How to calculate employee turnover rate
Discover how to calculate employee turnover rate and what a high, low, and average employee turnover rate is.
Employee turnover rate is the percentage of employees leaving your workforce over a specific time period. Businesses with high turnover rates often report low employee satisfaction, poor working conditions, and less motivated employees.
In this article, we’ll explore how you can calculate your employee turnover rate. You’ll also learn how to benchmark and improve your turnover rate to enhance your overall employee experience.
What is employee turnover?
Employee turnover is the percentage of your employees that leave across a given period.
A business that has a low employee turnover typically has high employee satisfaction. It also translates to higher productivity, engagement, and more profit. Decreasing employee turnover rates can enhance your workplace and create a better workplace culture.
How to calculate employee turnover rate in 3 steps
To calculate your employee turnover rate, use the formula to determine the final percentage.
Here is the employee turnover rate formula:
- Employee turnover rate = (Employees who left / Average number of employees) * 100
To calculate the employee turnover rate, use the turnover rate formula (or an employee turnover rate calculator). Divide the number of employee separations by the average number of employees, then multiply by 100.
Here’s how you can use the formula to calculate employee turnover:
- Find the average number of employees: Add the starting number of employees to those still with the company at year-end. Then, divide the number by two.
- Calculate the number of employee separations: Determine how many employees quit that year.
- Use the formula: Plug in your numbers from steps 1 and 2 and divide one against the other. Multiply that figure by 100 to get your employee turnover rate in a percentage.
For example, a human resource professional counts 200 employees at the start of the year. The year ended with 300 employees. The average number of employees for the year is 250 (200 + 300 = 500 / 2 = 250). If 10 employees separate from the company during that year, the annual turnover rate is 4% (10/250 = 0.04 x 100 = 4%).
How to analyze your employee turnover rate
Analyzing your employee turnover rate lets you determine whether your employee experience program works effectively. A high turnover rate signals the need to improve your employee value proposition and overall employee experience.
Always benchmark your employee turnover rate against your wider industry and against your previous data. Understanding how you stack up against others in your sector will show you if you’re on the right track. Then, comparing your employee turnover rate from year to year will indicate if you’re improving or regressing.
Benchmarking is an important strategy for continually improving the employee experience and decreasing your turnover rate.
It’s also important to remember that there are two types of employee turnover rates: voluntary and involuntary.