What is employee turnover rate?
Employee turnover rate metric measures how often employees leave an organization and are replaced by new employees.
How to calculate employee turnover rate?
To calculate the employee turnover rate, divide the ‘number of employees who left’ in a period by the ‘average total number of employees’ in the same period and multiply by 100. The average total number of employees will be calculated by – adding starting number and ending number and dividing by 2.
Formula for calculating employee turnover rate
Real-life example of employee turnover rate
Let’s say you employed an average of 360 employees in your company the previous year. During the year, your company lost 17 employees. Then, your employee turnover rate will be: 17/360 x 100 = 4.7%
What’s considered a good employee turnover rate? (Benchmark)
An employee turnover rate of 10% or less is considered good. However, it can vary depending on the industry, the size of the company, and other factors. As a general rule, employee retention rates of 90 percent or higher are considered good and a company should aim for a turnover rate of 10% or less.
Retail, staffing agencies, hospitality, and fast food have the highest employee turnover rates. Generally, a low turnover rate is seen as a sign of a healthy and successful company, whereas a high turnover rate of employees can be a cause for concern.
Compare your rate to that of similar companies to see if it’s unusually higher, which can indicate problems in your work environment.
Ways to decrease your employee turnover rate
- Improve your work environment and culture: Creating a positive work environment and culture can help employees feel more satisfied and engaged with their work. Research from Deloitte shows that 94% of executives and 88% of employees think a positive corporate culture is an essential part of a company’s success. This can be achieved by providing opportunities for professional development, offering flexible work arrangements, and rewarding good performance.
- Provide competitive compensation and benefits: Offering competitive compensation and benefits can help attract and retain top talent. This includes offering competitive salaries, bonuses, and incentives, as well as providing comprehensive health insurance and other benefits such as retirement plans and paid time off. In order to manage these benefits and generally meet employee needs more effectively and efficiently, it’s necessary to implement all-in-one HR software that allows you to truly live up to the promises you make to the people on your staff.
- Invest in employee training and development: 94% of employees said that they would stay longer with a company that invested in their careers. Providing employees with training and development opportunities as well as investing in mentorship platforms can help them grow and advance in their careers, which can make them feel more fulfilled and satisfied in their jobs.