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Employee Turnover

Employee turnover refers to the total number of employees who leave a company over a certain period, generally one year. For example, those employees might have chosen to leave of their own accord, been fired, or been laid off.

Employee turnover is usually a total number across the organization, but it can also apply to smaller subcategories within a business, such as demographic groups or individual departments. 

Calculating Employee Turnover

Calculating an organization's employee turnover is very simple. 

  • Determine the total number of employees who have left within a specific period that could be a month, a quarter, or an entire year.
  • Divide that total number by the average number of employees who worked in the company during the same time frame.
  • To calculate the employee turnover rate, you then multiply that number by 100

Let's give you an example to demonstrate what we mean:

  • 26 employees leave in one month
  • The average number of employees during that month is 140
  • (26 divided by 140) x 100 = 18.57% 

When calculating a figure for employee turnover, you don't include temporary hires or workers who have taken temporary leave. If you include these in your calculations, it will skew the turnover and make it higher than it is.

Voluntary vs. Involuntary Turnover

  • Voluntary turnover: This is a term used when an employee leaves an organization voluntarily. It can happen for a number of reasons, for example, better job opportunities in another organization, workplace conflict, or engagement. 
  • Involuntary turnover: This is a term used when the employer terminates an employee's contract or removes them from a group permanently. It might be because of toxic behavior or poor performance, for example. 

Employee turnover is a natural process in any organization. However, ideally, an organization would prefer if turnover was as low as possible. Nevertheless, determining low vs. high turnover is more about comparing typical and expected rates. These can change significantly, depending on the company size, job type, location, industry, and many more things. Ultimately, it's extremely rare for an employee turnover rate to be zero.  

The Causes of Employee Turnover

Many things can affect employee turnover. Employees can leave an organization or department for a variety of reasons. Some reasons are perfectly normal and expected, while others are considered more negative reasons. 

While employee turnover is generally expected, it's not considered good when the turnover happens because of negative reasons or the rate is unexpectedly high. 

Some of the more common reasons employees choose to leave a company include:

  • A lack of career development or few opportunities for employee growth
  • When there is no work-life balance
  • Employee promotion or transfers internally
  • When an employee experiences negative feelings towards their manager
  • When the work environment is toxic
  • A natural part of career progression
  • A life or family event
  • Workers feeling burnout or overworked
  • A better offer from another organization
  • When an employee leaves involuntarily

There are many reasons why it's crucial to understand and analyze employee turnover. For example, it can help a business implement the changes that are necessary to maintain workforce numbers at an optimum level.

There are many different benchmarks for ideal or acceptable turnover rates. This is mainly because there are so many variables that can affect them. What's most important for individual organizations is that various industry-related and individual factors are taken into account when pinpointing the acceptable turnover rate. In addition, it's equally important to look at the reasons behind the turnover, both involuntary and voluntary, and make any necessary changes so that turnover rates can be reduced.