What is considered a normal turnover rate?

Michelle Turnbridge asked 2 years ago
I just started running the HR functions at a small business (23 employees). We seem to be constantly re-hiring to replace workers jumping to another job. What is considered normal turnover for a company of our size? How do you even calculate a turnover rate? (We’re a IT consultancy.)
1 Answer
Best Answer
Nicole Roder replied 2 years ago
Hi there. Thanks for your question! Turnover is expensive for any employer, so your concern is understandable. Unfortunately, I think you might be feeling the normal sting of high turnover that comes with your industry.

According to the Bureau of Labor Statistics, the annual rate of annual separations (i.e. “turnover rate”) for your industry was 63.3% in 2018. Ouch! (See annual separations rate for “Professional and Business Services” on this BLS chart.)
To calculate your company’s annual turnover rate for the year, gather these numbers:

The number of people you employed at the start of the year (A)
The number of total separations you had during that period (B)

Then calculate your turnover rate using this formula:

B ÷ A × 100 = Turnover Rate

You say that your company employs 23 people. For simplicity’s sake, I’m going to assume that you average 23 employees over the entire year.

You didn’t mention your total number of terminations for the year, so I’ll use a hypothetical figure. If you have 15 separations during a one year period, then your termination rate is:

15 ÷ 23 × 100 = 65.2%

That’s a little bit higher than the industry average. However, there is also some evidence that companies with fewer than 1,000 employees have significantly higher turnover rates than others in their industry, so that might not be out of the ordinary.

If you employed more or fewer than 23 people at any time during the year, simply calculate your turnover rate using your average number of employees.

For more information about turnover rates and how to work toward a healthy employee retention rate, check out this Zenefits blog post.