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Turnover and attrition

What is the turnover rate?

Definition

The turnover rate is the percentage of your workforce that left during a period.

Last updated

A rate makes leaver counts comparable.

It is the comparable version of the raw leaver count: five departures means something very different in a team of twenty than in a company of five hundred.

It also makes periods comparable, as long as you handle the length of the period properly. That is where most turnover reporting goes wrong.

The formula divides separations by average headcount.

Separations divided by average headcount, multiplied by 100. Annualize a monthly or quarterly figure before comparing it to an annual one, or the number reads far too low.

Formula

Turnover rate = separations ÷ average headcount × 100

To annualize a monthly rate, multiply it by 12. To annualize a quarterly rate, multiply it by 4. A rolling 12-month rate, which adds up the last twelve months of separations, is steadier than one annualized month, because a single busy month can stand in for a whole year.

Here is a worked example with round numbers.

Take an invented company with 390 people at the start of a quarter, 410 at the end, and 10 separations during the quarter.

Average headcount is (390 + 410) ÷ 2 = 400. The quarterly turnover rate is 10 ÷ 400 × 100 = 2.5%. Annualized, 2.5% × 4 = 10%, which is the figure to compare with an annual rate.

Reported as 2.5% next to last year's annual 10%, the quarter would look like a dramatic improvement. It is the same pace.

The turnover rate and the retention rate are not mirror images.

The retention rate looks only at the people present at the start of the period, so a new hire who joins and leaves in the same year counts in turnover but not in retention. That is why the two rarely add up to 100.

Your own trend is the fairest yardstick.

Turnover benchmarks vary enormously by industry, role, seniority and region, and published figures rarely state which population they measured. Your own rate over time, split into voluntary and involuntary turnover, is the comparison you can trust.

These are the mistakes that skew the turnover rate.

  • Comparing a quarterly rate with an annual one without annualizing it.
  • Annualizing one unusual month, such as a seasonal peak, and presenting it as the yearly pace.
  • Dividing by end-of-period headcount, which understates the rate when the company is growing.
  • Leaving out new hires who left within the period. They are separations and belong in the count.
  • Rounding the monthly or quarterly rate before annualizing it, which moves the yearly figure.

Work out your own turnover rate.

Enter your headcount at the start and end of the period and the number of separations, and the free calculator runs the formula and shows the annualized figure.

Calculate your turnover rate

Free, no signup required.

These related terms are in the glossary too.

  • Employee turnover

    Employee turnover is the movement of people out of a company over a set period, counted as the employees who leave and are replaced.

  • Attrition

    Attrition is headcount lost when employees leave and the role is not backfilled, so the position disappears from the org chart.

  • Retention rate

    The retention rate is the percentage of employees present at the start of a period who are still employed at the end of it.

  • Headcount and average headcount

    Headcount is the number of employees on the payroll at a point in time. Average headcount is the average across a period, and it is the denominator in most turnover and retention formulas.

  • Separation

    A separation is any end of the employment relationship, voluntary or involuntary. It is the numerator in most turnover formulas.

  • Voluntary turnover

    Voluntary turnover is a departure the employee chose: a resignation, a retirement, or a move to another employer.

These pages on this site go deeper.

Back to the HR glossary, where all 52 terms are defined.