Employee Turnover Rate Calculator
How to Calculate Employee Turnover Rate
Employee turnover rate is a critical HR metric that measures the percentage of workers who leave an organization during a specific period (usually a month or a year). Understanding this number helps businesses identify issues with company culture, compensation, or management styles.
The Turnover Rate Formula
To calculate the turnover rate, you need three specific numbers: the employee count at the beginning of the period, the employee count at the end of the period, and the total number of departures.
Step 1: Calculate Average Employees
(Beginning Employees + Ending Employees) / 2 = Average Employees
Step 2: Calculate the Rate
(Total Separations / Average Employees) x 100 = Turnover Rate Percentage
Suppose a retail store started the year with 50 employees and ended with 60 employees. During that year, 11 people left the company.
1. Average Employees: (50 + 60) / 2 = 55
2. Turnover Rate: (11 / 55) * 100 = 20%
This means the store has a 20% annual turnover rate.
Why Monitoring Turnover Matters
High turnover is expensive. It involves recruitment costs, training expenses, and a loss of institutional knowledge. By tracking turnover rates regularly, HR departments can:
- Identify Trends: Spot if turnover is spiking during specific seasons or within specific departments.
- Benchmark Success: Compare your rates against industry averages (e.g., hospitality typically has higher turnover than government sectors).
- Improve Retention: If the rate is climbing, it acts as an early warning signal to conduct exit interviews and address employee dissatisfaction.
What is a "Good" Turnover Rate?
While 10% is often cited as a general benchmark for healthy turnover, "good" varies significantly by industry. Technology firms might see 13-15%, while the fast-food industry can experience turnover rates exceeding 100% per year. The goal is usually to maintain a rate lower than your direct competitors while ensuring that "high-performers" are the ones staying.