Knowing how to calculate employee turnover helps companies understand the well-being of the organization and develop smart employee retention strategies.
Knowing how to calculate employee turnover can help companies better understand the well-being of their organizations. Employee turnover refers to employees leaving a workplace and being replaced by new employees. In terms of turnover vs. attrition, attrition doesn’t always warrant replacements. The employee turnover rate is the percentage of employees who leave a workplace within a certain period. Usually, the time period is a year, but it could be a month, a quarter, or any other time span. Generally, the calculations include both voluntary and involuntary turnover. For example: employees who quit or resign as well as those who were fired or laid off.
The employee turnover rate is a useful metric that shows whether employers are successful in retaining their employees. Employee turnover is expensive for companies and organizations. To some extent, employee separations are normal and expected. However, when the turnover rate is high or suddenly spikes, that should be a warning sign for employers.
This article will explore how to calculate employee turnover rates and costs and their implications for organizations.
How to calculate employee turnover rate
Calculate your employee turnover rate by dividing the number of employees who have left during a specific time period by the average number of employees during that period and multiply by 100.
A traditional employee turnover rate includes both voluntary and involuntary talent loss. So include individuals who have left the company due to termination, retirement, disability, and by their own volition.
Employee Turnover Rate = (Number of employees who left / Average number of employees) * 100
To calculate your employee turnover rate, first calculate the average number of employees in a given time span. To do so, add your starting headcount to your final headcount for the specified period of time, and divide by 2.
Average Number of Employees = (Headcount at the beginning of the timeframe + Headcount at the end of the timeframe) / 2