employee loyalty. Turnover rate is typically calculated by dividing the number of separations during a period by the average number of employees, then multiplying by 100 to express it as a percentage.

Key Facts

• Calculation Method: Typically calculated by dividing the number of separations during a period by the average number of employees, then multiplying by 100.
• Voluntary Versus Involuntary: Can be broken down to identify why employees are leaving (for example, quitting versus being let go).
• Industry Benchmarking: Turnover expectations vary by industry; high turnover may be normal in retail but problematic in healthcare or education.
• Impact on Costs: High turnover increases recruitment, training, and onboarding costs and may reduce team productivity and morale.
• Indicator of Culture: Elevated turnover can signal internal issues like poor management, lack of engagement, or limited advancement opportunities.

1. How is turnover rate calculated?

Divide the number of employee departures by the average number of employees for a time period, then multiply by 100. For example: (15 separations ÷ 150 average employees) × 100 = 10% turnover.

2. What is considered a “good” turnover rate?

It depends on the industry. Generally, 10% or less is seen as healthy in many sectors, but some roles or industries may have higher norms.

3. What causes high turnover rates?

Common causes include poor management, lack of career growth, low pay, poor work-life balance, toxic workplace culture, and weak onboarding.

4. How can employers reduce turnover?

Improve employee engagement, offer competitive compensation, provide growth opportunities, recognize achievements, and foster strong leadership.

5. What’s the difference between turnover and attrition?

Turnover refers to all employee departures and may include replacement, while attrition refers to natural, unreplaced workforce reductions (such as retirements).