How to calculate employee turnover rate.
What is employee turnover rate, and why does it matter?
An organization’s “employee turnover rate” is defined as the number or percentage of employees who leave an organization who are then replaced by new employees.
Your company’s employee turnover rate can be a highly useful metric, especially when it comes to gauging the effectiveness of managers or recruiting processes, employee satisfaction or even the overall organizational culture. Turnover can also be quite costly for organizations, so it’s important for organizations to take action to prevent high rates of employee turnover.
How do you calculate employee turnover rate?
The formula above is what you’ll need to use to calculate your company’s employee turnover rate. To help you understand what each component of that equation means, we’ve provided a brief explanation below.
- Figure out what period of time you’re wanting to measure.Before you begin calculating your employee turnover rate, you should first decide over what period of time you want to measure turnover. This can be any length of time, but most businesses calculate employee turnover on an annual or monthly basis. You could also measure turnover on a quarterly basis, especially if you hire lots of seasonal workers, or have one quarter that is more stressful than another.
- Determine your average number of employees your organization had during the specified time.Once you’ve decided the length of time you’re going to be using to measure turnover, you’ll then need to figure out the average number of people your company employed during the specified time period. You can do this by averaging the number of employees who were employed at the beginning of the time period and the number of employees who were employed at the end of the time period.
- Figure out how many separations (both voluntary and involuntary) your organization had in the specified time.This information should be readily available in whatever employee management system or HR technology platform your organization uses.
- Do the math.Then, simply divide the number of employees who separated from your company during that time by the average number of employees working during that time, and multiply by 100. That will give you the rate of employee turnover in the given period.
G&A Partners’ Employee Turnover Rate Calculator
Now that you know how the formula works, you can save time by simply using G&A Partners’ employee turnover rate calculator.
Why does your organization’s employee turnover rate matter?
Knowing how to find your organization’s rate of turnover is useful for many reasons: helping you understand how turnover is affecting your organization, determining if your organization’s rate of turnover is on par with comparable businesses, as well as helping you identify any seasonal or other trends in turnover.
Once you calculate your employee turnover rate, you can compare it to those of other organizations as well as industry averages. The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) program releases monthly reports outlining national trends in turnover. When comparing employee turnover rates, keep in mind that certain industries tend to have higher rates than others, and that factors such as the size of the organization or region can affect turnover.