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How to Calculate Your Employee Turnover Rate

Employee turnover is inevitable in every business. However, there’s a good turnover rate and there’s a bad turnover rate. In order to determine how your company is doing with employee turnover, you have to calculate the employee turnover rate. By calculating and understanding your employee turnover rate, you will gain insight into how to best recruit and retain employees. Figuring out why your employees are leaving is the key to the problem, so let’s see what employee turnover is, how to calculate the turnover rate, what’s the best way to do it, how to understand it, and how to reduce it. 

What’s employee turnover rate and why is calculating it important? 

Employee turnover rate is the percentage of your employees who leave your company over a specific amount of time. People who have voluntarily left, get terminated, or choose to retire are all included in employee turnover and should be included when calculating that rate. Calculating employee turnover is important because it tells the story of your employees’ experience while working at your company. It helps you get a sense of how your company is doing internally and when you know what your turnover rate is, you can figure out what the problem is and find a solution. Knowing and understanding employee turnover not only helps you retain and recruit employees, but it can help your company save money because turnover is costly and the higher turnover rate you have the more money it’s costing you. 

Calculating employee turnover is crucial to the success and health of your company. 

How to calculate employee turnover rate for your company

There’s a little bit of math involved in calculating turnover rate, but it’s not complicated. There are a few different ways to calculate employee turnover including monthly, quarterly, and annually. 

Here are a few employee turnover rate formulas that you can use: 

Most companies find that calculating employee turnover quarterly and annually is more useful because there’s more data over a longer period of time to show patterns. 

For example, say on January 1st your company starts with 15 employees. Mid-month 2 employees leave, so at the end of the month, you only have 13 employees. Below is how you would calculate the turnover rate: 

What’s the best formula to calculate employee turnover rate? 

There’s no right or wrong answer, but most companies prefer to calculate turnover rates on a quarterly or annual basis because those are longer periods of time that will give more data. Depending on what you want to calculate there are a lot of different formulas. 

Understanding your employee turnover rate 

Once you’ve calculated your employee turnover rate you probably have these two questions: what is a high turnover rate and how do I know?  A high turnover rate depends on the business and industry. For example, retail is going to have a much higher turnover than a law firm due to the type of industry it is. It’s something that has to be calculated over time to be truly understood. 

At the end of the day, a high turnover rate is a bad thing, and it's a tricky spot to be in for any employer. A healthy turnover rate is when employee retention rates are around 90%. Companies should aim for a turnover rate of 10% or less to keep their company stable. 

To understand your employee turnover rate there are three questions you need to answer: 

1) Who is leaving?

It’s important to identify who is leaving your company because it helps get to the root of the problem. If your top performers are leaving, then that requires immediate attention because that affects your company’s performance. If low performers are leaving, you need to evaluate your employee engagement, productivity, and profits.

2) When are they leaving?

Paying attention to when employees are leaving is useful. For example, if your new hire's turnover rate is high, then maybe your recruitment process isn’t working. If a lot of new employees are leaving it could be because they're not doing what the job description said. If employees are struggling with work-life balance, then company policies like parental leave and expected work hours should be re-evaluated. 

3) Why are they leaving?

Knowing why your employees are leaving is essential to solving the problem. You can change your management style or policies in response. Setting up exit interviews with employees is one way to see patterns and get suggestions on how to improve. One reason employees leave is they don’t feel their opinions and efforts are valued, if this is coming up in exit interviews HR can review how they do things to improve. 

Employee turnover rate can reveal underlying issues within companies and high turnover rates shouldn’t be ignored. If you are actively and consistently looking at your turnover rates, you will improve your company and retain talent. 

How to reduce employee turnover rate 

Finding out the motivation behind your employees’ leaving is important, but in order to reduce employee turnover rate, you need to pay attention to other factors as well. The key to a good turnover rate is the continual investment into your company and your team so that employees stay. 

Below are some strategies that you can use to help reduce turnover rate and increase retention. 

1) Measuring turnover rate regularly

It’s important to regularly track turnover rates so that patterns can be determined and the problem can be solved. If you want to keep turnover rates low you should be proactive and track it more frequently. 

2) Talk to your employees

One of the best things you can do is communicate with your employees. Make sure you are regularly checking in with them and making sure they feel their voices are heard and efforts are seen. Ask them what will keep them there and take action based on what they say. 

3) Give employees opportunities to grow

Employees leave because they aren’t given the opportunity to grow within the company. Eventually, they will seek out other positions at other companies that align more closely with their goals. To keep turnover rate low, providing space and opportunity to evolve in their career is essential. 

4) Offer competitive benefits, including a financial wellness benefit

Since the onset of the COVID-19 pandemic, companies are realizing the importance of benefits now more than ever. Employees seek out companies that offer competitive benefits and a key benefit that employees are looking for today is a financial wellness benefit like Your Money Line. Helping your employees improve their financial situations can reduce their stress and increase their happiness and productivity at your company. 


Having a healthy employee turnover rate is essential to the health of your company. Now that you know how to calculate employee turnover rate and what to do with the information to reduce turnover and improve retention, you can start taking steps and implementing these strategies. Your Money Line is here to help by providing your employees with a financial wellness software solution that connects them to personalized, confidential, and empathetic financial guidance through real people and technology. Contact us today to help improve your turnover rates and retain top talent.