HR Glossary
Employee turnover — how to measure and reduce it
Employee turnover — that is, the rate at which people leave the company — is one of the most important HR metrics. High turnover is costly and signals deeper problems.
Employee turnover — that is, the rate at which people leave the company — is one of the most important HR metrics. High turnover is costly and signals deeper problems.
Employee turnover is a percentage expression of the proportion of employees who left the company in a given period (usually a year) out of the total number of employees. We distinguish voluntary turnover (the employee leaves on their own) and involuntary turnover (the company ends the employment relationship).
Turnover rate (%) = (Number of departures per year / Average number of employees) × 100
Example: A company has on average 60 employees, and 9 people leave during the year. Turnover rate = (9 / 60) × 100 = 15%
Replacing a single employee costs, according to various studies, 50–200% of their annual salary — it includes the costs of recruitment, onboarding, the period of the newcomer's reduced productivity and the loss of know-how.
A company finds that turnover in Q3 reached 22%. An analysis of exit interviews shows that the main theme is unclear communication about the company's strategy and the feeling that no one listens to feedback. HR proposes a series of town-hall meetings and the introduction of regular 1:1s with managers.
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