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Effective employee offboarding is critical for a business to maintain its positive standing among current employees and a competitive edge in the talent market
Make use of this handy employee turnover rate calculator to monitor how your company is faring in terms of employee satisfaction and retention on a periodical basis.
A company's employee turnover refers to the rate of employees who leave the company during a period, which then requires replacements through external talent hiring.
The employee turnover rate is the percentage of employees who leave the company during a given period, through voluntary resignations or company-initiated decisions.
Employee turnover is an important business metric for HR professionals and company leaders. The turnover rate can be the best indicator of employee satisfaction levels. Turnover rates are typically calculated half-yearly or annually to understand the impact of employees' contributions on the company's business and profits.
Our employee turnover rate calculator can give accurate turnover values for a given time. Follow these steps to calculate your company's employee turnover instantly:
You will receive your company's average number of employees (calculated using the standard average formula) during the specified period, along with the corresponding turnover rate.
Calculating similar rates periodically can help companies analyze turnover patterns and identify the reasons behind them.
To calculate the turnover during a given period, one must know the employees enrolled with the company from the start date to the period's end date. Additionally, it is necessary to know the exact number of employees who left the company through voluntary resignations or retirement, or were terminated or laid off.
With these parameters, the turnover rate formula gives the turnover rate of employees in a company.
$$ \textit{Turnover Rate (%)} \ = ( \displaystyle \frac{\textit{Employees Who Left}} {\bigl(\textit{Employees at Start} + \textit{Employees at End}\bigr)/2} \times 100 ) $$
Here, the average of employees is calculated in the denominator, i.e.,
(Employees at Start + Employees at End)/2.
Assume a company has 2000 employees at the beginning of their fiscal year, April 1. As months pass, the company sees employees leave and get replacements. By October 31 of the same year, the company had 2400 employees.
During these 6 months, the company saw 450 employees leave.
With these values, we can calculate the following.
$$ \textit{Turnover Rate} \ = \left( \frac{450}{(2000 + 2400)/2} \right) = \left( \frac{450}{2200} \right) = 0.2045 \times 100 = 20.5\% $$
This turnover rate indicates a significant exit in just 6 months, which is alarming and suggests that the company has been through a turbulent time.
Ideally, every company should strive to maintain stable turnover rates over any given period. Considering business environments and industry standards, a 10% to 15% turnover rate is acceptable as a good value.
However, this value can increase depending on market situations, such as The Great Resignation, during which most companies saw higher turnover than usual. It is best to compare a company's turnover rate with that of its competitors and peers for a better evaluation in such situations.
A turnover rate higher than previous values can indicate underlying workplace issues that require investigation. On the other hand, a very low turnover can indicate stagnation that prevents new talents from entering the workforce.
A company must calculate its employee turnover rate regularly to understand how it can plan to improve its hiring and retention strategies. Higher turnover rates can lead to considerable financial, knowledge, and time losses.
The turnover rate can determine several underlying problems and uncover reasons for sudden voluntary or involuntary resignations in a company, such as:
High turnover rates are a warning sign for leaders and HR professionals to ramp up employee retention strategies. Companies must work with team leaders and HR professionals to address areas that can help retain employees, such as:
The turnover rate is calculated as the percentage of employees who left the company during a given period, divided by the average number of employees during that period.
Revaluate180 uses AI-powered insights and proprietary models to evaluate candidate compatibility with a job role. This is how you reduce unconscious bias while hiring and avoid costly hiring errors.
Classifying a given turnover value can be challenging without knowledge of industry standards and the period during which it is calculated. Generally, a turnover rate of 20% can be concerning and indicate that the company needs to realign its employee retention strategies.
However, if most companies report similar turnover rates during the same period, it can indicate a market crisis or a culture shift that is affecting all companies in the industry.
A turnover rate between 10% and 15% is generally tolerable due to voluntary resignations in a company. Gradual or sudden spikes in these values over time can indicate employee dissatisfaction for one or more reasons. Similarly, low turnover rates can indicate barriers to attracting new talent and stagnation.
If this rate occurs within a short period, say 2 to 6 months, it is very high. A 10% to 15% turnover rate in a year is tolerable, considering that other competitors get similar turnover values.
Try identifying causes of dissatisfaction and disengagement among your employees through detailed exit interviews. Realign your retention and engagement strategies by offering competitive pay packages, opportunities for skill development and training, improving the company’s work culture, and boosting employee motivation levels.
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