What employee turnover measures
Employee turnover is the share of a workforce that leaves during a period. A high rate drives up recruiting and training costs and can hurt productivity and morale; a very low rate can sometimes mean too little renewal.
The formulas
The most common international formula divides separations (all departures, voluntary or not) by the average headcount:
turnover rate = separations ÷ ((headcount at start + headcount at end) ÷ 2) × 100
To compare periods of different lengths, annualize it: multiply by 12 and divide by the number of months.
In France, a widely used formula averages hires and departures and divides by the starting headcount:
rate = ((hires + separations) ÷ 2) ÷ headcount at start × 100
The calculator shows both, so you can compare with any benchmark.
Worked example
A company starts the year with 120 employees, hires 28 and sees 18 leave, ending with 130:
| Result | Value |
|---|---|
| Average headcount | 125 |
| Turnover rate | 14.4% |
| Annualized rate | 14.4% |
| French-style rate | 19.2% |
| Estimated cost at 30% of a $60,000 salary | $324,000 |
Benchmarks
Turnover varies enormously by industry. In the U.S. Bureau of Labor Statistics JOLTS survey, total separations typically run at about 3% to 4% of employment per month across the economy, much higher in leisure and hospitality and retail, and lower in government, finance and manufacturing. Compare yourself with your own industry, and track voluntary quits separately from layoffs.
What turnover costs
Estimates of the cost of replacing an employee range from roughly a fifth of annual salary for many jobs to more than a year’s pay for senior or specialized roles. The cost includes:
- recruiting: ads, agencies, interview time;
- onboarding and training;
- lost productivity while the position is empty and while the new hire gets up to speed;
- the extra workload on the rest of the team.
Reducing turnover
- Analyze exit interviews and quit rates by team, manager and length of service.
- Watch early departures: people leaving in their first year often point to hiring or onboarding problems.
- Compare pay with the market regularly.
- Invest in career paths, training and manager quality, which surveys consistently cite as reasons people stay or go.