Turnover Rate
Turnover rate is the percentage of employees who leave an organization during a specific period, typically measured annually.
hr-metrics
Category
beginner
Difficulty
5 min read
Read time
2025-01-15
Updated
Definition
Short definition
Turnover rate is the percentage of employees who leave an organization during a specific period, typically measured annually.
Detailed explanation
Employee turnover rate measures the rate at which employees leave an organization and need to be replaced. It is a critical HR metric that impacts costs, productivity, and organizational knowledge.
Turnover can be voluntary (resignations) or involuntary (terminations, redundancies). High voluntary turnover often indicates issues with engagement, compensation, management, or career development opportunities.
The cost of turnover extends beyond recruitment - it includes lost productivity, training costs, institutional knowledge loss, and impact on remaining team morale.
Practical guidance
How it works
Count leavers over a period, divide by average headcount for that period, multiply by 100. Calculate separately for voluntary and involuntary turnover.
Best practices
Track voluntary and involuntary separately
Conduct exit interviews
Analyze by department and tenure
Compare to industry benchmarks
Calculation details
Formula
Turnover Rate = (Number of Leavers / Average Headcount) × 100
Variables
L: Number of Leavers
H: Average Headcount
Worked example
(24 / 150) × 100 = 16%
Result: Annual Turnover Rate: 16%
Frequently asked questions
What is a healthy turnover rate?
This varies by industry. Generally, 10-15% annual turnover is considered normal. Very low turnover (under 5%) may indicate stagnation, while high turnover (over 20%) suggests retention problems.
Related glossary terms
Retention Rate
Retention rate is the percentage of employees who remain with an organization over a specific period, the inverse of turnover rate.
Employee Engagement
Employee engagement is the emotional commitment and connection employees have to their organization and its goals, measured through surveys and behavioral indicators.