How to Calculate Employee Turnover (Simple Formula)

Employee turnover isn’t just a statistic - it’s a valuable indicator of your company’s ability to attract, support, and retain talent. High turnover can be costly, but moderate turnover can also be beneficial, offering opportunities to bring fresh talent and new perspectives to your team.

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Below, we'll show you how to calculate employee turnover (including staff turnover calculator) and go through why keeping an eye on this number matters.

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What is Employee Turnover?

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Employee turnover refers to the rate at which staff leave your company within a specific timeframe, typically a year. It includes:

• Voluntary turnover: Employees who choose to leave for reasons such as better opportunities, personal life changes, or retirement.
• Involuntary turnover: Employees dismissed due to performance issues, restructuring, or layoffs.
• Desirable turnover: Turnover that results in replacing underperforming staff with stronger talent.
• Undesirable turnover: Loss of highly valued employees, which creates skill gaps in your organization.

Turnover differs from attrition. Attrition is when employees leave and the positions remain unfilled, shrinking your workforce.

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Why Tracking Employee Turnover Matters

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Regularly monitoring employee turnover helps your business maintain efficiency and morale. Addressing turnover proactively can help you:

• Manage hiring costs: Recruiting, training, and onboarding expenses can quickly add up.
• Boost productivity: Retaining experienced employees helps sustain productivity.
• Maintain high morale: A stable workforce fosters confidence and loyalty among your team.
• Attract talent: Companies known for employee retention are attractive to job seekers.

Keeping turnover in check allows you to build a stronger and more stable workforce.

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How to Compute Turnover Rate (Step-by-Step)

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Use this straightforward formula:

Employee Turnover Rate (%) = (Number of Employees Who Left ÷ Average Number of Employees) × 100

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Step 1: Count Departing Employees

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Determine how many employees left your company within the chosen period (typically one year). Do not include temporary or seasonal workers.

Example: 8 employees left last year.

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Step 2: Find Your Average Number of Employees

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Calculate the average number by adding employees at the start and end of the period, then dividing by two.

Example:

(60 + 70) ÷ 2 = 65 average employees

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Step 3: Apply the Formula

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(8 ÷ 65) × 100 = 12.3%

Your annual turnover rate is 12.3%.

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Breaking Down Voluntary & Involuntary Turnover

To better understand turnover, calculate voluntary and involuntary separately:

• Voluntary Turnover:

(Voluntary Leavers ÷ Average Employees) × 100

• Involuntary Turnover:

(Involuntary Leavers ÷ Average Employees) × 100

Example:

• Voluntary: (6 ÷ 65) × 100 = 9.2%
• Involuntary: (2 ÷ 65) × 100 = 3.1%

What's a Healthy Turnover Rate?

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Turnover rates vary across industries. Here's a snapshot of average turnover rates:

• Professional Services: 13.4%
• Technology: 12.9%
• Entertainment & Hospitality: 11.8%
• Retail: 11.4%

Roles typically experiencing higher turnover:

• Customer Service: 17%
• Manufacturing: 15%
• Sales: 14%

Comparing your turnover rate to industry benchmarks helps evaluate your company's retention performance.

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Common Causes of High Turnover (and Solutions)

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If turnover seems high, consider these factors:

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Career Growth Opportunities: Provide Clear Pathways for Advancement

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Employees don’t just want jobs - they want careers. If they don’t see a future within the organization, they’ll look elsewhere. Creating structured career development plans, offering mentorship programs, and providing opportunities for upskilling (such as certifications, training, or tuition reimbursements) can help employees visualize their long-term growth within the company.

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Internal promotions not only boost morale but also save recruitment costs, as retaining and developing existing employees is often more cost-effective than hiring externally.

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Effective Management: Train Managers to Support Employee Engagement

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A saying that holds true in many workplaces: “Employees don’t leave companies, they leave managers.” Leadership plays a significant role in employee satisfaction. Managers who lack communication skills, emotional intelligence, or the ability to provide constructive feedback can create disengagement and frustration.

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Regular leadership training, 360-degree feedback programs, and equipping managers with coaching skills can help build stronger, more supportive teams.

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Work-Life Balance: Encourage Flexibility to Prevent Burnout

Burnout is one of the biggest reasons employees resign. An “always-on” culture can drive employees to exhaustion, leading to disengagement and high turnover. Encouraging work-life balance through flexible work arrangements, hybrid or remote options, reasonable workload expectations, and mental health initiatives ensures employees feel valued and supported.

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When employees are well-rested and have time for personal life, they are more productive and engaged at work.

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Positive Company Culture: Foster a Supportive Work Environment

A company’s culture is its glue—either it binds employees together or pushes them away. A positive culture isn’t about perks like free coffee or casual Fridays; it’s about creating an environment where employees feel included, respected, and recognized for their contributions.

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Encouraging open communication, celebrating wins (big and small), and fostering diversity and inclusion initiatives help cultivate a workplace where employees want to stay.

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Role Clarity: Ensure Employees Understand Their Responsibilities

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Ambiguity leads to frustration. When employees are unclear about their roles, expectations, or how their work contributes to the bigger picture, they can feel lost and disengaged. Providing clear, well-defined job descriptions, setting measurable goals, and offering regular check-ins help employees stay aligned and motivated. Clarity reduces stress and empowers employees to take ownership of their responsibilities.

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Each of these areas plays a critical role in employee retention. Addressing them proactively not only reduces turnover but also enhances engagement, productivity, and long-term company success.

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Strategies to Improve Retention

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Hire the Right People: Build Teams That Stay and Perform

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Retention starts with hiring the right people from the start. Many companies focus too much on skills and overlook attitude. But the best hires aren’t just the most qualified—they’re the ones who align with your culture, values, and expectations. Hiring for mindset over resume creates teams that are adaptable, driven, and engaged long-term.

To get this right:

• Use data-driven hiring instead of gut instinct.
• Look beyond experience—evaluate grit, ownership, and problem-solving ability.
• Set clear expectations upfront, so new hires know exactly what success looks like.

When you hire smarter, retention becomes easier. The wrong hire costs more than just salary—it drains morale, slows productivity, and increases turnover.

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Read more here

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Leadership That Inspires, Not Micromanages

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Most employees don’t leave jobs—they leave bad leadership. Retention improves when managers know how to motivate, mentor, and set high standards without micromanaging. The best leaders aren’t just bosses; they’re coaches who help their teams grow.

What makes a great leader?

• Clear, consistent communication—no mixed messages.
• The ability to challenge and support—pushing employees to do better while ensuring they feel valued.
• Confidence in firing fast when needed—keeping only those who elevate the team.

Training managers in real leadership, not just management tactics, leads to better engagement, stronger performance, and lower turnover.

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Real Engagement, Not Just Perks

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Ping-pong tables and free coffee won’t keep employees—they need meaningful engagement. People stay where they feel recognized, heard, and valued. Creating an environment where employees see their impact and feel part of something bigger builds loyalty.

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To drive engagement:

• Provide real-time feedback, not just annual reviews.
• Recognize achievements—small wins matter.
• Foster open communication—employees should feel safe to speak up and contribute.

Engagement isn’t about making people "happy"—it’s about making them invested. The more connected employees feel, the more likely they are to stay and thrive.

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Final Thoughts

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Employee turnover is an essential metric for business health. Regularly calculating and analyzing your turnover rate helps you proactively manage workforce stability. A strategic approach to turnover empowers your organization to grow stronger and more successful over time.

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