Employee Turnover

Employee turnover refers to the number or percentage of workers who leave an organization and are replaced by new employees during a certain period. It’s an important metric for HR managers and leaders to monitor, as high employee turnover can be costly for organizations due to the associated recruitment and training costs, and it can also indicate issues with employee satisfaction, engagement, or retention.

Employee turnover can be voluntary (the employee chooses to leave, often for reasons like a new job, retirement, or returning to education) or involuntary (the employer initiates the departure, such as through layoffs or termination for cause).

The turnover rate is typically calculated with this formula:

Employee Turnover Rate = (Number of employees who left during the period / Average number of employees during the period) * 100%

For example, if a company started the year with 100 employees, ended with 110, and had 20 employees leave during the year, the average number of employees would be 105 ((100+110)/2), and the turnover rate would be:

Turnover Rate = (20 / 105) * 100% = 19%

A certain level of turnover is expected in every organization, and can even be beneficial by bringing in new ideas and skills. However, high turnover can disrupt operations and decrease productivity and morale. Therefore, organizations often strive to reduce unnecessary turnover by implementing effective retention strategies, such as competitive compensation, career development opportunities, positive work environment, etc.